Ftn. Hills cutback avoids eliminating services

Grappling with a future shortfall, Fountain Hills scaled back spending this year without making any serious cuts.

Construction-related sales taxes dipped more than $1.5 million between the 2005-06 and 2007-08 fiscal years. If the trend continues, the town could face a $70 million to $90 million deficit by 2025.

Luckily, planners projected the housing slump early and made the "appropriate accommodations" to balance this year's budget, town spokeswoman Katie Decker said.

Retail sales taxes have remained steady, even in the weakening economy.

2008-09 general fund budget revenue: $16.1 million.

Expected shortfall: $0.

What they did: Rather than cutting specific programs, the town scaled back each item in the 2008-09 budget to generate a net savings, said Julie Ghetti, town finance director.

For example, the town dipped into Town Hall operations and transferred some of that money into parks, recreation and community/activity centers.

The good news: Retail sales taxes went up almost $375,000 from 2005-06 year to 2007-08.

Residents "always need groceries," Decker said.

"It's not one of those things where you're going to see massive decreases," she said.

The town is projecting a slight jump in revenue this fiscal year compared with last year. That's because income tax from the state is on a two-year lag.

"Fiscal year 2007 was a great financial year for the state," Decker said. "Check back in two years, and you will see a totally different situation."

The bad news: Construction and state-shared revenue are expected to go down as Fountain Hills nears build-out.

Voters this year shot down a property tax that would have netted an additional $4.5 million a year for the town.

What's next: Planners may have to look at other ways to boost town revenue or resort to slashing.

"At this point, it is too early to tell, but we are keeping a close eye and will make the appropriate modifications to make sure we have a balanced budget," Decker said.