On April 22, Kelly Pfost showed Town Council and staff the projection, which included seeing what would happen with an imminent recession, at the conclusion of the town’s financial retreat. The retreat is a key budget planning event for the town.
The event includes presentations from different departments about different concerns that have financial impacts on the town. Staff generally asks for council direction at the conclusion of each presentation, but no formal decisions are voted upon.
In other presentations April 22:
- The North Water Treatment Plant, which originally went online in 1996, needs substantial investment if it is to maintain water quality. The plant has aging issues and has higher than industry standard repair and replacement costs. Staff recommends full plant reconstruction, at a cost of $273 million, or improvements to the existing plant at $285 million. It would be paid for through bonds or a water rate increase. Council directed staff to conduct a rate study and proceed on a basis of design for a reconstructed plant.
- Pfost reviewed the health of various the funds for various system development fees, or SDFs. Developers pay the fees to the town to pay for the increased burden on the town in, for example, building and maintaining roads or providing police and fire protection. The town would like to use a Public Facilities Municipal Properties Corp. bond to shore up the Roads SDF fund and to set up an internal loan and a Water Resource Municipal Property Corp. bond for the Water SDF fund, both for fiscal year 2020-21.
- The town wants to create signature and destination events that will increase the volume of hotel nights in the town. It is part of an effort to diversify the town’s sales tax base, which will help stabilize revenue. Other components include to further diversify uses in the Heritage District and to develop tools to protect the town’s Northwest Employment Corridor, which accounts for 12% of the town’s sales tax collections. The town’s tax rates are lower than neighboring cities.
- Recycling processing costs are going up for the town, while revenue is decreasing, sending the recycling budget line into the red. While the town has made several cost-cutting measures, it wants to have a rate study to figure out how to close the growing budget gap.
- The town has been paying down its portion of a Public Safety Personnel Retirement System unfunded liability faster than its neighboring cities and, as the town approaches paying off its portion, Pfost asked council to modify the strategies it uses on the payments. The PSPRS is underfunded to meet its obligations to public-safety workers as they retire, and the entities that pay into the fund for their workers, including Gilbert, have been asked to make additional payments to catch the fund up.
- Pfost also asked council to consider a strategy to pay off general fund debt early. Much of the debt is tied to the University Building. Use of a sinking fund to set aside money to pay the debt down could pay off the debt 17 years early and save $15 million in interest payments.
The April 22 meeting was the second part of the retreat, which originally was set for February but rescheduled to April 16 because of council resignations. However, the April 16 meeting was cut short when WebEx, the teleconference application the town uses for meetings, crashed on the West Coast during the afternoon, forcing a delay of the final set of presentations.