Pandemic leaves Gilbert Town Council wrestling with timing on fee increases, bond question

Gilbert Water Tower
Gilbert Town Council could recommend a transportation and infrastructure bond question for the November ballot and also will consider fee increases for three enterprise funds. (Courtesy Town of Gilbert)

Gilbert Town Council could recommend a transportation and infrastructure bond question for the November ballot and also will consider fee increases for three enterprise funds. (Courtesy Town of Gilbert)

Clarification: The comparison of Gilbert to other cities in paying down its portion of unfunded liabilities from the Public Safety Personnel Retirement System was with Gilbert's peer cities of similar sizes. Smaller cities' situations in the PSPRS may differ.

Gilbert Town Council gave the go-ahead for three rate studies on fees for town services and also prepared to send a transportation and infrastructure bond question to voters at its annual financial retreat Feb. 11.

But council fretted on the timing of all of it, discussing worries that fee increases could negatively impact how voters view the bond package that council members all see as needed.

The culprit, Town Manager Patrick Banger told council, was the coronavirus pandemic as items had been postponed in deference to residents’ needs during the outbreak.

Banger said those postponements have left town in a position where several critical needs now must be addressed at once.

The transportation and infrastructure bonds package was postponed from the 2020 ballot at the financial retreat in April. But the town continued work on studies related to the projects that would be covered on the bond.

As a result the proposed package, recommended by the town’s citizens transportation task force, has grown from $465 million to $515 million.

The new bond package has $214 million to address safety and congestion, $106 million for reconstruction, $49 million for multimodal investment, $68 million for transportation technology investments, and $78 million for redevelopment.

The town last passed street bonds in 2007, and the money is running out. If a package is not passed in November, Public Works Director Jessica Marlow said projects that are under way would be finished, but new projects would come to a halt as the money runs out.

Banger said transportation and traffic issues are the one area in town that residents are expressing increased dissatisfaction in surveys, underscoring the need to make improvements.

Council Members Aimee Yentes and Laurin Hendrix expressed an interest in delaying a vote on the bonds until 2022, when it could be on a regular election cycle and more people would participate. A vote this fall would be, by law, an all-mail-in ballot. Hendrix doubted the town would run out of money.

The town also is likely to put out to voters a request for $16.79 million in bonds to build an advocacy center for victims of domestic violence and sex crimes. The center, to be built adjacent to the public safety building at the town’s municipal complex, would streamline interviews, exams and services for victims.

The one question council left for staff to explore was whether it would be better to package the center’s bond package with the transportation and infrastructure bond package in one ballot question or separate them into two.

Budget Director Kelly Pfost told council the bonds could be taken on without raising the town’s secondary property tax rate of $0.99 per $100 assessed valuation.

Raising fees

The council also saw presentations from staff on three enterprise funds that need an increase in fees as they could soon fall below their minimum fund balances.

The environmental services fee residents are charged primarily for recycling has been affected by increased costs and a falling market for recyclable materials, Marlow said.

Commercial solid waste services have fees that are among the lowest in the Valley among municipalities and far lower than competing private services, officials said. But the pandemic hit the costs and demand for services, affecting its bottom line.

Finally, the water fund has been hit by rising costs of raw water and increasing safe water standards while the Neely Water Treatment Plant, which supplies water for the majority of town residents, is reaching the end of its functional life, Marlow said.

Marlow presented a timeline for replacing the plant that has construction starting in 2023 and the plant coming online in 2025. The projected cost is $422 million.

The problem council members expressed was not the need for the additional fees but the timing. They expressed concerns about whether the fees should come all at once, and if they were to start being charged in the fall, how that would affect the bonds questions on the ballot, even if the bonds did not affect the property tax rate.

Banger said he understood council’s concern, but he said the pandemic created the timing problem, and there was a need to continue providing the services for residents.

“We don’t build plants just to build plants, and we don’t raise fees just to raise fees,” he said.

Council did give staff a green light to have rate studies conducted with the idea that it might wait or stagger implementing increases.

Council members also considered whether unused or new AZCares relief funding could help the town keep the funds afloat long enough to delay or stagger the increases.

One potential problem, Pfost said, was that doing so would be outside the town’s financial policies and could negatively impact the town’s AAA bond rating, one of the 50 best among more than 19,000 municipalities in the country.

Other items

Council also reviewed the budget process, long-range infrastructure plan, and long-range revenue and expenditure forecasts. The financial retreat serves as a kickoff to the budgeting process for the coming fiscal year, which will start July 1.

It received an update on the transportation master plan, for which work started in June. Staff said it should be completed in November.

The town reviewed its Arizona State Retirement System and Public Safety Personnel Retirement System liabilities and endorsed the town making a one-time payment of $10 million to reduce its PSPRS liability. That system has been far underfunded to its liabilities, resulting in catchup payments, of which only Gilbert and Chandler have been successful in reducing among peer cities, Pfost said. Other peer cities are losing traction on the catchup.

The town also reviewed revenue from the food tax, which Pfost estimated at $14 million, and considered whether to make changes in its rates. The revenue collected goes into the town’s general fund, and as eliminating the food tax would have a large impact on that fund without a prospect to replace the money, council members expressed little interest in making a move. However, Yentes challenged council members to look for ways to relieve the burden on taxpayers, which members said would be a good discussion to have.
By Tom Blodgett
Raised in Arizona, Tom Blodgett has spent 30 years in journalism in Arizona and is the editor of the Gilbert edition of Community Impact Newspaper. He is a graduate of Arizona State University, where he now serves as an instructional professional in the Walter Cronkite School of Journalism and Mass Communication and editorial adviser to The State Press, the university's independent student media outlet.


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