A $2.9 million grant received under the CARES Act has helped improve the financial picture for the Town of Fountain Hills during the first six months of the current fiscal year.

The Coronavirus Aid, Relief and Economic Security Act was approved by Congress in March 2020 and allotted $2.2 trillion in stimulus aid that included grants to state and local governments. The state allocated those funds to most communities.

The Town of Fountain Hills received its allotment in July 2020, just as the new fiscal year was beginning. The funding was largely allocated to public safety, and the town used the money to pay the first four months on its contracts with the Maricopa County Sheriff’s Office (3.9 months totaling $1.62 million) and Rural/Metro Inc. for fire and emergency medical services (four months totaling $1.28 million).

The town also had $300,000 available that it used for community business grants. That money went to 66 local businesses that applied at approximately $5,000 each (average). Another $100,000 was used for sanitizing services and supplies and to install safety equipment at town facilities. There was a portion of the funding left unallocated.

With the budget approved for the fiscal year, the funding for MCSO and Rural/Metro had already been allotted for the year, so the use of the CARES funding resulted in a one-time General Fund savings. Staff is recommending that $2 million be placed in the street fund for pavement maintenance. Staff is anticipating a major asphalt sealing project for Saguaro and Shea boulevards that will cost more than $1 million, and revenues are consistently short for needed pavement management.

An additional $500,000 in savings from CARES is to be placed in the Facilities Reserve Fund.

Budget detail

Town Finance Director David Pock reported to the Town Council at is planning retreat last week that the town’s regular revenue stream showed encouraging signs for the first six months of the year – July 1 to Dec. 31.

Pock said revenue collections were either well ahead or very near budgeted amounts for the first six months. Local sales tax revenue totaled $6.27 million compared to an anticipated $4.9 million – almost $1.4 million ahead of budget. Pock said that is largely due to healthy retail sales, construction and utilities and communications taxes.

Town Manager Grady Miller told the council that while larger cities have a much more diverse retail base for collecting sales tax, Fountain Hills has a stable retail base that includes three grocery stores and Target, all of which did fairly well through the pandemic months.

Pock also noted that the town is now receiving sales tax from online sales coming from the community.

Total revenues for the first six months of the year, including taxes, intergovernmental collections and other items such as user fees, licenses and permits, were $10.34 million.

Overall General Fund expenses for the first six months were $5.67 million, compared to $8.15 million budgeted. The public safety savings is reflected in this figure.

Pock noted that all departments were well within their projected budgets for the period. The General Government budget line was slightly higher due to the $300,000 CARES Act money allocated for the small business grant program.

Revenues from state shared sales taxes, income taxes and Highway User Revenue Funds (HURF) are running slightly behind budget projections.

Pock also reported that the town’s fund balances are in good shape.

Forecast

In preparation for planning the 2021/2022 Fiscal Year budget, Pock said the goal is to maintain existing levels of service. He is anticipating only slight revenue increases from sales tax while, at the same time, it is expected that State Shared Revenues will remain flat or decline slightly.

The MCSO and Rural/Metro contracts, which account for more than 50 percent of the General Fund Budget. have built-in annual increases. That will be 3 percent for Rural/Metro, with a similar number from MCSO.

A preliminary projection for next fiscal year General Fund budget is $19.7 million in revenue with $19.5 million in expenses.