The Town of Fountain Hills has prepared a tentative $3.3 million annual budget for the 2018/19 fiscal year. That is almost exactly $3 million less than the budget for the current fiscal year.

Town Finance Director Craig Rudolphy presented the early numbers to the Town Council at a planning retreat on Feb. 8.

The budget for capital improvement projects alone is down by $3.2 million. The budget for the current fiscal year includes two large projects in the planning for years, the relocation of Fire Station #2 and construction of the trailhead in Adero Canyon for access to the McDowell Mountain Preserve.

Both of those projects are expected to carry into next fiscal year.

Public safety, the combination of town contracts with the Maricopa County Sheriff’s Office and Rural/Metro, are being budgeted for $8.1 million, an increase from $7.7 million for the current year.

The town has budgeted a new Facilities Replacement Fund based on a reserve study this past fiscal year. This is to build reserves to cover the costs of maintenance, replacement and repairs to town-owned facilities.

There is a $1 million contribution budgeted for the upcoming fiscal year, however Rudolphy said the study is recommending a fully-funded reserve balance of $7,127,225.

There is a list of projects that are ongoing or planned that would be funded through this reserve. Staff has identified $515,583 in such projects that are incomplete or deferred from the current fiscal year, plus another $459,713 for new projects in the coming fiscal year for a total of $975,296.

Rudolphy presented a five-year projection for the town’s General Fund that indicates operating expenditures outdistancing revenues.

Staff does not expect any issues for the 2018/19 budget. However, the next four years there is expected to be a $4.5 million total deficit, or about $1.12 million per year.

Rudolphy is projecting a much bleaker picture over the next 10 years with an average deficit over that time of $6.4 million per year.

Staff has $1.5 million in capital improvement projects in the budget for the 2018/19 fiscal year. At the time those are completed the town’s Capital Reserve Fund will be reduced to $961,063, which is considered dangerously low.

Budget development and refinement will continue with tentative approval expected in late April or early May with final approval in early June.