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Finance director not optimistic on economy
Thelma Grimes/San Pedro Valley News-Sun
With cuts to state funds, a slowed economy and plenty of unknowns, Benson Finance Director Jim Cox told the City Council he is not as optimistic as some national economists in saying things are going to get better.
In a presentation on Aug. 10, Cox gave council members the final numbers for the 2008-09 fiscal year, which ended June 30. He also gave a grim outlook for years to come.
"We are going to be looking at significantly lower numbers next year, and I can't see where things are going to get better," Cox said. "There comes a point where there is no more fat to cut from the budget, and we are already cutting into muscle."
Cox is concerned about state funds that look to be hit hard by a growing deficit and continued disagreements between Arizona Governor Janet Brewer and the legislature, which has also led to a full budget not being passed for the 2009-2010 fiscal year that began July 1.
Some of the funds to be hit hard are state-shared revenues, state sales taxes and Highway Users Revenue Fund or HURF , allocated for city street repairs.
"Economists say we are at the bottom and now going back up," Cox said. "I wish I shared their optimism. With the massive debt the government is taking on, it makes me nervous."
In state-shared revenues, Cox said the city will likely be hit the hardest next year, noting that this year they already had a 14 percent loss, receiving $612,000, or almost $100,000 less than last year. There will definitely be a larger reduction next year, Cox stressed in the 20-minute presentation.
State sales taxes have also taken a hit this year, with the city receiving $360,000, or 6 percent less than last year's $383,000. Cox said if that fund remains at a 6 percent loss, he will be very happy.
HURF funds are also in trouble, as that area of the budget took a 12 percent loss. Since those funds go toward street repairs, Cox said the city is going to have to make some adjustments.
Vice Mayor Toney King said no matter how optimistic economists are sounding, the city is going to have to be careful for the next several years. Mayor Mark Fenn said the key to Benson's surviving the economic downtown is planning and communication.
In looking at just city numbers, Cox showed decreases in revenues in almost every department, and again, stressed the need to conduct a study on city-run utilities and possibly have the council approve more increases in the future.
In the last fiscal year, Cox said the gas department ended the year with an excess of $59,000, the water department was up $64,000, but the wastewater department was in the red by $27,000.
"As an aside, this points out our need to finish rate studies and move forward with rate adjustments," Cox said.
The City Council made some tough decisions several years ago, approving massive rate increases to water, gas and wastewater. Cox said as a result, water use has gone down across the board and residents are paying less, but the city's cost for service has not gone down.
Besides the possibility of residents receiving rate hikes for city utilities, Sulphur Springs Valley Electric Power Cooperative is awaiting permission from the Arizona Corporation Commission to increase electric rates for all San Pedro Valley residents.
According to a report by Robert Carreira, director of the Cochise College Center for Economic Research, the average cost of living for residents in Cochise County was slightly above the national average in the second quarter of 2009.
The information came from a study conducted by the American Chamber of Commerce Researchers Association (ACCRA), which measures relative price levels for consumer goods and services in participating areas. The AARA index includes separate weighted sub-indices for grocery items, housing, utilities, transportation, health care and miscellaneous goods and services.
The cost of living index indicated that in the second quarter of 2009, Cochise County's cost of living was 0.1 percent higher than the average of all participating places nationwide. This is up from the first quarter where Cochise County was 0.1 percent below the national average.
As utility rates and the cost of gas continue to increase in the San Pedro Valley and the rest of Cochise County, the average cost of living will also continue to rise for residents.
Carreira said the primary reason for the increase between the first and second quarter is utility rate increases. In the first quarter, Carreira said the local cost of utilities was 7.7 percent below the national average. In the second quarter, local costs were only 4.5 percent below the national average.
Housing costs and an increase in miscellaneous goods also contributed to the increase.
However, Carreira said increases to utilities, housing and miscellaneous goods and services were partially offset by relative declines in health care, grocery items and transportation.
Grocery items, which were 2.5 percent above the national average in the first quarter, fell to 0.3 percent above the national average in the second quarter. Transportation costs, which include gasoline and automobile maintenance, were 2.9 percent above the national average in the first quarter, and in the second quarter fell to 2.5 percent above the average.
In Arizona, ACCRA findings show that Phoenix has the lowest cost of living due to lower utility rates, housing and transportation. The highest cost of living in the state is in Flagstaff, where residents are paying 13.8 percent above the national average.
Besides the increased cost of living, Carreira also examined new home sales in Cochise County for the second quarter.
While sales of existing homes in Cochise County were down in the second quarter, Carreira said recent figures suggest the market is at or near the bottom of the current downturn. From April through June, 284 homes were sold countywide according to the Southeast Arizona Multiple Listing Service (SAMLS), down 7.8 percent from the 308 homes sold at the same time last year.
Sales were down 12.3 percent in the first quarter of this year.
However, Benson sales were one of the downsides of the report, with nine homes being sold in the second quarter. Fourteen homes were sold at the same time last year.
However, the median price for the nine homes sold was $116,000 down from $199,396 at this time last year. Carreira said the large decline in price was the result of a large number of foreclosures in the mix of homes sold. Six of the nine homes sold in Benson in the second quarter were the result of foreclosures.
As of Aug. 1, Carreira said there were 1,031 active listings in Cochise County. This is an 11-month supply based on the pace of sales in the second quarter. The average number of days on the market for active listings as of Aug. 1 was 144 down from 158 in mid-May.
With cuts to state funds, a slowed economy and plenty of unknowns, Benson Finance Director Jim Cox told the City Council he is not as optimistic as some national economists in saying things are going to get better.
In a presentation on Aug. 10, Cox gave council members the final numbers for the 2008-09 fiscal year, which ended June 30. He also gave a grim outlook for years to come.
"We are going to be looking at significantly lower numbers next year, and I can't see where things are going to get better," Cox said. "There comes a point where there is no more fat to cut from the budget, and we are already cutting into muscle."
Cox is concerned about state funds that look to be hit hard by a growing deficit and continued disagreements between Arizona Governor Janet Brewer and the legislature, which has also led to a full budget not being passed for the 2009-2010 fiscal year that began July 1.
Some of the funds to be hit hard are state-shared revenues, state sales taxes and Highway Users Revenue Fund or HURF , allocated for city street repairs.
"Economists say we are at the bottom and now going back up," Cox said. "I wish I shared their optimism. With the massive debt the government is taking on, it makes me nervous."
In state-shared revenues, Cox said the city will likely be hit the hardest next year, noting that this year they already had a 14 percent loss, receiving $612,000, or almost $100,000 less than last year. There will definitely be a larger reduction next year, Cox stressed in the 20-minute presentation.
State sales taxes have also taken a hit this year, with the city receiving $360,000, or 6 percent less than last year's $383,000. Cox said if that fund remains at a 6 percent loss, he will be very happy.
HURF funds are also in trouble, as that area of the budget took a 12 percent loss. Since those funds go toward street repairs, Cox said the city is going to have to make some adjustments.
Vice Mayor Toney King said no matter how optimistic economists are sounding, the city is going to have to be careful for the next several years. Mayor Mark Fenn said the key to Benson's surviving the economic downtown is planning and communication.
In looking at just city numbers, Cox showed decreases in revenues in almost every department, and again, stressed the need to conduct a study on city-run utilities and possibly have the council approve more increases in the future.
In the last fiscal year, Cox said the gas department ended the year with an excess of $59,000, the water department was up $64,000, but the wastewater department was in the red by $27,000.
"As an aside, this points out our need to finish rate studies and move forward with rate adjustments," Cox said.
The City Council made some tough decisions several years ago, approving massive rate increases to water, gas and wastewater. Cox said as a result, water use has gone down across the board and residents are paying less, but the city's cost for service has not gone down.
Besides the possibility of residents receiving rate hikes for city utilities, Sulphur Springs Valley Electric Power Cooperative is awaiting permission from the Arizona Corporation Commission to increase electric rates for all San Pedro Valley residents.
According to a report by Robert Carreira, director of the Cochise College Center for Economic Research, the average cost of living for residents in Cochise County was slightly above the national average in the second quarter of 2009.
The information came from a study conducted by the American Chamber of Commerce Researchers Association (ACCRA), which measures relative price levels for consumer goods and services in participating areas. The AARA index includes separate weighted sub-indices for grocery items, housing, utilities, transportation, health care and miscellaneous goods and services.
The cost of living index indicated that in the second quarter of 2009, Cochise County's cost of living was 0.1 percent higher than the average of all participating places nationwide. This is up from the first quarter where Cochise County was 0.1 percent below the national average.
As utility rates and the cost of gas continue to increase in the San Pedro Valley and the rest of Cochise County, the average cost of living will also continue to rise for residents.
Carreira said the primary reason for the increase between the first and second quarter is utility rate increases. In the first quarter, Carreira said the local cost of utilities was 7.7 percent below the national average. In the second quarter, local costs were only 4.5 percent below the national average.
Housing costs and an increase in miscellaneous goods also contributed to the increase.
However, Carreira said increases to utilities, housing and miscellaneous goods and services were partially offset by relative declines in health care, grocery items and transportation.
Grocery items, which were 2.5 percent above the national average in the first quarter, fell to 0.3 percent above the national average in the second quarter. Transportation costs, which include gasoline and automobile maintenance, were 2.9 percent above the national average in the first quarter, and in the second quarter fell to 2.5 percent above the average.
In Arizona, ACCRA findings show that Phoenix has the lowest cost of living due to lower utility rates, housing and transportation. The highest cost of living in the state is in Flagstaff, where residents are paying 13.8 percent above the national average.
Besides the increased cost of living, Carreira also examined new home sales in Cochise County for the second quarter.
While sales of existing homes in Cochise County were down in the second quarter, Carreira said recent figures suggest the market is at or near the bottom of the current downturn. From April through June, 284 homes were sold countywide according to the Southeast Arizona Multiple Listing Service (SAMLS), down 7.8 percent from the 308 homes sold at the same time last year.
Sales were down 12.3 percent in the first quarter of this year.
However, Benson sales were one of the downsides of the report, with nine homes being sold in the second quarter. Fourteen homes were sold at the same time last year.
However, the median price for the nine homes sold was $116,000 down from $199,396 at this time last year. Carreira said the large decline in price was the result of a large number of foreclosures in the mix of homes sold. Six of the nine homes sold in Benson in the second quarter were the result of foreclosures.
As of Aug. 1, Carreira said there were 1,031 active listings in Cochise County. This is an 11-month supply based on the pace of sales in the second quarter. The average number of days on the market for active listings as of Aug. 1 was 144 down from 158 in mid-May.
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Reader Comments
The following are comments from the readers. In no way do they represent the view of bensonnews-sun.com.
We have kept the money wrote on Aug 19, 2009 4:11 PM:
" To: where to get money
The city is paying the city manager $22,000.00 less than our last goof of a city manager. Thanks to David Lambert for setting his pay at a lower rate than the last city manager, which was grossly over paid.
Maybe we could charge back Tipton and Suagee for the $25,000.00 un-needed investigation on our current (re-elected) Mayor.
Get a life, and just move on ! ! ! "
The city is paying the city manager $22,000.00 less than our last goof of a city manager. Thanks to David Lambert for setting his pay at a lower rate than the last city manager, which was grossly over paid.
Maybe we could charge back Tipton and Suagee for the $25,000.00 un-needed investigation on our current (re-elected) Mayor.
Get a life, and just move on ! ! ! "
Christopher wrote on Aug 19, 2009 5:59 PM:
" Oh look. Just when you think things can't get worse, we get notice that not only is the city in financial problems, but on top of that, they are looking to raise our rates again.
AGAIN!!!!
In an already hurting economy, the rates for utilities never seems to go down, it always seems to go up. I live paycheck to paycheck with my family and we struggle enough as it is. How about not raising the utility rates on us again. The last time the rates went up, they increased in a huge amount. I'm sure we can expect more of the same to happen to us, and will the public get a fair vote on if the rates will go up, probably not. "
AGAIN!!!!
In an already hurting economy, the rates for utilities never seems to go down, it always seems to go up. I live paycheck to paycheck with my family and we struggle enough as it is. How about not raising the utility rates on us again. The last time the rates went up, they increased in a huge amount. I'm sure we can expect more of the same to happen to us, and will the public get a fair vote on if the rates will go up, probably not. "
Where to get the money wrote on Aug 19, 2009 8:39 PM:
" To we have kept the money,
David Lambert didn't set the pay he asked for a pay increase over what Nichols had already agreed to.
The last city manager was far more qualified than Nichols and far more compitant. Nichols has been riding on the former city managers progress that was already set in motion, and the city did not have ONE lawsuit during his employment. He was the only City manager that can make a claim to that fame.
The city saw more progress then than it ever had even his critics had high praise for his accomplishments. They just didn't like him personally. Get your facts straight.
Nichols is taking this City down a very expensive lawsuit road. Do you live in a house more than 10 years old? If you do or know anyone who does be prepared to face Nichols in court when he comes after you because your home does not meet current codes. You had better start THINKING for yourself instead of letting this news paper think for you.
What makes you think the investigation of Fenn was un needed. I hope you don;t think it is over. The wheels of justice sometimes move slowly. The fact that he has been relected only shows that voters are easily influnced by this News Paper and not facts. Your proof of that. Your own statements show you don't have a clue about what is fact and what is fiction. "
David Lambert didn't set the pay he asked for a pay increase over what Nichols had already agreed to.
The last city manager was far more qualified than Nichols and far more compitant. Nichols has been riding on the former city managers progress that was already set in motion, and the city did not have ONE lawsuit during his employment. He was the only City manager that can make a claim to that fame.
The city saw more progress then than it ever had even his critics had high praise for his accomplishments. They just didn't like him personally. Get your facts straight.
Nichols is taking this City down a very expensive lawsuit road. Do you live in a house more than 10 years old? If you do or know anyone who does be prepared to face Nichols in court when he comes after you because your home does not meet current codes. You had better start THINKING for yourself instead of letting this news paper think for you.
What makes you think the investigation of Fenn was un needed. I hope you don;t think it is over. The wheels of justice sometimes move slowly. The fact that he has been relected only shows that voters are easily influnced by this News Paper and not facts. Your proof of that. Your own statements show you don't have a clue about what is fact and what is fiction. "
Where to get money wrote on Aug 19, 2009 8:44 PM:
" To We have kept the money,
I forgot one thing. The cost for the investigation of Mayor Fenn was $18,000.00 not $15,000.00. Another failure of yours to know your facts. "
I forgot one thing. The cost for the investigation of Mayor Fenn was $18,000.00 not $15,000.00. Another failure of yours to know your facts. "
Mickey wrote on Aug 20, 2009 7:27 AM:
" When in rome-do as the romans do.
I can not argue the statistics,and they are neg.I can argue the future trend and letting them cause a bunker mentallity for our counsil.
Although the Fed stimulas was not taken advantage of by most of Cochise municipalities,we can still benefit!
The stimulas taking place is not my idea of fiscal responsability BUT its what we have so take advantage of it!!!!!!!!!!!!!! "
I can not argue the statistics,and they are neg.I can argue the future trend and letting them cause a bunker mentallity for our counsil.
Although the Fed stimulas was not taken advantage of by most of Cochise municipalities,we can still benefit!
The stimulas taking place is not my idea of fiscal responsability BUT its what we have so take advantage of it!!!!!!!!!!!!!! "
We have kept the money wrote on Aug 20, 2009 10:53 AM:
" To: where to get money...
Just to take your own advise, 'Get your facts straight'.
Our previous city manager was in office when most, in not all, of the current lawsuits were originated from. The only reason why Nichols is having to pick up the slack, is because the city fired Rasch before any lawsuits could get filed. If you want to praise Rasch for his so called 'progress' then maybe you build a bronze statue and put it in your front yard.
As for the qualifications, of Nichols vs. Rasch, I have reviewed both and can tell you that Nichols leadership qualities and ethics far out-weigh Rasch.
Agian, Get a life, and just move on ! ! ! "
Just to take your own advise, 'Get your facts straight'.
Our previous city manager was in office when most, in not all, of the current lawsuits were originated from. The only reason why Nichols is having to pick up the slack, is because the city fired Rasch before any lawsuits could get filed. If you want to praise Rasch for his so called 'progress' then maybe you build a bronze statue and put it in your front yard.
As for the qualifications, of Nichols vs. Rasch, I have reviewed both and can tell you that Nichols leadership qualities and ethics far out-weigh Rasch.
Agian, Get a life, and just move on ! ! ! "
Not so wrote on Aug 20, 2009 3:24 PM:
" To we have kept the money. You don't know your facts, you can't spell and you dont tell the truth.
Talk about get a life.
Get an education. "
Talk about get a life.
Get an education. "
PeePee wrote on Aug 24, 2009 1:15 PM:
" The city would be rolling in money if it were not for the multi law suits. Water treatment plants, golf courses, utilities and planning and zoning screw ups. Most problems have been caused by favoritism and nepotism. It still continues. Fenn and his crew lead and the lemmings follow. "
where to get money wrote on Aug 19, 2009 10:01 AM:
Then we can deduct $10,000.00 for each law suit he gets us into with his poor leadership and attacks on undeserving residents because of his own personal agenda. He will be paying us to work in no time.
Then lets start fining the Mayor and each council member and the city attorney for there involvement in poor judgements that cost the tax payers money.
This is called accountability, Semms like a good idea to me. "