Like any form of life, communities are dynamic, evolving over time as residents and businesses transition in and out of a community. Through this evolution, the one constant is the infrastructure which supports the local community. Streets, drainage, water, wastewater, emergency services, open space, pedestrian connectivity are some of the topics which have been and continue to be part of community conversations. Each of these elements are dimensions to a community’s quality of life. Depending on a resident’s preferences, they may weigh the importance of each of these items differently. The Town’s elected representatives, the Town Council, are tasked with reconciling sometimes competing interests associated with managing this infrastructure. Some may agree with an elected official’s reconciliation while others may disagree with their thoughts. However, as I have observed over the past two decades, the local elected representatives that have transitioned through the community have done their best to learn and serve their fiduciary roles of addressing the broader community interests.
This infrastructure is one of the largest liabilities of any community. For example, the Town of Carefree has 110 miles of public streets which require significant and regular maintenance. The desert sun and low humidity result in a process called oxidation which dries the asphalt causing cracking and the deterioration of the streets. Without a continuing street maintenance program, these streets become irreparable which results in significant reconstruction costs which will be in the $10s of millions or more than 5 times the costs of regular street maintenance projects. This is why the Town conducts regular cycles of street maintenance projects. To fund these projects, the Town takes its one-time annual operational savings and places them into a restricted fund for these capital improvement projects (infrastructure maintenance). Over time, these one-time savings which contributed to funding this infrastructure will be exhausted as the Town is approaching the buildout of undeveloped properties within the community. This revenue is from the associated construction sales tax from the construction of new buildings. Therefore, it is critical to maintain these dedicated funds within this restricted account for the reinvestment in one of the Town’s largest liabilities, its aging infrastructure.
Over the upcoming fiscal year 2023-2024, approximately $7.4 is forecasted in capital improvement expenditures. These infrastructure projects include a street maintenance project which will cover approximately 25% of the Town’s 110 lane miles of public streets, the replacement of the Town’s fire truck, a drainage culvert replacement, pedestrian crosswalk safety improvements, town center improvements, and an extension of the capital aid and advance loan to the water company to install a new waterline in the original Carefree Water system to support the addition of fire hydrants and upgrades to the Peaceful Place pump station which will provide additional fire protection for properties in the original Carefree water service area and recently annexed areas. From a funding perspective, up to $3.2 million in grants are anticipated as well as the use of restricted Highway User Revenue funding to offset these expenses. Additionally, approximately $4.3 million is forecasted from the Town’s Capital Reserves to pay for these investments in the infrastructure that serves Carefree residents.
Human capital is essential to the operation of any organization. Within the Town of Carefree there are a total of 17 full-time positions. This includes the municipal courts, public works, community development and administration. This core staff is one of the smallest municipal staff within the state. As a result, and due to the workload, each staff member is tasked with a diversity of responsibilities. As with any organization with limited staff, consultants are occasionally used to supplement staff when special projects are identified. This approach permits staff to focus on core tasks and address the workload.
One of the largest annual operational investments is associated with public safety. There are two main components to public safety, law enforcement services and fire and emergency medical services. These services are contracted out to create operational efficiencies. Law enforcement is provided through a contract with Maricopa County Sheriff’s Office (MCSO). This contract is based upon a County established cost recovery model to cover the community’s desired level of law enforcement services. This contract is set to expire at the end of the current fiscal year, the updated contract is based on the past law enforcement service levels. The contract typically contains two, 3-year terms. The master contract with Rural Metro was originally established in 2007. Over the past two years, there has been an extensive community dialogue about pivoting to a regional approach to the delivery of fire and emergency medical services. The Carefree voters overwhelmingly supported continuing the relationship with Rural Metro over joining the regional system. As a result of this citizen vote, the existing contract with Rural Metro will automatically continue for an additional 42 months.
More specifically, the overall operational budget forecasted for this next fiscal year will be approximately $7 million. Of that over $2.8 million will be invested in public safety, approximately $2 million in human resources, and about $1.9 million in general operations. To fund these annual expenses, the Town’s general fund has three main funding streams: Municipal Sales Tax, State Shared Revenue and Cost Recovery/User Fees. Of the Town’s anticipated $7.6 million in annual revenue approximately, $4.4 million (58%) is forecasted from municipal sales tax. $2 million (26%) from state shared revenue and $1.2 million (16%) from cost recovery fees. It is important to note that state shared revenue have been inflated with one-time revenue associated with the new proportioning of the flat income tax which has been recently implemented. Additionally, the forecasted surplus (operational expenses over revenue) is a result of one-time revenue associated with construction sales tax. This surplus helps to offset expenses paid out of the capital reserve fund which are projected to be over $4 million this next fiscal year.
In summary, the Town continues to be managed in a fiscally conservative and responsible manner. Indeed, with an approximate $7 million operating fund, Carefree has one of the smallest municipal budgets within the state. As the community’s infrastructure ages, it is important to continue to maintain these assets to offset higher replacement costs. The Town has historically saved to properly fund and manage its aging infrastructure. These savings are no different than a Homeowner’s Association Capital Reserve Fund which is earmarked to fund a subdivision’s aging infrastructure. In conclusion, the Town’s budget is balanced and provides for efficient core municipal services while reinvesting in its aging infrastructure.
Gary Neiss, Town Administrator