Following two days of budget work sessions on April 17 and 18, the Sedona City Council elected to move ahead with city staff’s proposed budget for fiscal year 2025. Initially proposed at $100,338,000, following discussion and adjustments, the estimated final budget will be $105.5 million, or just $200,000 behind the FY23 budget, which was the largest in the city’s history.

The proposed budget includes $46,082,000 in capital improvement projects and $20,314,000 in personnel costs. Finance Director Cherie White estimated a $21 million surplus, or “excess resources available.”

As of Monday, April 22, White is no longer employed by the city.

Funding Sources

Staff’s proposed budget would be funded by $36,678,000 in reallocated balances and $69,892,000 in new revenues. Revenue sources are projected to consist of:

• $33,187,000 in sales tax, an estimated 1% increase from last year. Sales tax through February FY24 was up 5% from the same time last year.
• $10,578,000 in unspecified miscellaneous revenues.
• $9,261,000 in bed taxes, an estimated 2% increase from last year. Bed tax through February was up 8% from the same time last year.
• $6,250,000 in wastewater revenues.
• $5,349,000 in state shared revenues, an estimated 8% decrease from last year.
• $4,7689,000 in other intergovernmental revenues.
• $500,000 in contingent revenues.

“There was a theme in our survey of don’t do anything,” budget work group representative Lynn Zonakis said. On behalf of the work group, she suggested the city bring the survey question on consolidating trash services back in a year or two to “reframe that” to “help educate people” and that the city only permit construction of accessory dwelling units with kitchens if the owners agree to deed-restrict them to prevent their use as short-term rentals.

Departments

Departmental budgets as proposed prior to council additions were:

• The City Attorney’s Office will receive $1,060,350, an increase of 11.2% from FY24.
• The City Clerk’s Office will receive $820,490, an increase of 16.7% from FY24.
• Expenditures for City Council are budgeted at $292,930, a decrease of 8% from FY24. Councilman Brian Fultz suggested that council members’ stipends be adjusted for inflation annually.
• The City Manager’s Office will receive $1,254,780, a decrease of 28.5% from FY24 due to communications and tourism being spun off into a new department.
• The new Communications and Tourism Department will receive $2,566,110, an increase of 378% from FY24 due to the Tourism Department being cleaved from the City Manager’s Office.
• The Community Development Department will receive $2,930,410, an increase of 7.9% from FY24.
• The Finance Department will receive $2,420,870, an increase of 8.5% from FY24.
• The Housing Department will receive $1,291,470, a decrease of 5.2% from FY24.
• The Human Resources Department will receive $765,140, an increase of 35.8% from FY24.
• The Information Technology Department will receive $2,891,920, an increase of 9% from FY24. Capital projects will include $1,150,000 for software replacement.
• The Municipal Court will receive $1,033,850, an increase of 7% from FY24.
• The Sedona Police Department will receive $11,686,050 for operations and administration, an increase of 11.3% percent from FY24. Capital projects under SPD will include $100,000 for radio equipment and $500,000 for body cameras.
• The Sustainability Department will receive $907,370, a decrease of 10% from last year. Sustainability capital projects will include $80,800 for LED streetlight retrofits.
• General Services, which accommodates things that are not easily assigned to departments, will include $11,201,600 in spending, a decrease of 18.5%.

Arts & Culture

The city’s arts budget, which is contained within the budget for the city manager’s office, will be $198,400, an increase of 10.7% from FY24. Related capital projects will include $119,000 for art in the roundabouts.

Council had “no interest” in discussing the recent request by local arts nonprofits for the city to increase its arts funding to $550,000, with Councilwoman Melissa Dunn commenting that Sedona is no longer “a city animated by the arts.”

“The real question is, should we be?” Councilwoman Jessica Williamson asked.

“I don’t think it was fair to the council,” Williamson added. “It was not for me a pleasant moment.”

Parks and Recreation

The Parks and Recreation Department will receive $1,436,910 for operations and administration, an increase of 2.5% from FY24. Capital projects in this department will include $1,063,660 for restoration of the house and barn at Ranger Station Park, $502,880 for buildout of Ranger Station Park and $1,100,000 for Posse Grounds pickleball courts.

“Having a top-quality aquatic center would be one of those big goal dreams,” Parks and Recreation manager Josh Frewin said. He also noted that attendance at the department’s events in 2023 was around 12,000.

Public Works

The Public Works Department will receive $10,738,520 for operations and administration, an increase of 18.8% from FY24. Capital projects in public works will include $252,500 for replacing windows and doors at city hall, $181,800 for solar panels at city hall, $250,000 for ongoing work on Uptown SR 89 improvements, $13,893,610 for continued work on the proposed Uptown parking garage — the total cost of which is now estimated at $25,999,668 — $15,000 for Uptown parking improvements, $80,000 for Forest Road improvements, $300,000 for design of a pedestrian crossing of Oak Creek near Tlaquepaque, $516,200 for a road between Portal Lane and Brewer Road, $8,215,340 for continued work on the Forest Road extension, $2,594,160 for the reconstruction of Brewer and Ranger roads, $105,000 for design of a new Ranger Road roundabout, $4,295,400 for shared use paths, $50,000 for traffic cameras and $150,000 for drainage improvements.

Staff has scheduled tentative approval of both the garage and the debt financing for the garage for May 15.

Transit

The transit system will receive $3,332,250 for operations and administration, an increase of 8.8% from FY24. Planned capital projects include $520,000 for development of the proposed transit maintenance center, $236,000 for the purchase of microtransit vehicles and a new bus, $75,000 for bus stop improvements, $20,000 for beautification of the old Chevron station, $650,000 for design and construction of a SR 179 parking lot and $400,000 for intersection improvements at the sewage plant.

Wastewater

The city wastewater department will receive $6,069,020 in program costs, an 8% increase from FY24. Capital projects budgeted for the year include $401,000 for new pipelines, $3,460,620 for lift station upgrades, $3,515,500 for UV disinfection system upgrades, $155,000 on clarifier replacement, $300,000 for a new backwash system and $250,000 for a new facility plan.

Wastewater Director Roxanne Holland told the council that “we’re at the tipping point” to decide on replacing the irrigation system used to dispose of treated effluent at the Dells with either a new irrigation system or recharge wells.

“We’re having irrigation breaks frequently,” Holland said. “We had one last week that resulted in a permit violation … Operationally, recharge wells are more reliable for us.”

Former City Manager Karen Osburn, present as a temporary consultant, explained that the two injection wells the city installed in 2015 cost $5.5 million total. Osburn and White also argued that adding one additional well today would cost another $5.5 million and adding two more for a total of five would cost an additional $15.6 million.

A decision on the replacement system will be deferred to the FY26 budgeting process.

Council also directed staff to begin adjusting wastewater fees for inflation according to the Consumer Price Index, with the first phase of annual increases expected to be 3.6%.

Debt Service

The city has currently issued $42,089,000 in outstanding bonds. Payments on those bonds for FY25 are expected to be $7,210,859.

“It is making me very nervous and uncomfortable to be this much in debt,” Vice Mayor Holli Ploog said.