During the Study Session on January 10th, the City Council received information on a rate study done by the City’s Solid Waste and Recycling division. This draft report recommends a rate increase over the next several years, due to the increased volume along with inflation impacts. That will help to pay for planned capital upgrades and staffing needs.
These rate increases will be brought to Council at the January 24th Council voting meeting. If they are approved, the new rate of $20.33 which is only a $1.33 increase per month will be in effect as of March 1, 2023. That rate will be incrementally annually increased through January 1, 2028.
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Last Tuesday, we received an update from our Finance Director Mark Woodfill on the status of the Public Safety Personnel Retirement System (PSPRS).
Woodfill shared with Council the June 30, 2022 Actuarial Valuation of the PSPRS fund. Woodfill explained that the City had to make projections as to when the fund balance liability would be drawn down to $1.5 million. Prop 443 had a built-in sunset clause specifying when the sales tax would end, which was when the PSPRS fund balance liability was at $1.5 million or less.
PSPRS provides an annual report every December that is lagging by about six months. Because of that, the numbers Woodfill showed were from the end of June. When Fiscal Year 2022 ended, the City’s fund for Prescott Fire and Prescott Police was at 94.4% funding. Since then, the City of Prescott collected another six months of the sales tax, before retiring it for good on December 31st.
Over the last five years, the City of Prescott has made additional contributions from the General Fund balance. The proceeds from the sale of Fire Station #7 and the Hotshot Buggies also went towards the PSPRS balance. In addition, the State of Arizona contributed $7 million, of which we’ve already received $4 million with another $3 million committed to the City of Prescott in future years. So, right now, as of June 30, 2022, our PSPRS fund balance stands at $84,576,720.
Woodfill explained that we will get final numbers next year, stating, “…We will be very close to the $1.5 million liability balance… We will do the best we can, and I think we did that by shutting the tax off when we did.”
However, as Woodfill reminded Council, the Retirement Systems funding balance depends on earnings generated by the investments. The net earnings since the year 2000 have fluctuated greatly over that time.
I think this is a terrific achievement that the City’s residents and all of our tourists helped us accomplish, because they were the ones that contributed significantly to the sales tax to allow us to get us to this point. It is certainly a major achievement and milestone.
I do want to caution the City, however, that the PSPRS Investment Board continues to underperform and overestimate their average return, which we can see just from looking at this year-end report. Although they have made some modest improvements in their investment team, they still spend an extraordinarily high amount in administrative overhead on outside investment advice.
I believe we must anticipate that the City of Prescott may have to continue to offer additional contributions to ensure that our unfunded liability doesn’t start growing again.
Woodfill said that the City is planning to establish a PSPRS stability reserve fund, in order to address those fluctuations. This will be explained as the budget process begins this spring.
I also want to point out that I’ve been looking at some receipts in the last few days, and some retailers are still charging 9.1% sales tax. Since we have stopped that .75% sales tax, our new overall tax rate in the City of Prescott is now 8.35%.
Although that may not have a big effect on your chai lattes, if you go out and buy a new car, I’m telling you, it will definitely make a big difference.
Woodfill said the City Finance Department is calling those retailers that haven’t changed their tax rate yet to remind them to do so. If you encounter a sales tax error, please notify our tax compliant analyst at city hall, 928-777-1231.
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Remember, there are four City Council Seats to fill in the August primary election this year, as well as the Mayor’s seat.
If you are interested in running for office, your first step is to meet with our City Clerk and submit a Candidate Statement of Interest.
The nomination filing period begins on March 4, 2023 and will close on April 3, 2023. You can find more information HERE.
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Due to favorable weather and moisture conditions, pile burning in the Bradshaw Ranger district has begun and will continue through the end of January. These operations significantly reduce the fuel sources in the surrounding forrest and contribute greatly to reduce wildfire risks in our community. Depending upon wind conditions, there may be some minor air quality impacts, so we ask for your patience during this fire safety period.
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The City of Prescott has been and will continue experiencing a series of winter storms over the next few weeks. The Streets Division reminds you to, “…prepare for this event by stocking up on at least 3 days’ worth of essentials such as medications, food, water, alternate heating sources and be sure to have electronic devices charged to full capacity in case of any prolonged power outages.”
Whether we receive rain or snow, roads are slippery and can be dangerous. Stay home if possible, but if not, please drive safely.
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It was my honor and privilege to read the proclamation recognizing the 20th Anniversary of the US Vets organization here in Prescott. This is an outstanding accomplishment, they provide such great services to our veterans community and I want to congratulate them once again.
