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Tombstone’s budget: The numbers don’t add up

By JULIANNE STANFORD

Tombstone Bureau Chief

Tombstone is a wealthy city – or so it appears on paper.

For each of the past three years, the City of Tombstone has planned for an income of more than $6 million to be spent on annual expenses such as the city council, public services and infrastructure repairs.

But in reality, the city has been spending only half of that amount by the end of the year because the annual revenue is falling drastically short of the estimates.

An analysis conducted by The Tombstone Epitaph of the city’s internal final financial documents found that Tombstone’s revenues have been overestimated by at least $3 million each year for the last three years, giving the city the appearance that it has more money to spend than it really does.

Discrepancies range through amounts large and small, including an estimate that listed expected income of $15,000 from the sale of memorabilia in the 2016 fiscal year, ended June 30, when the actual revenue turned out to be $186.  And out of a $600,000 grant budgeted for building renovations, the city actually received a mere $124,000.

Overall, the city projected it would have revenues of $6.8 million in 2015, but the actual revenue was $3 million. In 2016, the city actually received $3.1 million of what it had estimated would be $6.4 million in revenue.  As a result, the city spent $3 million of what had been estimated would be $6.8 million in 2015 and $3.2 million out of $6.4 million in 2016.

It appears the numbers for the current fiscal year are on track to be no different, according to The Epitaph’s analysis.

The budget, which was unanimously approved at a City Council meeting on June 14, estimates the city will have an income of $6.2 million and spend $6.1 million throughout the current fiscal year, which runs from July 1, 2016 though June 30, 2017.

When Tombstone constructs a budget for a coming year, planners look back at their income and expenses from prior years to predict the amounts they should include for the new year, according to Tombstone’s Financial Director Ruben Villa.

However, the city has never spent over anything close to $6 million since 2009, which is the earliest posted budget on the city’s website. But this number persists annually as the estimate foundation.

And so, the $3 million difference that popped up in 2015 and 2016 will likely manifest itself again in 2017.

While it’s easy enough to look at the numbers and see the pattern of overestimation, Ruben Villa said the figures aren’t quite so black and white.

“A budget is no more than a plan, a set limit, and we try to make it as flexible as possible so the City Council can make decisions within those limits,” Villa said. “Our budget is our best guess at what we think we know at the time and what the council might want to see during the fiscal year.”

That flexibility is the culprit behind the huge difference seen between the budget estimates and the city’s actual finances at the end of the year. The city also incorporates grant money into the budget that has yet to be awarded.

And so the $3 million extra in the budgets at the end of each year actually never existed in the first place.

Members of the Tombstone Vigilantes reenactment group play a hand of cards during a reenactment on Allen Street in Tombstone, Ariz. on Sunday, Sept. 25, 2016. The groups performs every second, fourth and fifth Sunday each month. (Photo by Julianne Stanford / Arizona Sonora News Service)

Members of the Tombstone Vigilantes reenactment group play a hand of cards during a reenactment on Allen Street in Tombstone, Ariz. on Sunday, Sept. 25, 2016. The groups performs every second, fourth and fifth Sunday each month. (Photo by Julianne Stanford / Arizona Sonora News)

Last year’s budget projected $3.7 million in alternative sources of revenue other than taxation. But at the end of the fiscal year, the city had made $384,000, which is just 10 percent of the estimate. In 2015, of the budgeted $4.2 million, the city received only six percent of that estimate, with an income of $252,000.

Similarly, the 2017 budget has $3.3 million of alternative funding built into it.

Villa said the difference between the budget estimates and the end-of-the-year realities should not be a cause for concern.

“When we’re building our budget, we have no idea what grants are out there, but we know what our needs are.” Villa said. “We plug in as best as we can what we believe we’re going to be looking for to meet our obligations in grants.”

If the city were to have applied for a grant in December and it wasn’t factored into the budget during the planning stages in March, it wouldn’t be able to use the funding that year without spending less on something else, he explained.

“The reason we put those numbers in is just in case the money is available — so you’ll see that huge gap at the end,” Villa said. “Maybe we were too optimistic on a few line items, and [the grants] just didn’t happen.”

A former City of Tucson budget official who is currently an adjunct professor at the University of Arizona’s School of Government and Public Policy said those grant estimates throw off the balance of the budget. The source spoke with The Epitaph on the condition of anonymity due to their previous involvement with the city government.

“You don’t budget on need, you budget on anticipation of the resources you’re going to have to spend on resources and programs for your citizens,” the former official said. “A budget is a projection of what your revenues are going to be and what your expenditures are going to be, it’s just not a projection of need.”

The former official said those overestimations might not be as beneficial to the city as Villa suggests.

“What’s the point?” that person said. “If they’re consistently not getting any of these grants, why would they put that money in there? Why would they continually overstate their budget year after year if they’re not getting this money? A budget is plan, and if they’re not getting the money, it doesn’t serve a purpose.”

Villa said residents should be happy the government isn’t spending all of the money it budgets for.

“It’s not a reflection of services not being delivered because we didn’t spend the money,” he said. “In fact, I would argue it actually reflects the efficiency of the city in that if you put money in the budget, and we came under budget, and we were still able to provide those services.”

The former City of Tucson budget official said there isn’t a practical reason to continuously include large  grants estimates in the budget.

“It misrepresents the size of your budget to your citizens. They’ll be like ‘Woohoo we live in a $6 million town,’ but then at the end of the day it’s a $1 million town,” the official said. “It’s not a meaningful number, unless you drill down and explain to them what you’re doing. But if it happens year after year, then why are you doing it?”

Villa said there isn’t any intent to mislead the residents of Tombstone.

“We don’t do it to create the impression that we’re inflaming the budget for the sake of just inflating it because there’s really no benefit to it,” Villa said. “Even if we said it was $10 million, all it really does is create a gap in the opportunity if the money is available.”

 

JulianneJulianne Stanford is a senior pursuing a degree in journalism and political science with an emphasis on international relations at the University of Arizona. After graduation, she hopes to cover international news for print or public radio. Julianne is an Arizona native, born and raised in Phoenix, and enjoys hiking, traveling, playing a board game or reading a good book with a big cup of black coffee in her spare time.