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Flagstaff finance staff: General fund revenues roughly $83 million; one-time gains lift short-term capacity
Summary
City finance staff told the council the general fund operating revenue is about $83 million, with sales tax, state‑shared revenues and other sources balancing the mix. Staff said one‑time gains and vacancy savings create limited one‑time capacity but ongoing structural pressures remain.
Rick Tatum, finance staff, told the Flagstaff City Council at its Feb. 13 budget retreat that the city’s general fund operating revenues are about $83,000,000 and that today’s revenue picture shows modest growth but also volatility in several categories.
Tatum said approximately 37% of the general fund revenue comes from the city’s sales tax, about 39% from state‑shared revenues, and roughly 24% from other categories such as property tax, franchise fees, permits and charges for services. “The operating budget revenues for the general fund is about $83,000,000,” Tatum said.
The council was shown a multi‑year sales tax forecast: actuals through 2024, prior year projections, and updated estimates. Tatum said the updated projection line was above last year’s projection in places, and that the city ended FY2024 roughly $640,000 above the revenue estimate, which staff are treating as one‑time revenue. He cautioned the council that figures such as building permits and investment earnings can spike year to year and should be budgeted as one‑time resources when they are not expected to recur.
Finance Director Brady Sudo told the council staff’s review of fixed costs shows modest year‑to‑year increases. He said pension and benefit costs are broadly manageable in the near term but noted specific cost pressures: motor vehicle parts and some utilities are tracking above budget. “We are expecting to exceed budgeted revenues in fiscal year 2025 by $2,440,000,” Sudo said, and staff identified roughly $11,190,000 in one‑time capacity and $1,900,000 in ongoing capacity available for the FY2026 budget process, with an additional optional property tax increase generating about $910,000 if council chooses that route.
Council members asked staff how vacancy savings are treated; Sudo clarified that vacancy savings are counted as one‑time resources and are not assumed to recur year to year. He also flagged several funds outside the general fund that present medium‑ to longer‑term risks—solid waste and the airport fund among them—which staff will address in tomorrow’s “balancing the needs” session.
Ending: Staff recommended that the council treat most of the recent revenue gains as one‑time funding when deciding FY2026 allocations and use ongoing revenue only for recurring commitments. Staff said it will present further detail in division reviews and the March capital improvement workshop.
