Fountain Hills CFO outlines FY25 results, warns of three fund shortfalls as council sets priorities

Paul Soledinger, Fountain Hills’ chief financial officer, opened the council retreat with an overview of Fiscal Year 2025 revenues, departmental spending and the town’s conservative projection approach. Soledinger said the town’s major buckets performed unevenly: the streets fund brought in about $5.2 million; the capital projects fund received roughly $2.1 million in ongoing revenues; and the general fund receipts included roughly $28.5 million in sales and other local revenues. The town’s total reported revenues were discussed in two ways in the presentation; Soledinger repeatedly emphasized the distinction between townwide totals and the general fund when answering council questions.

Soledinger said the town intentionally uses a three‑step projection process—(1) establish a trend line from prior years, (2) reduce that trend by a conservative 5–15% margin, and (3) manually modify for known, nonrecurring changes—to protect reserves against volatility in construction and leisure services receipts. He told the council the method creates larger general‑fund excess reserves that staff can use, within legal limits, to cover shortfalls in other funds.

Staff identified three structural funding shortfalls. First, the capital projects and facilities reserve is underpressured: ongoing revenues of about $2.1 million were insufficient to match recent capital spending. Second, the streets fund currently budgets about $7 million–$7.7 million for repairs but brings in roughly $5 million of ongoing revenues, producing a persistent gap. Third, the Lake Liner capital project carries an estimated total cost of about $17 million; the town has saved roughly $6.6 million toward that need and faces an unfunded remainder of approximately $10.4–$10.5 million depending on final estimates.

Soledinger also flagged a near‑term revenue gain tied to bringing the fire department in‑house: fire‑insurance premium tax distributions were small while the town contracted with Rural/Metro, but after transitioning to an in‑house department the state will distribute a larger share to the municipality. Soledinger said Fountain Hills received about $95,000 in FY25 but expects a larger payment (he cited an adjusted distribution that will be made to local governments, projecting the town will receive roughly $540,000 in the current year and a new baseline of roughly $330,000 a year thereafter) and that those dollars are legally restricted to fire‑retirement costs.

Councilmembers asked for clarifications on the construction sales‑tax share (staff explained the rate structure and the labor deduction) and debated whether the projection methodology makes budgets too easy to beat or whether it is a prudent protection of services. Several councilmembers praised the town’s track record of delivering major capital work while maintaining reserves, and staff reiterated the approach was intended to preserve service levels without triggering reductions in force.

Next steps: staff will carry the conservative projections forward into FY26 planning and return with more detailed departmental requests as the budget process advances. The council indicated it wanted further discussion of priority tradeoffs—especially streets and Lake Liner funding—at future workshops.

Sources: presentation by Paul Soledinger at the retreat and council Q&A.