Advisory committee hears options to close Flagstaff public-safety funding gap: bonds, sales tax, levy and fees on the table

Flagstaff’s advisory committee on public-safety funding spent its meeting weighing how to close recurring and capital shortfalls for police, fire and related services, as city staff laid out a menu of one-time and ongoing revenue options and long-range cost projections.

The committee heard that local sales and intergovernmental revenues together account for the bulk of the city’s general fund, and that police and fire are the largest ongoing expenditures: staff pegged their combined share at roughly 46% of general‑fund spending. Budget Director Heidi Dairberry told the committee that cost‑allocation reimbursements to the general fund total about $86 million and that ongoing transfers out include a pension bond transfer of more than $8 million per year (the pension bond transfer expires in 2040).

Why it matters: committee members said the city faces a sustained mismatch between ongoing operating needs and available recurring revenue. Staff presented a 10‑year view showing multi‑year gaps bundled across capital and operations — examples included approximately $220 million for fire and $245 million for police on a 10‑year tally — and urged the group to prioritize needs and match them to funding tools that are either one‑time (bonds, impact fees, grants) or ongoing (sales tax, primary property tax levy increases, user fees).

City staff and finance director Brandy Suda emphasized that grant programs (such as federal COPS or SAFER awards) can seed new officers or firefighters but are temporary and require the city to find ongoing funding when grants expire. Suda summarized the mechanics of the primary property tax levy: state law limits the yearly levy increase to 2% and, because the city has not raised the levy in recent years, the city currently has roughly 14% unused capacity that could be phased in over multiple years (staff estimated that capturing the full remaining capacity would yield roughly $1 million annually).

On state policy pressures, staff warned the committee that recent developments could shrink state‑shared revenues: Dairberry said the combined effects of the Santan Valley incorporation and possible “tax conformity” changes at the state level could reduce the city’s state‑shared income‑tax receipts by about $800,000 a year if full conformity is adopted.

Tools discussed: staff organized funding options into one‑time and ongoing categories. One‑time options include issuing voter‑authorized general obligation bonds (secondary property tax) for capital projects and drawing on authorized but unissued bond capacity; development impact fees (statutorily required to be reviewed every five years) can fund growth‑related capital but not ongoing personnel or operating costs; and targeted grants or state appropriations can fill specific capital gaps. Ongoing options discussed include modest increases in the primary property‑tax levy (subject to the 2% cap per year), targeted user‑fee increases under a new five‑year cost‑recovery policy (general‑fund user fees total about $6.3 million annually), the RIP water‑infrastructure fee (0.53 per thousand gallons, roughly $1.27 million annually), airport fees and a transactional‑privilege (sales) tax measure (staff noted a 1% sales tax commonly yields tens of millions in many cities and Flagstaff’s existing 1% TPT measure expires in 2035).

Trade‑offs and constraints: committee members pressed staff on distributional effects and economic consequences. Tourism and hospitality stakeholders warned that Flagstaff’s combined restaurant/bar and lodging tax burden — and a higher local minimum wage — can raise the cost of visits and affect local businesses. Staff also cautioned that some tourism‑oriented levies (hotel/tourism taxes) are limited by state law in how the revenue can be used; a legal opinion would be required to confirm whether revenue could be redirected to public safety.

Accounting clarifications: members asked whether transfers‑out appear in the general‑fund pie chart; staff explained those transfers are appropriations that fund expenditures recorded in other funds and that the overall city budget includes those outlays in a separate consolidated chart. Staff also confirmed that many current operating costs are being temporarily supported by one‑time funds in some years — a situation the committee flagged as unsustainable.

Next steps: staff said they are preparing tiered priority lists (tiers one through five) across departments, a 10‑year deployment/timing model for capital and operating costs, and community‑survey questions that could test support for specific ballot packages. Timing constraints were clarified: sales‑tax ballot measures must appear in November even‑year elections; general obligation bond measures (secondary property tax) may be scheduled differently. Committee members requested scenarios showing the per‑household and business impacts of levy or sales‑tax options and asked staff to return with prioritized, costed packages and survey language.

Representative quotes from the meeting include: “We have about a little over $86 million of ongoing resources coming into the general fund annually,” said Brandy Suda, the city’s finance director; Budget Director Heidi Dairberry said of state action, “...that’s about a $800,000 impact annually.”

The committee did not take formal votes. Staff will return with prioritized scenarios, draft survey questions and a clarified timeline for any potential ballot placement.