Safford staff outlines intergovernmental agreements, finds inconsistent cost-sharing methods

City of Safford staff used the Nov. 18 work session to present a comprehensive review of intergovernmental agreements (IGAs) and nonprofit contracts ahead of the FY2025 budget cycle, saying the goal is to clarify how costs and in-kind services are shared among Safford and neighboring jurisdictions.

City Manager framed the review around two themes: cooperation (how services crossing jurisdictions are structured and enforced) and revenue sharing (whether Safford should share local revenues with neighbors). Staff identified examples where agreements use differing allocation methods: population-based formulas (dispatch, animal care), case-load-based allocation (municipal court), CPI indexing for annual adjustments (western Urban CPI used in some county contracts), and extensive in-kind contributions (Mount Graham golf course effluent and sewer costs).

Presenting population and revenue data, staff gave 2021 population estimates used in contracts: Safford 10,324; Thatcher 5,332; Pima 2,921; county 7,248. Staff reported Safford collected about $10.177 million in local sales tax in the last fiscal year (presentation text), with sales-tax-per-resident figures lower than some neighbors; state-shared revenues and local sales/property tax together were presented as the bulk of the city’s revenue. The Wayfair marketplace-facilitator rule was cited to explain why online sales tax is allocated by purchaser location.

Staff reviewed five specific agreements:

- Dispatch services: Parties include Safford, Graham County, Thatcher, Pima and Eastern Arizona College. The county contract allocates costs by population and includes direct, indirect and depreciation expenses; since FY22-23 the contract has used a Western Urban CPI index for annual adjustments.

- Animal care: Graham County provides sheltering and impound services for the municipalities (EAC excluded). Staff said the animal-care IGA uses population percentages and includes direct and indirect costs but no depreciation; the transcript lists a current-year contract figure rendered as '7297' (context unclear in presentation). The agreement also uses Western Urban CPI for adjustments and is up for renewal in January 2025.

- Municipal court: Thatcher provides consolidated municipal court services for Safford, Thatcher and Pima. Allocation is based on cases per jurisdiction; staff reported Safford accounted for about 61% of cases in the reported year and cited the court's FY25 budget figure given by Thatcher as $491,628. Staff said Safford owns and maintains the court facility and only direct expenses are currently allocated across parties; they noted difficulty obtaining up-to-date case-count data and that Safford may be billed at a higher share than reflected in budget estimates.

- Mount Graham Municipal Golf Course: The IGA jointly manages the course with Thatcher and TR Golf Management. Staff said the FY25 operating subsidy (the difference between operating cost and revenue) was $293,100 and that Safford bears large in-kind costs—reported as $490,000—for effluent operations (lift stations, pumps) that deliver reclaimed water to the course. Thatcher's contract pledges up to $60,000 in utility/in-kind support; staff said Thatcher has not historically reached the cap.

- Library: There is no formal IGA for library services. Staff said Graham County contributed $50,000 to the library this year and reported the library's general-fund budget as $886,000; county contributions are set annually.

Staff concluded that IGAs are inconsistently structured (different methods for allocation, differing inclusion of depreciation and indirect costs), which can produce unequal cost burdens over time. The presentation closed with a recommendation to discuss contract specifics in executive session for negotiation strategy and to capture any sensitive staffing or pricing information.

Council approved closing the public work session and reconvening in executive session after a short break to discuss those contract details.

(Exchanges: Several exchanges between council members and staff focused on whether allocation by population or case load is fair in each instance and on the availability of up-to-date data for budgeting; staff repeatedly recommended revisiting calculation methods during contract renegotiation.)