Your management team and staff have eliminated, reduced and curtailed expenses while maintaining a high level of services. At the same time, they have put into place policies and programs to increase revenues. Consequently, we, as a City, were able to operate at a surplus in 2010 and anticipate a small surplus in 2011. We have not dipped into our operating cash reserves and have, in fact, been able to increase our savings account. In effect, we are not into ‘deficit spending’. We are paying as we go. Contrast that with the headlines regarding the state and federal situation!

Article submitted by the City of Sedona

Council has added a Budget Oversight Commission and a Sustainability Commission to the commissions already in place. All are populated with committed, involved citizens dedicated to adding their time, expertise and voices to those of staff and council in managing the many issues confronting us. You have more representation in the process and staff has more support.

Going forward, can we sustain our current service standard and spending levels?  If we were totally self-funded, the answer would undoubtedly be ‘yes’.  But, we are not an island unto ourselves.

Forces outside our control and even outside our ability to directly influence impact our revenues and our fortunes. Simply put, we are impacted by the national economy, by national financial stability, and by state financial stability. We are to a large degree at their mercy. How well they do their jobs has a direct impact on our ability to finance our City government.

How well are the Federal and State governments doing?  We all know the substantial issues that they face.  I, for one, don’t believe that the severity of the issues can be overstated.

Sedona City Council

How our Federal debt and deficit spending is addressed will directly impact our tourism economy that generates the bulk of our revenues.  For instance, will continued deficit spending and increase in debt lead to increased costs and inflation?  If so, when and how much?  Many argue that it will happen soon and to a high degree. What will the impact be on our visitors, our businesses, on us?

Closer to home, State financial deficits will undoubtedly impact the revenues we receive from the state, currently about $2,400,000 a year for operations (21% of our operating income). The state is grappling with how to reduce this year’s one billion dollar deficit. Next year’s deficit is expected to more than double. Revenues provided by the state to Sedona will be reduced; the only question is “how much”?

One could go on and on. Suffice it to say that the short-term health and direction of our national economy is uncertain at best.

For the purposes of financial planning and the sustainability of City services, one simply needs to know that these are fragile, perilous times that need to be respected. Though economic activity has increased from 2009, we have not yet re-established our national economic fundamentals and turned a corner based on stable footings. This is not something to fear, but we must remain vigilant and be prudent and frugal in managing our financial affairs.

Now is the time to continue to be cautious when considering expenditures with long-range financial implications. It is not the time to draw down our reserves nor is it the time to commit future, uncertain revenues to nonessential, unnecessary projects.

Let us go slowly, maintaining our basic services while monitoring the Governments above us to be reasonably sure that they have righted their ships before we sail off on adventures that commit the city purse.

Thanks to the continuing hard, intelligent work of your City staff, your council and its commissions, your City is well positioned with careful, conservative financial management and healthy reserves. Let’s stay the course.

This Eye on Sedona column is written by Sedona City Councilman, Mark DiNunzio, and the opinions expressed are not necessarily those of the Sedona City Council.

For the best Arizona news and views, read www.SedonaEye.com daily!