BISBEE — When the city decided to take out bonds to pay down the Public Safety Personnel Retirement System debt last year, it created a problem as the $21 million from the bond sale caused the city to exceed its 2022 alternative expenditure limit by $14 million.
As explained by City Attorney Joe Estes, the city’s Home Rule Option did not allow for the exemption of these types of long-term debt expenditures, even though such exemptions are allowed under the state Constitution.
“However, the city’s Home Rule does allow a declaration of an emergency to exceed the limitation with the requirement that the following fiscal year’s expenditures will be reduced by the amount of the over expenditure,” he said. “We expected the payment to be extended over the 20-year life of the debt.”
In May the city sold the bonds to help pay down the $25.1 million unfunded liability owed to PSPRS and lower its payments. The move will save the city $20 million over the next 11 years. The mayor and council approved the issuance of $21 million in bonds at the rate of 5.6% interest, but the annual audit in January showed the bonds caused the city to exceed its fiscal year 2021–2022 Alternative Expenditure Limitation by $14 million.
The state sets a formula for determining the city’s expenditure limitation and that amount is not to be exceeded.
To correct the problem, Mayor Ken Budge and City Council members Leslie Johns, Mel Sowid, Anna Cline, Frank Davis, Joni Giacomino and Juanetta Hill held the first public hearing to declare an emergency under the city’s Home Rule Option.
The $14 million has to come out of the 2022-23 budget and since a $25 million grant the city sought to repair and replace sewer lines in Old Bisbee was not awarded, City Manager Steve Pauken said the budget could take the $14 million hit.
Two public hearings must be held before the mayor and council can declare an emergency. No one from the public offered opinions on the measure at the first meeting.
The next hearing will be conducted during the March 21 meeting.
The city has low-income programs that reduce monthly sewer and garbage fees for those who qualify. While it has been a blessing to those who are indeed in need of help, there are those who “game the system,” as Pauken said.
To prevent those who would take advantage of the city’s program, there will be new guidelines and requirements for residents who apply.
“We have to clarify the residents are actually low income and deserve the reduced fees,” said Estes.
Those seeking the lower rates must meet the same program minimum qualifications and verification requirements as established for the low-income sanitation and sewer program.
Those who apply and receive the discounts must recertify eligibility for the program each year by submitting a declaration attesting to continuing eligibility and provide the required proof of income.
The account holder must provide the following documentation for the program: proof of U.S. citizenship or lawful permanent residency such as a birth certificate, a Certificate of Naturalization a U.S. passport or a Social Security award letter if receiving benefits or a Permanent Resident Card. The applicants must provide proof of residence.
The account holder must provide income verification and that of all people over the age of 18 living in the residence. Income verification documents will include at least two or more of the following, as determined by the city: a copy of most recent filed federal income tax return, copies of the most recent W-2 forms, three months of consecutive paystubs for all employment and three months of consecutive bank statements for all bank accounts.
If a person meets all the requirements, they will receive a discounted sewer and sanitation rates of 30% of the residential fee provided income for the household is at or below 50% of the federal poverty guidelines for the size of household.
If the provided income for the household is no more than 100% of the federal poverty guidelines for the size of household and if the account holder provides proof of income and eligibility documentation, a sewer and sanitation rate of 60% of the residential fee will be in effect.
If at any time the residence shows no water usage for any 30–day period, the account shall immediately be removed from the program and standard utility rates shall apply. The account holder will not be allowed to re–enroll in the program for a 12–month period following removal.