Youngtown leaders consider disbanding cash-strapped town
With key services already cut, W. Valley town considers disbanding

47 comments by Dustin Gardiner - Mar. 5, 2012 10:37 PM
The Republic | azcentral.com

A standing-room-only crowd crammed into a Youngtown meeting room as the town's leaders debated disbanding their 50-year-old police force.

Some residents yelled at council members. Others wept in the back of the room. The mayor, his temper flaring, threatened to have the chambers cleared.

Three hours later, six police officers left without jobs. Each was given a month's pay and told to hand over gun and badge.

The December move was a sign of just how desperate things have become in the northwest Valley town, as a budget shortfall endlessly chips away at public services and, perhaps eventually, the town itself.

John Cosmos, owner of Youngtown Cafe, which faces the main street alongside an Ace Hardware store and other small businesses, said diners have been fretting about the town's future since the vote late last year to ax the police force.

"People are worried, you know," Cosmos said. "You might as well call it a dead town."

Town leaders, facing a financial quagmire among the worst in the Phoenix area, are considering once-unthinkable options undertaken by only a few cash-strapped cities in the country.

The town could make further budget cuts so steep that most services are gone. It could seek to be annexed by a neighboring city.

Or it could disincorporate, ceasing to exist as its own town and returning to be a piece of Maricopa County.

It's the first modern Arizona town or city to openly consider calling it quits because of money woes.

Youngtown's budget problems are exacerbated by its microscopic size. The town budget is so small that there's not much left to cut. Most of the bread-and-butter services that cities typically provide, such as police protection, garbage pickup and park maintenance, have already been outsourced.

The town's commercial tax base is limited. Land-locked between Sun City and El Mirage along Grand Avenue, the town has nowhere to grow to add a new development or major shopping center. The economic downturn has choked what revenues there are from the few businesses.

Residents don't pay a city property tax. And although Youngtown was once a retirement community, a legal decision stripped it of its age-restricted status. The arrival of younger residents and families brought an increasing demand for public services such as police and code enforcement.

The result is an operating cost that is projected to inevitably outpace revenue, with no apparent scenario for change.

Before the police vote last year, Mayor Mike LeVault painted a grim scenario for the town: a car driving toward a cliff in the distance. Unless the town of 6,100 changed course, he said, it would have exhausted its approximately $1.8 million in reserve funds within a few years.

"I can see the cliff down the road -- two years, three years," LeVault said at the time. "In its current form, this town is not sustainable long term."

He said that although the decision saved Youngtown from financial collapse, the town still lacks the fiscal stability needed to ensure survival.
Bigger money woes

The disbanding of Youngtown's police force is the latest in a series of cuts that have shrunk its workforce from nearly 40 employees seven years ago to 23 today. But the downsizing hasn't solved the long-term money problem.

Town Manager Lloyce Robinson said the town's budget for the current fiscal year, which ends June 30, projects expenses that exceed revenue by about $183,000. The town would have to cover the difference by making further cuts or pulling from its savings account of $1.8 million.

"You do the math," Robinson told a fellow town manager who was called her office on a recent afternoon over rumors that the town was going broke.

At the current pace, the town has several years before its reserves could be depleted.

Youngtown's $4.7 million budget covers the basics: a town manager, public-works department, finance director, code-enforcement officers, town clerk, Municipal Court and other office workers. The only non-core service is the town library and museum, which cost about $100,000 a year to operate.

Its revenues are far smaller than communities of comparable size such as Litchfield Park, Guadalupe and Tolleson. Those have annual budgets of more than $7 million each and still offer recreation programs and other amenities that Youngtown cut years ago.

More than 25 percent of Youngtown's budget had gone toward its fledgling police force. Since the town cut the force and contracted with the Maricopa County Sheriff's Office for patrols, Robinson estimates it could save more than $400,000 by the end of the fiscal year.

This would leave the town with a projected deficit of about $183,000 this year.

Before the vote to cut the police force, the town had estimated a $583,000 shortfall this year. Although the cut brought a savings, Robinson said, deficits are likely in future years if the revenue equation isn't changed.

Town leaders say their decision to outsource policing was a matter of coming to grips with the reality that they are too small and revenue-strapped to afford their own.

Some have long questioned if they could maintain a properly trained and equipped department.

That fear rose to the forefront in August, when Police Chief Terry McDonald warned the council that a lack of resources was putting his officers at risk.

Two years ago, an outside consultant warned that the department was not equipped to respond to major crimes and did not have enough officers to ensure 24-hour police protection.

After months of consternation -- and McDonald's departure for a job in a neighboring city -- the Town Council voted unanimously in December to disband the police force. Council members said they could no longer put officers on the streets knowing that they could be in harm's way, with the town bearing the liability.

Critics said Youngtown should have cut everything else before booting its police force, including its library and salaries for the mayor and council members, which are $1,000 per month for the mayor, $600 for the vice mayor and $500 for council members.

There is now a bitter rift in town, and some residents have threatened to file a recall campaign against the mayor and council.

Residents said cutting Youngtown's Police Department was akin to removing a piece of the town's identity.

The mayor disagrees, seeing the vote as an unavoidable step toward a secure future. He said the town still has a long way to go to build its fiscal "firewall."

"I think what it does, at the very least, is buy us time to regroup," LeVault said. "That one decision on policing does not solve our financial problems."
History

Those problems are rooted in tradition. Retirees who dominated the Town Council for years deliberately kept the town small, not raising taxes or annexing land.

That limited the town's ability to grow and accommodate changes in its population.

Youngtown was founded in 1954 and claims to be the nation's first master-planned community for active seniors, despite nearby Sun City's reputation as the pioneer.

The Youngtown vision was to create a utopia for retirees from around the country, who would flock there for affordable housing and live out their twilight years in sunshine.

For decades, the concept was golden. Hundreds of modest, ranch-style homes sprang up along streets winding around a fishing lake, five parks and a town clubhouse.

Residents even founded the nation's first AARP chapter.

Then, the town's age restriction was challenged.

A town ordinance required that one resident in every home be more than 55 years old and that no one be under 18 years old. In 1998, the town lost a legal battle with the state attorney general and was forced to lift its age restriction.

An influx of young families and children followed. The population doubled from about 3,000 to more than 6,000 over the years, and the town catered to its new residents with playgrounds and youth-sports programs.

Crime rates rose, increasing the demand for police and code enforcement. Officers who had spent much of their time dealing with minor problems were receiving calls for domestic violence, drugs and sex crimes involving minors.

The town's new residents weren't as apt to keep neatly manicured lawns and gardens, spurring complaints from longtime residents.

Youngtown's transition from retirement community to one like any other across the Phoenix area was the tipping point toward its current budget conundrum.

Service needs increased as the population changed, but the town didn't take steps to bring in more revenue and shore up its finances.

The town is further hampered by being landlocked, preventing it from annexing land for new businesses or subdivisions. There are no major employers and only small businesses that bring little sales-tax revenue.

Other cities in the Valley have depended on new rooftops to bring construction sales taxes and spur commercial growth.

Borrowing money isn't a likely option. The town has no guaranteed revenue source, such as utility fees or a property tax, to secure a bond. Town leaders still lament a 1995 decision to sell the water utility to a private company.

Larger municipalities can leverage buildings in tough economic times or borrow money for infrastructure upgrades, but beyond its tiny Town Hall complex, Youngtown has little in the way of hard assets.

Youngtown isn't getting much help from other levels of government, either. The Arizona Legislature has tightened its belt in recent years by taking money from cities and towns, cutting revenues to Youngtown by about $500,000 since 2009, officials estimate.

Federal grants that the town has depended on to fund its recent capital projects, such as paving its alleys and improving fire-hydrant flow in older neighborhoods, are also being scaled back or eliminated.

Given the lack of revenue options, town leaders said it could be a matter of time before they are ultimately forced to raise taxes or pursue other unsavory options, such as disincorporation, bankruptcy or deannexation.

A small group of residents continues to push for a property tax to save the town, but a survey last fall indicated that a majority of residents are still cool to the idea.

Two years ago, 73 percent of voters rejected a property tax that would have mostly funded the Police Department.

Town Council members recently appointed a citizens tax advisory committee to, among other things, study the property-tax issue, talk to residents and make a recommendation on whether to put it before voters. The council had opted not to put a tax on the ballot this year.

"The town is in a position now where they're trying to make up for a lot of mistakes," said Lora Rice, a committee member whose family has run an auto-body shop in town since 1971. "Because if we don't have money, we don't have a town."

Still, others say they would rather quit being a town than pay property taxes.

They complain the city provides residents with far fewer services and amenities than neighboring communities that have public pools, recreation programs and outreach services for seniors and the disabled.
Losing its identity

Ceasing to be a town is easier said than done.

Two-thirds of voters must petition the Maricopa County Board of Supervisors, who can then decide to disincorporate the town or call for an election to let voters decide. A trustee would be appointed to sell the town's property and wind up its business.

Few towns or cities in Arizona have successfully disincorporated.

According to the League of Arizona Cities and Towns, none has done so in at least four decades.

South Tucson, a community of about 5,000, incorporated, disincorporated and reincorporated between 1936 and 1940. Disincorporation campaigns have started and fizzled at other spots, such as Chino Valley and Camp Verde, in recent decades.

On a national level, Youngtown would be one of a few small towns and cities to dissolve since the recession. Each had unique circumstances, but most were so strangled by the recession that leaders decided services could be provided more cheaply at the county level.

Another option for Youngtown is annexation by a neighbor, but mayors of the only cities that border the town, Peoria and El Mirage, have said they are not interested. In joining either city, Youngtown residents would pay a property tax.

Because no Arizona community has disincorporated in recent memory, other details of the process are not cut and dried.

If residents do decide to return to Maricopa County, the few services that Youngtown still provides would go away or be handled by county departments. Utilities in the town are all privately owned, and fire protection is provided as part of a special tax district with Sun City.

What the county would do with Youngtown's parks, library and other municipal buildings is unclear.

State law provides that any money left over in city coffers would go toward projects to benefit the community.

For Youngtown residents, the decision is still up in the air. In the fall survey, there was no clear consensus among those who responded on the question of disincorporation.

Youngtown leaders said they plan to fight to preserve the town. LeVault hedges over whether that means a property tax, which he said must bubble up from a citizen effort to succeed.

But, he admits, without more revenue, the town could die a slow death.

"There is going to be a day of reckoning," Robinson said. "It will come."

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Youngtown leaders consider disbanding cash-strapped town