Regular Fire Board Meeting - July 10, 2024

NOTE 20 - GOING CONCERN

Ganado Fire District (the District) has experienced a negative cash flow for the past five years. This has resulted in an overdraft of the Apache County warrant account in the amount of $ 175,264 at June 30, 2023.The deficit is a direct result of a lawsuit filed against Counties in the State of Arizona by “Centrally Assessed Utilities” resulting in the District being required to refund over $400,000 in property tax money to these utilities. All of the District’s property tax revenue is supplied by these “Centrally Assessed Utilities”. As a result of this lawsuit, property tax valuation for subsequent years was also reduced. The District is exploring options to mitigate the reduction in property tax revenue such as additional annexations into the District. Apache County is aware of the issue and is working with the District to alleviate the problem. In addition, the state legislature has passed a statute allowing Fire Districts in the State of Arizona to raise their Property Tax levy in increments beginning in tax year 2022 with a final result of a rate of $3.75 for the tax year 2024 and each tax year thereafter. This is discussed in more depth in Note 17. The District anticipates this increase to allow them to once again become solvent. As addressed in Note 20, the required refund of property tax money due to a lawsuit filed by “Centrally Assessed Utilities” against Counties in Arizona caused the District to incur liabilities exceeding the unencumbered funds and monies collected for the year, resulting in continued unfunded liabilities. As a result, the District has not complied with ARS 48- 805, 48-806 and 48-807 as required by relevant statutes. The court ruling also had the effect of reducing property tax valuation for subsequent years. The District is working with the Apache County Treasurer’s office to mitigate this issue.

NOTE 21 - NON-COMPLIANCE WITH ARIZONA REVISED STATUTES

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