FY2027 Revenue Outlook and Budget Implications

FY2027 Revenue Outlook & 
Budget Implications
Paul Soldinger, Chief Financial Officer
February 24, 2026

FY2027 Revenues 
Discussion

FY2027 Budget Milestones 
• Initial Revenue Projections completed – 1/6/2026
• Departments submitted supplemental requests to Town 
Manager– throughout January 2026
• Council Retreat – Today (2/24/2026)
• Budget Open House – 3/11/2026
• Capital Improvement Plan (CIP) Work Session – 3/24/2026
• Council provides direction on CIP and funding for projects
Budget Timeline

FY2027 Budget Milestones 
• Proposed Budget Work Session – 4/14/2026
• Council discusses proposed budget and provides direction for Tentative 
budget the following month
• Tentative Budget Adoption – 5/5/2026 Regular Meeting 
(Public Hearing)
• Tentative Budget sets the maximum amount the Town may budget for 
FY2027 
• Final Budget Adoption – 6/2/2026 Regular Meeting (Public 
Hearing)
• Council considers adoption of final budget for FY2027 Town operations
Budget Timeline

Initial FY27 Revenue Projections
Revenue Projections
• Transaction Privilege Tax (Local Sales Tax) Revenue 
Projections by Category
• Intentionally conservative to reduce risk
• Projected increases of 3.0% across funds (2.1% in General Fund)
FY2025
FY2026
FY2027
$ Change from % Change from
Actual
Projections
Projections
FY2026
FY2026
TPT Category
Construction
 $  2,971,838  $  2,376,414  $  2,722,303 
345,888 
14.6%
Utilities
1,723,779
1,695,247
1,721,065
25,817 
1.5%
Retail
$10,604,441 
10,260,360
10,306,400
46,040 
0.4%
Restaurants/Bars
1,413,481
1,309,217
1,364,582
55,365 
4.2%
Real Estate
970,416
681,444
632,545
(48,899)
-7.2%
Services (Leisure & Tourism)
2,466,878
1,691,040
1,801,954
110,914 
6.6%
Other 
40,438
0
0
N/A
N/A
Total Actual/Forecast Revenues:
 $20,191,270  $18,013,723  $18,548,849  $        535,126 
3.0%
TPT Total Revenues

Local Sales Taxes – Split Revenues
• 2.9% local sales tax rate applied to almost all categories 
collected for in-Town purchases, based on past Council 
approvals to split revenues
Revenue Projections - Splits
½ of local construction 
sales taxes
2.6%
0.2%
Econ Dev
Fund
CIP
Fund
0.08%
0.02%
Downtown
Fund

Initial FY27 Revenue Projections
Revenue Projections
FY2025
FY2026
FY2027
$ Change from % Change from
Actual
Projections
Projections
FY2026
FY2026
TPT Category
Construction
$  2,971,838 $  2,376,414 $  2,722,303 
345,888 
14.6%
Utilities
1,723,779
1,695,247
1,721,065
25,817 
1.5%
Retail
$10,604,441 
10,260,360
10,306,400
46,040 
0.4%
Restaurants/Bars
1,413,481
1,309,217
1,364,582
55,365 
4.2%
Real Estate
970,416
681,444
632,545
(48,899)
-7.2%
Services (Leisure & Tourism)
2,466,878
1,691,040
1,801,954
110,914 
6.6%
Other 
40,438
0
0
N/A
N/A
Total Actual/Forecast Revenues:
 $20,191,270  $18,013,723  $18,548,849  $        535,126 
3.0%
TPT Total Revenues
General 
Fund
Streets
CIP
Econ Dev
Downtown
$306,824
$36,905
$172,945
$14,762
$3,690

Local Sales Taxes - Split Revenues
Revenue Splits
$15,268,851
$1,279,231
$127,923
$511,692
$1,361,152
Local Sales Tax – FY27 Initial Projections*
General fund
Streets fund
Downtown fund
Economic development fund
Capital projects fund
*Based on past Town Council Ordinances
General Fund:
•
FY25 actual: $16.6 million
•
FY26 projected: $15.0 million
•
FY27 projected: $15.3 million
Streets fund:
•
FY25 actual: $1.40 million
•
FY26 projected: $1.24 million
•
FY27 projected: $1.28 million
Econ/Downtown funds 
(combined):
•
FY25 actual: $696k
•
FY26 projected: $621k
•
FY27 projected: $640k
Capital projects fund:
•
FY25 actual: $1.49 million
•
FY26 projected: $1.19 million
•
FY27 projected: $1.36 million

Initial FY27 Revenue Projections – General Fund
Revenue Projections
FY2025
FY2026
FY2027
$ Change from % Change from
Actual
Projections
Projections
FY2026
FY2026
Revenue Source
Sales Tax Revenues
 $ 16,616,599  $  14,962,027  $  15,268,851 
306,824 
2.1%
Franchise Tax/Fees
334,101
350,000
325,000
(25,000)
-7.1%
State Shared Revenues
   Urban Revenue Sharing (Income Taxes)
5,022,719
4,698,139
4,931,976
233,837 
5.0%
   Sales Tax Revenues
3,622,681
3,639,515
3,618,015
(21,500)
-0.6%
   Fire Insurance Premium Taxes
95,892
75,000
330,000
255,000 
340.0%
Licenses & Permits
952,127
876,787
855,170
(21,617)
-2.5%
Leases & Rents
368,171
379,914
387,055
7,141 
1.9%
Charges For Services
278,368
260,000
275,000
15,000 
5.8%
Fines & Forfeitures (Municipal Court)
214,389
210,000
300,000
90,000 
42.9%
Investment Earnings
616,693
348,507
294,941
(53,566)
-15.4%
Other
356,642
252,000
215,000
(37,000)
-14.7%
Total Revenue Source:
 $ 28,478,382  $  26,051,889  $  26,801,008  $         749,119 
2.9%
General Fund Revenues

Initial FY27 Revenue Projections – Streets Fund
Revenue Projections
FY2025
FY2026
FY2027
$ Change from % Change from
Projections
Projections
Projections
FY2026
FY2026
Revenue Source
Sales Tax Revenues
$1,392,501 $    1,242,326 $    1,279,231 
36,905 
3.0%
State Shared Revenues
  HURF
1,889,802
1,890,627
1,928,886
38,259 
2.0%
  Vehicle License Taxes (VLT)
1,300,912
1,277,830
1,314,887
37,057 
2.9%
Investment Earnings
595,071
191,193
121,544
(69,649)
-36.4%
Other
15,301
131,000
41,000
(90,000)
-68.7%
Total Revenue Source:
$   5,193,587 $    4,732,976 $    4,685,548 $         (47,428)
-1.0%
Streets Fund Revenues
Streets
Projected FY26 Ending Fund Balance = $6.1 million

Initial FY27 Revenue Projections – CIP Fund
Revenue Projections
CIP
Projected FY26 Ending Fund Balance = $8.8 million
FY2025
FY2026
FY2027
$ Change from % Change from
Actual
Projections
Projections
FY2026
FY2026
Revenue Source
Sales Tax Revenues
$1,485,919  $    1,188,207  $    1,361,152 
172,945 
14.6%
Grant Revenues
20,055
2,190,750
978,250
(1,212,500)
-55.3%
Investment Earnings
498,270
170,000
176,077
6,077 
3.6%
Other 
74,381
0
0
0 
N/A
Total Revenue Source:
$2,078,624  $    3,548,957  $    2,515,479  $   (1,033,478)
-29.1%
Capital Projects Fund Revenues

FY2027 Possible 
Revenue & Other 
Budget Impacts

Legislative Bills – Possible Future Impacts
• Food for Home Consumption – Local Sales Tax 
• HCR 2021 – Last Legislative Session – Will be on November 2026 statewide ballot
•
Would cap Town’s food tax rate at 2.9%, if successful
• HB 2839 – introduced this Legislative Session
•
SNAP eligible food items would no longer be taxable; examples of exemptions:
•
Fruit
•
Vegetables
•
Dairy, etc.
Legislative Possible Impacts
FY2023
FY2024
FY2025
Food Tax (TPT Code 62):
2,081,908
$   
2,179,521
      
2,084,109
      
Total Local Sales Taxes:
20,586,294
$ 
20,559,929
$ 
20,191,270
$ 
Percentage of Total Local Sales Taxes:
10.1%
10.6%
10.3%
Total Town Revenues:
40,931,231
40,201,766
38,340,244
Percentage of Total Town Revenues:
5.1%
5.4%
5.4%
Actual Revenues

Legislative Bills – Possible Future Impacts
• Retail Local Sales Tax – Remote Sellers 
• HB 2118 – current Legislative session
• Current tax guidance requires taxes on remote sales to be paid to municipalities where the 
goods are delivered (e.g. a Fountain Hills resident ordering a new mattress from an online 
retailer will result in the Town receiving the taxes, if delivered to a Fountain Hills home)
• HB 2118 would change the taxes owed to be based on where the distribution warehouse is 
located (e.g. that same mattress was delivered to a home in Fountain Hills from a 
warehouse based in Scottsdale – then, Scottsdale would receive the taxes)
Legislative Possible Impacts
FY2023
FY2024
FY2025
Remote Sellers (TPT Code 605):
1,520,558
$   
1,730,864
      
1,849,537
      
Total Local Sales Taxes:
20,586,294
$ 
20,559,929
$ 
20,191,270
$ 
Percentage of Total Local Sales Taxes:
7.4%
8.4%
9.2%
Total Town Revenues:
40,931,231
40,201,766
38,340,244
Percentage of Total Town Revenues:
3.7%
4.3%
4.8%
Actual Revenues

Legislative Bills – Possible Future Impacts
• Income Tax Conformity
• SB 1106 – Vetoed by Governor; other proposals are being discussed at 
Legislature
• Would impact State Shared Income Taxes (Urban Revenue Sharing) beginning in FY2028 (in 
two fiscal years)
• Urban Revenue Sharing is projected to start increasing again in FY2027; any tax conformity 
measures may reduce those future projected increases
Legislative Possible Impacts
Projected
Projected
FY2023
FY2024
FY2025
FY2026
FY2027
Urban Revenue Sharing
4,518,501
$   
6,302,824
      
5,022,719
      
4,698,139
               
4,931,976
            
Total General Fund Revenues:
28,254,987
$ 
30,774,289
$ 
28,478,488
$ 
Percentage of GF Revenues:
16.0%
20.5%
17.6%
Total Town Revenues:
40,931,231
40,201,766
38,340,244
Percentage of Total Town Revenues:
11.0%
15.7%
13.1%
Actual Revenues

MCSO Cost Notification Decreased 
• FY27 MCSO cost notification noted lower retirement 
and overtime costs have offset market-based pay 
adjustments, resulting in another reduction to our 
contract
Budget Reductions – FY2027
FY2027 MCSO 
Contract
$5.69M
FY2026 MCSO 
Contract
$5.76M
Law Enforcement cost reduction of $68k for FY2027

Annual General Adjustment (AGA) Policy — FY2027 First Calculation
Policy adopted Sept. 9, 2025 (Town Council Work Session) | Presented Feb. 2026 using PMI + ECI data
1) Policy framework (adopted Fall 2025)
2) FY2027 calculation (first application)
Formula (fixed 50/50 split):
AGA = (50% × ECI) + (50% × PMI)
ECI = Employment Cost Index (BLS), measured Q4-to-Q4
PMI = Peer Market Index (League of AZ Cities & Towns salary survey, 
January release)
Council retains discretion to override the formula in extraordinary 
circumstances.
Inputs available for FY2027:
PMI
League survey (Jan 2026) 4.26%
ECI
BLS ECI Q4-to-Q4
3.40%
AGA = (0.50 × 4.26%) + (0.50 × 3.40%) = 3.83% (rounded to 
3.8%)
Recommended FY2027 salary 
adjustment: 3.8%
Note: Implemented as an across-the-board base salary adjustment; rounded to one decimal for payroll/budget administration.