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TOWN OF WICKENBURG BUDGET STUDY SESSION February 17, 2026 • Session I o Budget Direction & Creation o Budget Calendar o Financial Policies o Financial Overview o Property Tax Rate o Tax 101 Highlights o Potential Impacts o Capital Improvement Projects Town Council Budget Study Session 3 Budget Direction Provided by Management No Increases, Possible Reductions To Departmental Baseline Operating Budgets For The Fiscal Year •Focus on maintaining core service levels •Increased costs due to inflation, policy changes, utilities •Departments encouraged to find internal efficiencies where possible No New Personnel Requests Continue with 5-year CIP Plan Reduce Reliance On One-time Revenues • Construction activity is slowing • Wickenburg Ranch has about 100 vacant lots left in phase I • Global & National Economy unstable and we appear to be entering a period of economic retraction 4 Budget Creation Emphasis On Strategic Resource Allocation • Aligning funding with Council priorities and adopted plans • Preserving financial resilience while supporting key initiatives • Limit operational spending within anticipated revenue projections • Use of fund balance limited to capital improvement projects • West Valley cities are anticipating 5%-7% salary increases • Anticipating large increase to health insurance cost Operating Contingency Line Item • Designed to address unforeseen needs or emerging priorities • Requests for expenditures require Town Manager approval • Provides flexibility and increases accountability • Funded by reducing General Fund departmental baseline budgets (what-if) 5 Budget Creation The Annual Budget Is A Fundamental Policy Document of The Town • It is a financial plan • Establishes the Expenditure Limitation • Establishes the tax rate for property taxes • It is the provision of the Town's financial resources to provide the community programs, services, and projects The Numbers Will Change As We Progress Through The Development of The Annual Budget – To Be Expected • Numbers in the budget are based on many projections • Expenditures • Revenue • Operations – unknown conditions like the recent swimming pool breakage 6 Budget Calendar Council Study Session • February 17 Department Budget Meetings • February 23-26 Budget Work Session with Council • March 16 Designating CFO Resolution 2026-27 • April 6 Fee Schedule to Council • April 6 Town Manager Draft Budget Proposal • April 20 Tentative Budget Resolution with Expenditure Limitation to Council • May 4 Public Hearing on Final Budget and Tax Levy • June 1 Final Budget Resolution to Council • June 1 Primary Property Tax Rate Resolution to Council • July 6 7 • Current Financial Structure – Town Code • Reserve and Contingencies • Develop a Centralized and Comprehensive – Council Adopted Financial Policy Manual Financial Policies 8 PROCUREMENT THRESHOLDS o $0 - $4,999.99: No quotations or bids required o $5,000 - $24,999.99: 3 written quotes approved by Department Director o $25,000 - $49,999.99: 3 written quotes approved by Town Manager o $50,000 and Above: Sealed bids, competitively procured contract, or cooperative purchase approved by Town Council BUDGET TRANSFERS o A transfer from a capital line item (9#### account) requires Town Council approval prior to incurring the expense o A transfer between funds requires Town Council approval prior to incurring the expense o A transfer within the same department requires approval of the Department Director prior to incurring the expense PROCUREMENT CODE UPDATES TO TOWN CODE SECTION 4-4 o Delegate awarding authority to the Town Manager or his designee for procurements when the cost to the Town is $50,000.00 or less in any one transaction o Town Council shall be the awarding authority for procurements when the cost to the Town is greater than $50,000.00 in any one transaction Town Code Procurement and Budget Transfers 9 Reserves and Contingencies • Should be appropriated to provide for emergencies, mid-year requests, and unanticipated expenditures • General Fund Reserve will be maintained in an amount not less than 15% of new General Fund revenues for the budgeted fiscal year • Contingency will be established for all other applicable funds of at least 10%, and the equity of all funds will be maintained to meet the objectives of the fund • $100,000 will be budgeted under General Services each year to indemnify the Town of unanticipated insurance claims • Expenditures may be made from contingencies only upon approval by the Town Council 10 • State Forecasts & Overview of Economy • Inflation • Addition of San Tan Valley • FHC Sales Tax • Remote Retail Sales Tax • General Fund Potential Impacts Potential Impacts 11 State Forecasts & Overview of Economy • Sales and use taxes are the primary source of Arizona’s General Fund • Generates $8.2 billion in revenue • FY26 State budget projected $17.77 billion in revenues • General Fund expenditures of $17.57 billion, an 8.2% increase from FY25 • FY27 State budget proposal projects $18.5 billion in revenues • General Fund expenditures of $18.7 billion, a 4.9% increase from FY26 • Arizona’s economy is experiencing a slow-growth phase • Continues to see strong population growth • Projected to accelerate in late 2026 and 2027 12 Inflation • Producer Price Index • Construction & Infrastructure • Energy & Utilities Town cost (proposed 14% increase) • Waste Materials • Gross Domestic Product • Expenditures on infrastructure, buildings, and equipment that enhance future production • Compensation of Employees • Construction Price Index • Raw Materials • Labor • Equipment and Services • Employment Cost Index • Wages and Salaries • Employer Paid Benefits • Municipal Cost Index • Reflects rising costs of municipal operations • Public Safety 13 Addition of San Tan Valley • TPT, HURF, and VLT revenues distributed to San Tan Valley beginning September 1, 2025 o TPT impact to TOW is a deduction in the amount of $1,682.14 per month for a total of $10,092.83 for the remainder of the fiscal year o HURF impact to TOW will be less than TPT ▪ADOT has yet to provide reports with the direct financial impact to cities and towns o VLT will only affect cities/towns within Pinal County, no direct impact to TOW • URS revenues to begin distribution to San Tan Valley July 1, 2026 • Prohibits counties and municipalities, from July 1, 2026, through June 30, 2030, from increasing fees, transaction privilege tax rates, surcharges, or municipally provided utility rates above amounts authorized in the FY26 budget and from adopting new tax classifications or expanding the tax base, subject to limited voter-approved exceptions 14 Rates, Fees and Taxes HCR2052 & HB4030 • Relief for motorist during the summer months (May thru December), due to required specialty fuel blend, which costs more. The bill would reduce fuel costs by $.18 per gallon • Reduces the HURF distribution by $21 million to local governments 15 Motor Fuel Tax Holiday HB2400 • Modifies provisions related to the Public Safety Personnel Retirement System (PSPRS) in Arizona • Specifically adjusts the definition of “normal retirement date” for members hired on or after July 1, 2017, allowing them to retire with fifteen years of credited service if they are at least fifty-five years old, rather than requiring twenty-five years of service • Changes the eligibility for a cost-of-living adjustment (COLA) for members hired on or after July 1, 2017, allowing them to receive this adjustment starting the third anniversary of their retirement or when they turn sixty, whichever comes first, instead of the seventh anniversary 16 PSPRS Service Requirement & Cost-of-Living Adjustment SB1504 • Arizona does not automatically conform to federal tax law changes • Uncertainty exists regarding the Governor and Legislature's approach to conformity and the resulting impact on state income tax revenues • Local governments rely on a shared portion of these revenues to support their General Fund • The League of Arizona Cities and Towns has estimated financial impacts between $40 million and $80 million in loss to State Shared Revenue for local government 17 Tax Conformity • Proposed house bill introduces provisions that would impact which food items are subject to the Town of Wickenburg Food for Home Consumption Sales Tax • Language is specifically designed to exempt any item eligible for the Supplemental Assistance Program (SNAP) from this tax category, rendering those items non-taxable • If either are approved, the majority of food items currently taxed in this category would be rendered non-taxable 18 Food for Home Consumption Sales Tax HCR2018 & HB2839 5 Year FHC Revenue • Introduces provisions that would alter the allocation of remote retail sales tax revenue among tax jurisdictions • Currently, Transaction Privilege Tax (TPT) is calculated and remitted based on the “ship to” address • As drafted, HB2290 would change the TPT calculation and remittance basis to the “ship from” address • This would heavily impact cities and towns without warehouse presence 19 Remote Retail Sales Tax HB2290 5 Year Remote Sales Revenue 20 General Fund Potential Impacts • General Fund Revenues • State Shared Revenue and Local Tax • Property Tax • General Fund Expenditure Overview • General Fund Budget Overview Financial Overview General Fund Revenue Historical Trend General Fund Revenue Breakdown 2021-22 Actual 2022-23 Actual 2023-24 Actual 2024-25 Actual 2025-26 Budgeted State Grant $ - $ - $ 113,340.00 $ 276,042.00 $ 115,000.00 Miscellaneous $ 3,494,566.00 $ 1,676,238.00 $ 2,110,674.00 $ 1,898,630.00 $ 2,354,025.00 Community Development $ 1,107,156.00 $ 442,833.00 $ 481,228.00 $ 514,484.00 $ 456,850.00 Parks & Recreation $ 155,071.00 $ 151,642.00 $ 151,764.00 $ 160,116.00 $ 158,206.00 Police & Court $ 195,175.00 $ 168,838.00 $ 321,627.00 $ 237,812.00 $ 260,500.00 Admin Fees $ 1,085,440.00 $ 1,308,248.00 $ 1,221,987.00 $ 1,361,546.00 $ 1,557,454.00 Franchise Fees $ 243,983.00 $ 283,912.00 $ 311,819.00 $ 338,924.00 $ 304,970.00 IGA's & Contributions $ 2,795,877.00 $ 712,942.00 $ 1,052,759.00 $ 1,106,451.00 $ 1,185,000.00 Property Tax $ 532,450.00 $ 567,470.00 $ 604,754.00 $ 565,431.00 $ 645,000.00 State Shared Revenue $ 2,551,011.00 $ 3,013,381.00 $ 3,740,615.00 $ 3,365,893.00 $ 3,311,839.00 Local Tax $ 7,803,609.00 $ 8,794,849.00 $ 10,859,726.00 $ 9,163,921.00 $ 8,500,000.00 Transfers In $ 3,374,461.00 $ - $ - $ - $ - Transfers Out $ (2,261,833.00) $ (747,337.00) $ (1,698,903.00) $ (1,398,900.00) $ (2,498,902.00) Total $ 21,076,966.00 $ 16,373,016.00 $ 19,271,390.00 $ 17,590,350.00 $ 16,349,942.00 24 FY27 Projected General Fund Detail 2026-27 Projected 2025-26 Budgeted $ Difference Prior Year % Difference Prior Year State Grant $ 115,000.00 $ 115,000.00 $ - 0.00% Miscellaneous $ 2,323,202.00 $ 2,354,025.00 $ (30,823.00) 1.30% Community Development $ 425,000.00 $ 456,850.00 $ (31,850.00) 7.50% Parks & Recreation $ 150,000.00 $ 158,206.00 $ (8,206.00) 5.40% Police & Court $ 270,000.00 $ 260,500.00 $ 9,500.00 3.60% Admin Fees $ 1,687,242.00 $ 1,557,454.00 $ 129,788.00 8.30% Franchise Fees $ 310,000.00 $ 304,970.00 $ 5,030.00 1.60% IGA's & Contributions $ 1,176,800.00 $ 1,185,000.00 $ (8,200.00) 0.06% Property Tax $ 645,000.00 $ 645,000.00 $ - 0.00% State Shared Revenue $ 3,311,839.00 $ 3,311,839.00 $ - 0.00% Local Tax $ 8,500,000.00 $ 8,500,000.00 $ - 0.00% Total $ 18,914,083.00 $ 18,848,844.00 $ 65,239.00 0.03% FY27 Projected General Fund Revenues Total: $18,914,083 *Transfers not Included State Shared Revenue and Local Tax 2021-22 Actual 2022-23 Actual 2023-24 Actual 2024-25 Actual 2025-26 Budgeted 2025-26 YTD LOCAL SALES TAX $7,803,609 $8,794,849 $10,859,726 $9,163,921 $8,500,000 $5,070,369 STATE SALES TAX/TPT $1,070,876 $1,140,038 $1,206,805 $1,217,260 $1,253,365 $806,332 STATE INCOME TAX/URS $997,383 $1,459,753 $2,098,733 $1,727,989 $1,618,005 $1,078,670 AUTO LIEU TAX $412,703 $413,590 $435,077 $420,644 $440,469 $273,090 TOTALS $10,284,571 $11,808,230 $14,600,341 $12,529,814 $11,811,839 $7,228,461 Department FY23 Actual FY24 Actual FY25 Actual FY26 YTD FY26 Budgeted % Used Finance $706,652 $765,341 $705,219 $435,900 $840,276 51.88% General Services $705,586 $723,394 $937,561 $281,831 $686,016 41.08% Town Manager $564,246 $656,798 $132,995 $224,729 $554,639 40.52% Human Resources $0 $0 $330,251 $211,406 $402,960 52.46% Town Clerk $201,340 $176,796 $201,402 $119,921 $243,197 49.31% Town Court $299,478 $356,057 $460,941 $215,320 $483,684 44.52% Town Attorney $230,154 $269,551 $288,541 $220,428 $285,000 77.34% Recreation $483,105 $570,757 $444,191 $284,463 $613,140 46.39% Economic Development $237,851 $226,981 $387,487 $159,898 $406,936 39.29% Information Technology $0 $0 $511,389 $270,652 $580,167 46.65% Library $234,638 $495,403 $341,554 $159,835 $341,150 46.85% Parks & Facilities $1,208,512 $1,559,951 $2,099,406 $1,356,634 $5,056,227 26.83% Community Development $533,600 $663,329 $763,178 $357,509 $717,969 49.79% Public Services $382,739 $422,449 $445,628 $202,256 $469,322 43.10% Police $3,781,211 $4,919,497 $5,276,534 $2,973,350 $6,397,048 46.48% Fire $6,558,207 $3,991,691 $5,346,550 $2,232,935 $6,237,956 35.80% Total $16,127,319 $15,797,995 $18,672,827 $9,707,067 $24,315,687 39.92% 27 Summary of Expenditures 28 Summary of Contingencies and Reserves 2025-26 Budgeted 2025-26 Remaining Difference 2026-27 Projected Contingency $ 5,654,653.00 $ 5,654,653.00 $ - $ 4,320,000.00 Capital Reserve $ 1,000,000.00 $ 1,000,000.00 $ - $ 1,000,000.00 Reserve $ 4,349,780.00 $ 4,289,780.00 $ 60,000.00 $ 5,674,225.00 FY27 Current Projected Fund Balance: $15,000,000 • Town Current RATE is .3997, LEVY is $615,000 • Council Policy Direction • Does the Council wish to not increase collections beyond the allowable rate and avoid a truth in taxation hearing? • If yes, the net effect will be lowering the current tax rate and maintaining the levy Property Tax 30 • Sales Tax & Food Tax • Restaurant, Bar & Bed Tax • Property Tax • Conclusion Tax 101 Highlights 31 Comparison – Sales Tax & Food Tax Average between 28 surveyed communities Town of Wickenburg Base Tax Rate 3.16% 2.20% Tax Per Capita $1,543 $1,458 FHC 2.69% 2.20% 32 Comparison – Restaurant and Bars Tax & Bed Tax Average between 28 surveyed communities Town of Wickenburg Base Tax Rate 3.16% 2.20% Restaurant and Bars Tax Rate 3.30% 2.20% Bed Tax Rate 3.23% 3.00% 33 Cities & Towns – Property Tax 49 of 91 (54%) have a primary property tax • Primary range is from $0.1018 to $5.2164 • 23 have an additional secondary tax • Secondary range is from $0.1401 to $2.7115 • Secondary tax is used to cover financing of bonds 53 of 91 (58%) have either primary and/or secondary tax 34 Comparison – Major Purchases Out of the 28 surveyed communities, 11 have a reduced Retail Sales Tax rate that applies to single item purchases over a specified $ amount • Wickenburg has a Retail Sales Tax rate of 1.69% on single items over $5,000 • In FY25, Wickenburg lost out on $32,000 of revenue due to the single item rule • 5 surveyed communities apply a Retail Sales Tax rate to single items over $5,000 • 2 community applies a Retail Sales Tax rate of 2.00% to single items over $3,000 • 1 community applies a Retail Sales Tax rate of 1.50% to single items over $6,000 • 3 communities apply a Retail Sales Tax rate to single items over $10,000, • The average tax rate of the 11 who apply a reduced tax rate is 2.10% 35 Conclusion Background – TPT Rate Comparison Average TPT rate for smaller communities in Arizona is 3.16% Wickenburg’s current rate is 2.20% Breakdown – Tax Rate Composition State of Arizona TPT 5.60% Wickenburg 2.20% County 0.70% Total 8.50% History – Tax Rate Timeline Wickenburg’s TPT rate was increased to 2.20% on June 1, 2009 Property tax levy has maintained while the rate has decreased Property tax generates 3% of general fund revenue Use – Revenue Allocation Funding is used to provide all general fund services: emergency communications, police, fire, parks & recreation and other Town services CURRENTLY, 2.20% YOU PAY ON TPT BASE TAX GOES TO YOUR COMMUNITY *except for purchases over $5,000 - 1.69% 36 • 5-year CIP plan implemented in FY26 • $19,082,176 budgeted in FY26 • $18,300,600 proposed in FY27 Capital Improvement Projects 37 2026-27 Capital Improvement Projects 38 2026-27 Capital Improvement Projects Continued • $650,000 was budgeted in FY26 for 60% design • Temporarily delayed to determine potential revenue shortfalls • Based on 2nd quarter financial report, plan will move forward with design 39 Design of Sunrise Park 40 • Next Budget Work Session scheduled for March 16 Recap and Close of Work Session