Extracted text (via pymupdf)
8424 characters
Proposed Budget Overview Fiscal Year 2026/27 Mesa City Council Presented By: Date: Brian A. Ritschel – Management & Budget Director Samuel Schultz – Management & Budget Assistant Director April 2, 2026 2 Annual Balanced Budget • Each year the City of Mesa is required to appropriate an annual expenditure budget and set a secondary property tax levy and associated rate • The annual budget sets the maximum expenditure limit for the fiscal year • A balanced budget means that the total resources available to the city must be sufficient to cover the budgeted expenses • The City of Mesa’s FY 2026/27 Proposed Budget is balanced 3 FISCAL YEAR 2026/27 PROPOSED BUDGET “Elevate Mesa” 4 General Governmental Funds 5 General Governmental Funds – Financial Policies & Principles Financial Policies (Council Adopted) • Adoption of a Balanced Budget • Maintain a Reserve Balance of 8-10% • Forecasts will be Provided over a Multi-Year Period • Fees & Charges will be Reviewed on an Annual Basis • Adoption of a 5-Year Capital Improvement Plan Financial Principles (City Management Practice) • Balance Net Sources & Uses • 10-15% Reserve Fund Balance over 5-Year Forecasted Period • Sustainability of Programs & Services • Keep Wages & Benefits Competitive to Retain & Recruit Quality Staff • Investment in Capital & Lifecycle Replacement Projects 6 Budget Pressures • The FY 2026/27 Proposed Budget focuses on the City’s effort in providing quality core services while addressing the following impacts • Loss of on-going revenue due to state legislation • Market-Driven Compensation & Competitive Benefits • Fleet maintenance & repairs • Software & licensing • Building maintenance and utilities • Continuing ARPA initiatives with ongoing General Fund support 7 Budget Strategy - Impact • Striving towards a structurally balanced budget in FY 29/30 by reducing the ongoing base budget. • City Manager requested departments to submit a net 2% reduction of their ongoing base budget. 8 General Governmental Funds Forecast Update – February 2026 9 Budget Strategy – Reductions • A total of $55.7M in ongoing expenditures have been reduced from the budget and forecast for fiscal years 2024/25 to 2026/27. • For FY 2026/27 the Police Department ($4.4M) and Mesa Fire & Medical Department ($1.4) were asked to phase their reductions in over two fiscal years. • Police Department reductions in FY 26/27 • $1.7M: Conversion of 3 vacant sworn positions to civilian positions, 9 full-time and 1 part-time vacant positions, and recruit signing bonus pay • MFMD reductions in FY 26/27 • $831K: Marketing/Communications Specialist II position and reallocating 4 firefighter positions from the General Fund to the Public Safety Sales Tax Fund 10 Budget Strategy – Reductions, Cont. • City departments were able to make reductions through process review and efficiencies. Some reductions were: • 25 vacant positions across City departments • Subscription costs through discontinuing rarely used software • Contract costs through renegotiations • Equipment costs to meet staff needs • Insurance premiums to align with City needs • Off the Streets – Sunaire operations funding reallocated to American Rescue Plan Act (ARPA) interest and HOME ARP funds 11 • $2.0M: Credit card purchase and cooperative contract rebates. • $250K: Increase projected ongoing revenues building permits. Budget Strategy – Resources 12 Budget Strategy – Enhancement Requests • Departments submitted $6.6M in one-time and ongoing requests to increase services/programs or start new programs • $4.8M in requests were approved. Some of the requests include: • $3.0M: Redevelopment Toolkit Pilot • Assistant City Prosecutor II (1 FTE) • Senior Internal Auditor (1 FTE) • HVAC Controls Technician (1 FTE) • $65K: 3rd party process server for Code Compliance • I.T. Technician III (1 FTE) for city WIFI maintenance 13 Budget Strategy – City Infrastructure • $6.0M: Facility maintenance and improvements • $3.0M: Parks maintenance and improvements • $295K: Main Library Saguaro Room updates • $730K: Red Mountain Library – $500K: Children’s Room renovation – $230K: Program Room updates 14 General Governmental Funds Proposed Budget – Fiscal Year 2026/27 Actuals Projected Budget Forecast Forecast Forecast Forecast FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 Beginning Reserve Balance $247.5 $264.3 $235.3 $204.2 $167.7 $145.5 $147.2 Total Sources $733.6 $703.4 $701.7 $716.6 $748.3 $779.2 $815.9 Total Uses $716.8 $732.4 $732.7 $753.1 $770.5 $777.4 $802.2 Net Sources and Uses $16.8 ($29.0) ($31.1) ($36.5) ($22.2) $1.8 $13.7 Ending Reserve Balance $264.3 $235.3 $204.2 $167.7 $145.5 $147.2 $160.9 Ending Reserve Balance Percent* 36.1% 32.1% 27.1% 21.8% 18.7% 18.4% 19.3% data as of March 2026 *As a % of all Next Year's uses of funding dollars in millions Utility Fund 15 16 Utility Fund – Financial Policies & Principles Financial Policies (Council Adopted) • Adoption of a Balanced Budget • Maintain a Reserve Balance of 8-10% • Forecasts will be Provided over a Multi-Year Period • Utility Rates Examined Annually • Adoption of a 5-Year Capital Improvement Plan Financial Principles (City Management Practice) • Balance Net Sources & Uses • 20% or Higher Reserve Fund Balance • Smoothed Rate Adjustments throughout the Forecast • Equity between Residential & Non-Residential Rates • Affordable Utility Services 17 Budget Pressures • The FY 2026/27 Proposed Budget focuses on the City’s effort in providing quality core services while addressing the following impacts • Market-Driven Compensation & Competitive Benefits • Fleet maintenance & repairs • Solid Waste disposal • Water Commodity • 91st Ave. Water Reclamation Plant • Val Vista Water Treatment Plant 18 Budget Strategy - Impact • Striving towards a structurally balanced budget in FY 29/30 by reducing the ongoing base budget. • City Manager requested departments to submit a net 2% reduction of their ongoing base budget. 19 Utility Fund Forecast Update – February 2026 Actuals Projected Forecast Forecast Forecast Forecast Forecast FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 Beginning Reserve Balance $117.0 $119.4 $95.9 $86.0 $79.4 $92.6 $121.0 Total Sources $510.8 $534.4 $572.1 $617.4 $662.1 $710.0 $763.4 Total Uses $508.4 $558.0 $581.9 $624.1 $648.9 $681.7 $728.1 Net Sources and Uses $2.4 ($23.5) ($9.8) ($6.7) $13.2 $28.4 $35.3 Ending Reserve Balance $119.4 $95.9 $86.0 $79.4 $92.6 $121.0 $156.3 Ending Reserve Balance Percent* 21.4% 16.5% 13.8% 12.2% 13.6% 16.6% 20.3% data as of February 2026 *As a % of all Next Year's uses of funding dollars in millions 20 Budget Strategy – Reductions • A total of $3.8M in ongoing expenditures have been reduced from the budget and forecast for fiscal years 2024/25 to 2026/27. • A total of $1.7M in ongoing expense reductions were submitted by the departments • $320K: Overtime and temporary staff due to the slowing down of fiber to premise 21 • $24M annually: Capacity fee • Growth pays for growth • Will be reviewed with the Utility Master Plan Budget Strategy – Resources 22 Budget Strategy – Enhancement Requests • Departments submitted and were approved $2.1M in one-time and ongoing requests to increase services/programs or start new programs. Some of the requests include: • $252K: Lead and Copper Rule (LCR) and Per- and Polyflouroakyl Substances (PFAS aka forever chemicals) analytical services • $242K: Bartlett Dam feasibility study and Salt River/Central Arizona Project (CAP) Interconnect Facility (SCIF) technical review • $1.2M: 3rd shift at East Mesa Service Center (10 FTEs) for Fleet Services 23 Utility Fund Proposed Budget – Fiscal Year 2026/27 Actuals Projected Budget Forecast Forecast Forecast Forecast FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 Beginning Reserve Balance $117.0 $119.4 $96.6 $85.0 $84.1 $100.3 $125.5 Total Sources $510.8 $526.8 $569.5 $616.1 $662.9 $715.8 $771.5 Total Uses $508.4 $549.6 $581.1 $617.0 $646.7 $690.6 $734.1 Net Sources and Uses $2.4 ($22.8) ($11.6) ($0.9) $16.2 $25.2 $37.4 Ending Reserve Balance $119.4 $96.6 $85.0 $84.1 $100.3 $125.5 $162.9 Ending Reserve Balance Percent* 21.7% 16.6% 13.8% 13.0% 14.5% 17.1% 20.9% data as of March 2026 *As a % of all Next Year's uses of funding dollars in millions 24