FY 2025-26 Budget Kickoff Presentation

FY 2025-26 
Budget Kickoff
with Mayor and Council
Council Conference Room
Monday, October 14, 2024 | 4:00 p.m.

I.
FY 2024-25 Budget Actions
II.
Budget Process
III. Strategic Framework Focus Areas 
IV. FY 2025-26 Budgetary Impacts
V.
Capital Guidelines
VI. Financial Policies and Budget Practices
VII.Key Dates
- Council Discussion Point
Agenda

FY 2024-25 Budget Actions
•
Sales tax rates unchanged - one of the lowest in AZ
•
Reduced property tax rate from $1.0926 to $1.0826 per $100 of assessed value – 9th year of 
reduction
•
No changes to Water/Wastewater/Reclaimed & Solid Waste Rates
•
Added increases to capital budgets to compensate for inflation affected projects, maintain 
aging infrastructure, as well as finishing planned parks and arterial streets
•
Continued to address pension debt through additional one-time funding to maintain the 
paid off status off the Public Safety Personnel Retirement System (PSPRS) unfunded liability 
(+7M / $205.3M to date)
•
Added funding for new two-year labor association commitments and general employee pay 
increases
•
Added 48 positions, 34 of which (70%) were converted from one-time funded to ongoing 
funding or have an offset from grants or other revenue and 5 were to fill the needs of new 
capital projects
•
Budget Stabilization Reserve continues at $10M

Where We Are in the Budget Process
Kickoff allows for 
Council direction on 
Strategic Focus 
Areas, policies & 
guidelines before 
budget process 
begins & Resident 
Budget Survey 
initiated
Decision Package 
and CIP 
recommendations 
submitted by 
departments in 
December
Financial forecast, 
funding decisions 
brought to Council 
during workshops 1 
(February), 2 
(March) and 3 on the 
CIP (March)
Proposed budget 
brought to Council for 
discussion at all-day 
briefing (May 2nd)

“Strength in Numbers”
FY 2025-26 
Budget Theme

Strategic 
Framework 
Guides 
Our Decision 
Making
Council Retreat Coming 
Spring 2025
Focus Areas
•Economic Vitality
•Sustainability and Technology
•Connectivity
•Neighborhoods
•Quality of Life
•Community Safety
•All CIP and Decision Package adds are tied to 
their related Focus Area

Fiscal Year (FY) 2025-26 
Budgetary Impacts
Personnel/Staffing
•
PSPRS unfunded liability continues its 
paid off status, which allows for freed up 
ongoing funding (biggest impact will be 
this upcoming FY)
•
Making progress on the number of 
vacancies
•
Added positions (54% Police/Fire) to 
reduce pressure in high need areas and 
shift one-time funded positions to 
ongoing
Local Economic Impacts
•
Local revenues in line with budget
•
Industrial construction impacts are still being seen 
in our monthly revenues
•
New retail and entertainment concepts continue to 
open that bring destination-based experiences to 
Chandler
•
State shared income tax will level downward to new 
normal
•
Long tradition of strong financial management
•
AAA upgrade on ETRO Bonds and maintained on GO 
Bonds
The 
Brightside

Personnel/Staffing
•
Retirement and vacancy impacts will continue to be an issue
•
ERP system will require significant citywide staff effort
•
Still some reliance on temp labor for critical services
Economy & Inflation
•
Costs, driven higher by prior year inflation, 
remain high; concern of recession continues
•
Bond Election needed for additional 
authorization in four categories
Technology
•
Multi-year citywide Enterprise Resource 
Planning (ERP) system replacement 
continues
•
Cybersecurity posture / Infrastructure
•
Governance / speed to delivery
•
Mobility and flexibility / more to do
Legislative Impacts
•
Legislative Impacts to local tax base and Model City Tax 
Code continue to be watched (e.g., grocery tax)
•
Full effect of Residential Rental tax removal bill will impact 
new FY (est. impact $11M ongoing or about 6% of TPT 
revenue)
•
Prop 479 in voters’ hands in November
The 
Challenges
Fiscal Year (FY) 2025-26 
Budgetary Impacts

Delineating Ongoing vs. One-Time
This year 82% 
ongoing  GF TPT 
revenues and 18% 
one-time was 
budgeted
Adopted
Slight revenue reduction shows 
reduction in one-time revenues and 
residential rental tax removal
Transaction Privilege Tax (TPT or Sales Tax)
The 
Challenges
Fiscal Year (FY) 2025-26 Budgetary Impacts

Evaluation is done for each 
TPT category and their 
ongoing versus one-time 
components
Delineating Ongoing vs. One-Time
The 
Challenges
Fiscal Year (FY) 2025-26 Budgetary Impacts

Council Priorities for One-Time Dollars
1. Maintain reserves sufficient to 
meet financial policies
3. Focus operating & capital 
spending to move forward strategic 
focus area action items
2. Reinvest in existing aging 
infrastructure, systems, and 
projects that generate ongoing 
savings
4.  New initiatives and capital, 
including sustainability

• Minimize increase in secondary property taxes
• Re-imagine resident amenities scheduled for replacement
• Prioritize aging infrastructure
• Finish planned construction of streets, parks, fiber and 
utility systems
• Prior to adding capital, ensure related ongoing O&M can be 
supported
• Utilize master plans to guide long-term capital investment
• Ensure sufficient bond authorization exists to complete 
projects desired by residents
• Balance timely completion and coordination of capital 
projects with impacts to neighborhoods and businesses
Capital 
Guidelines

Maintain similar 
Budget Survey 
process to generate 
community 
involvement 
(1,310 for FY 2023-24 |1,768 for FY 2024-25)
• Run from Nov. – Jan.
• Run ad campaign to encourage 
participation
• Offer in English, Spanish, and 
Mandarin
• 15 questions, 1-2 in each focus 
area with comment box 
• Additional updates to 
questions or process?
Resident Budget Survey

• Operating Management*
• Capital Management
• Reserves (updated Apr. 27, 2023)
• Debt Management*
• Long-Range Financial Planning
• Grant Management*
• Investment*
• Accounting, Auditing, and Financial 
Reporting*
• Pension Funding*
Financial 
Policies
Will review and bring to Council any 
recommended updates along with the 
required update for the pension policy
* Updated February 2024

Council Approved 
Budgeting Practices 
Support Financial 
Sustainability
Maintain AAA bond ratings from Moody’s, Fitch 
and S&P
•
Continue adherence to all fiscal policies
Remain Structurally balanced
•
Ongoing revenues support ongoing 
expenditures
•
One-time revenues support one-time 
expenditures
Maintain strong reserves
•
15% General Fund contingency reserve
•
Budget Stabilization reserve
Balanced expenditure growth
•
Focus on maintaining and/or modernizing 
existing services
Control Primary Property Tax 
•
Provide options should the forecast allow 
for reduction

FY 2025-26 Budget 
Process Updates
Continued Modified Zero Based Budget (MZBB)
•
Helps ensure current budgets are right-sized 
based on services provided
•
Analysis includes review of services, related 
expenditure category spending trends, and 
line-item reviews 
•
Started with 2 departments/divisions in first 
year, 3 more in current year
•
Results to be reported at All Day Budget 
Briefing

Council Process changes implemented 
in FY 2024-25 Budget
•
List department accomplishments without making them 
the focus of the presentation
•
List all capital projects and decision packages, but focus 
presentations on the highlights
•
Additional discussion of timing of projects where policy 
direction may be needed
•
Provide Council a “Review Guide” to help with budget 
book review process
•
Hold All-Day Budget Briefing on non-Council meeting 
week
• New process changes for FY 2025-26?
Feedback 
Received Last 
Budget Process 
Additional 
Thoughts?

Tentative Key Budget Dates
Budget Event
Date
Council Budget Kickoff
Tonight
Resident Budget Survey with Council Outreach Videos
Nov 2024-Jan 2025
Council Workshop 1
February 6, 2025
Council Workshop 2
March 24, 2025
Council Workshop 3
March 27, 2025
All-Day Budget Brief
May 2, 2025
Council Meetings:
Tentative Adoption
May 22, 2025
Public Hearing & Final Adoption
June 12, 2025
Adoption of Tax Levy
June 26, 2025
Public comment opportunities are now a part of all these budget meetings

Questions?