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FY 2026-27 Budget Workshop #1 Council Conference Room Thursday, February 5, 2026 | 4:00 p.m. 1. Resident Budget Survey Feedback FY 2026-27 Resident Budget Survey Foundations Agenda 3. Preliminary Budget Forecast General Fund Revenues and Expenditures Spending Priorities Preliminary Capital Improvement Plan (CIP) Overview Preliminary Property Tax Discussion 4. Key Budget Dates & Closing remarks 2. Financial Considerations and Impacts Adding Sense to Dollars FY 2026-27 Budget Theme Our Vision We are a world class city that provides an exceptional quality of life Chandler Budget Process Timeline New Fiscal Year 2026-27 begins 7/1/2026 This year’s theme: Adding Sense to Dollars Council/Resident Process Staff Process Resident Budget Survey Feedback The survey ran from November 24, 2025, through January 16, 2026 CAPA assisted with a video ad campaign to encourage participation Continued expanded the outreach on social media Additional facilities provided paper copies, signage and survey QR codes and postcards Encouraged participation with Boards & Commissions, Recreation and Library users The survey consisted of 19 total questions and was offered in English, Spanish, and Mandarin Funding Priority questions in the survey help understand Chandler resident’s top priorities for operating programs and capital projects Each focus area was allotted 1-2 questions on the full survey, each with a comment box for written responses FY 2026-27 Resident Budget Survey 1,479 (1,343 prior yr) Survey Participants Survey Comments 1,961 (2,474 prior yr) Budget Survey Results Quality of Life Provides residents a convenient way to share feedback regarding City services, amenities and infrastructure that are important to their quality of life in Chandler Good Tax Dollar Return Overall City Services Very Good, 49% Good, 44% Neutral, 6.6% Strongly Agree, 20% Agree, 44% Neutral, 29% Very Satisfied 26% Satisfied 53% Neutral 17% 99% 93% 96% Budget Survey Results I Feel Safe in Chandler Chandler Fire Would Provide Quality Care Strongly Agree 28% Agree 56% Neutral 12% Strongly Agree 49% Agree 41% Neutral 9% 96% 99% Budget Survey Spending Priorities Capital Projects Theme # of Responses Social safety net services funding (Housing, Behavior Health, Seniors, Employment, etc.) 366 Enhancements to Public Safety services or personnel 343 Additional streets and alley maintenance improvements 303 Programs to address homelessness 294 Operating Programs and Services Theme # of Responses Ensure water and wastewater infrastructure is maintained 915 Quality public safety facilities and equipment for Police and Fire 564 Increase amenities and reimagine existing neighborhood and community parks 562 Enhanced street repaving program for safe commutes 480 Budget Survey Comment Themes (Top Three) Community Safety Traffic Enforcement & Road Safety (220 responses) • Major Themes Include: Residents value Chandler’s roadway infrastructure and safety efforts but consistently request stronger and more visible enforcement to address speeding, red-light running, street racing, unsafe intersections, school pickup/drop-off hazards, and traffic noise. Police Presence & Patrols (180 responses) • Major Themes Include: Residents appreciate seeing police patrols and feel reassured when officers are visible, while expressing a desire for more consistent neighborhood, park, and nighttime patrols as the city continues to grow. Mental Health & Crisis Response (150 responses) • Major Themes Include: Residents recognize the importance of police involvement in crisis situations and strongly support expanding mental-health training, de-escalation techniques, crisis intervention teams, and partnerships with social services to improve outcomes. Budget Survey Comment Themes (Top Three) Connectivity Street Maintenance & Infrastructure (170 responses) • Major Themes Include: Residents widely recognize that Chandler maintains roads better than many peer cities and appreciate ongoing resurfacing efforts, but express frustration with potholes, uneven pavement, prolonged construction timelines, poor project coordination, and streets deteriorating faster than repairs occur. Chandler Flex Program (160 responses) • Major Themes Include: Chandler Flex is consistently praised as an innovative, convenient service especially for seniors, teens, and non-drivers while residents strongly request expanded service areas, longer hours, simpler app use, better customer support, and broader access citywide. Public Transit & Bus Service (145 responses) • Major Themes Include: Residents appreciate having basic bus service and transit options, but report major gaps in frequency, route clarity, southern and southeast Chandler coverage, shade at stops, and travel times that make transit impractical for daily needs. Budget Survey Comment Themes (Top Three) Economic Vitality Overall Economic Health & Business Climate (140 responses) • Major Themes Include: Many residents feel Chandler is economically strong, well-run, and thriving with major employers and steady growth, while others note rising costs, vacant buildings, uneven revitalization, and concern that growth is not benefiting all residents equally. Employment Opportunities & Job Quality (130 responses) • Major Themes Include: Residents appreciate the presence of tech, engineering, and professional jobs, but report difficulty finding work within Chandler, limited mid-skill opportunities, prevalence of low- wage or service jobs, and challenges for young adults and experienced workers seeking local employment. Housing Affordability & Workforce Retention (120 responses) • Major Themes Include: Chandler is seen as a desirable place to live, yet high housing costs and rents are pushing young families, college graduates, retirees, and small business owners out of the city, raising concerns about long-term workforce sustainability. Budget Survey Comment Themes (Top Three) Neighborhoods Overall Neighborhood Quality & Pride (180 responses) • Major Themes Include: Many residents describe Chandler as a beautiful city with strong neighborhood pride and appreciate visible improvements over time, while others express concern that rapid growth, aging infrastructure, litter, and inconsistent upkeep are beginning to impact overall neighborhood appearance. Code Enforcement Responsiveness & Consistency (210 responses) • Major Themes Include: Residents frequently praise Code Enforcement for quick responses when issues are reported, online reporting tools, and the Code Enforcement Academy, but express frustration with inconsistent enforcement across neighborhoods, over-reliance on complaints, perceived harassment for minor issues, and lack of action on repeat or serious violations. Non-HOA Neighborhoods & Equity in Enforcement (160 responses) • Major Themes Include: Residents acknowledge that HOAs help maintain neighborhood standards, while emphasizing that non-HOA areas need stronger, more consistent enforcement to address weeds, abandoned vehicles, campers, trailers, sidewalk obstructions, and blight without creating the feeling that the City has become a de facto HOA. Budget Survey Comment Themes (Top Three) Quality of Life Overall Park System & Quality of Life (260 responses) • Major Themes Include: Residents overwhelmingly value Chandler’s parks, recreation centers, libraries, aquatic facilities, and events as key reasons they choose to live here, while emphasizing that continued investment, thoughtful planning, and consistent upkeep are essential to maintaining this high quality of life. Community Events, Arts & Cultural Programming (180 responses) • Major Themes Include: Residents strongly appreciate free and low-cost events such as the Multicultural Festival, Ballet Under the Stars, concerts, art socials, and family programming, but express concern about rising costs, parking fees, and affordability limiting inclusivity and access. Park Maintenance, Cleanliness & Asset Management (310 responses) • Major Themes Include: Residents recognize the effort staff put into maintaining parks, but report widespread concern about aging infrastructure, uneven maintenance, restroom cleanliness, broken equipment, irrigation damage, worn athletic fields, and the need to prioritize maintaining existing parks before expanding new ones. Budget Survey Comment Themes (Top Three) Sustainability & Technology Water Sustainability & Long-Term Supply (150 responses) • Major Themes Include: Residents strongly value water as Chandler’s most critical resource and support conservation, aquifer recharge, and water-quality efforts, while expressing concern about drought conditions, infrastructure capacity, water testing transparency, and ensuring long-term availability without significant cost increases. Responsible Growth & Development Balance (95 responses) • Major Themes Include: Residents appreciate Chandler’s economic growth and livability, but consistently express concern that high-density housing and rapid development may be outpacing infrastructure, increasing traffic, and placing additional strain on water and utility systems. Resource-Intensive Development & Data Centers (100 responses) • Major Themes Include: Residents support prioritizing water and energy for community needs and largely oppose data centers and similar uses, citing concerns about excessive water and power consumption, limited community benefit, noise impacts, and increased utility costs for residents. Financial Considerations and Impacts Quality of Life Sustainability & Technology Economic Vitality Strategic Framework Guides Decision Making Our Brand: A safe, diverse, equitable and inclusive community that connects people, chooses innovation and inspires excellence. Focus Areas: Community Safety Neighborhoods Connectivity Strategic Framework Guides Our Decision Making Operating Management * Capital Management (Jan. 2016) Reserves (Apr. 2023) Debt Management * Long-Range Financial Planning (Jan. 2016) Grant Management * Investment* Accounting, Auditing, and Financial Reporting * Pension Funding * (annual update; February 2026 Council Meeting) Financial Policies (*Revised and updated by Council February 2024) Chandler’s 9 Financial Policies Institutionalize Strong Financial Management Practices • Economy has seen inflation continue to be a concern, and Federal Reserve monetary policy is being closely watched • Grant funding changes by federal government continue to be in flux • Conformity at state level with One Big Beautiful Bill Act and newly incorporated San Tan Valley impact state shared income taxes (up to $3.6M conformity and $1.7M San Tan Valley ongoing reductions) • State Food Tax bill could change prior year agreement and create a loss of up to $17M ongoing revenue (not much traction but watching) • Growth of sustainable (ongoing) revenue is expected to grow at a slower rate at the state level as well as locally • Development revenues lower on single family residential. Expect future development to be more infill and redevelopment focused FY 2026-27 Financial Considerations National Recession Gauge showing lower risk of recession Source: St Louis Fed and Y Charts.com Currently not including recession in forecast, although monitoring Capital Plan Inflation Impacts (through Q3 of 2025) Data source: The Mortenson Construction Cost Index is calculated quarterly by pricing a representative non-residential construction project in geographies throughout the country. Construction Costs continue to go up. Construction Price Index’s new normal 5.9% over last 12 months Local Growth is still projected Source: University of Arizona’s azeconomy.org as of December 2025 Personal Income is expected to grow at 6 to 6.2% over next fiscal year Chandler maintains AAA Bond Ratings from Moody’s, Fitch, and S&P rating agencies for GO Bonds and ETRO • Continued adherence to all fiscal policies & strong reserves • Re-affirmed ratings in December 2025 Chandler tracks structural balance • Ongoing revenues support ongoing expenditures • One-time revenues support one-time expenditures Chandler maintains strong reserves • 15% General Fund contingency reserve • Continue Budget Stabilization provision at $10M Chandler manages expenditures to meet service demands • Maximize grant opportunities • Weigh positions vs. contracting • Continue Modified Zero-Based Budgeting to verify funding requirements to provide services Property Tax Options • Provide options to match expenditure needs or right size Sound Budgeting Practices Support Financially Sustainable Goals FY 2026-27 Preliminary Budget Forecast FY 2025-26 General Fund Operating Revenues and Expenditures Annual Inflows Annual Outflows 86.5% Local taxes and licenses and State shared revenues 11.1% Other Charges for services (i.e., parks, rec., building, planning, library) 2.4% Primary Property taxes 60.5% Ongoing Personnel (Wages/Benefits) 21.0% Ongoing Base Budget (i.e., Ops./maint., supplies, utilities) 18.5% One-time & other needs (i.e., PSPRS, consultants, pilot programs) If Revenues exceed Expenditures, General Fund Balance increases FY 2025-26 Adopted Budget reflects 82.2% of revenues as ongoing with the rest supporting one-time needs General Fund thru December True to Projection Expenditures December 2025 to 2024 Comparison $200,134,722 Expenses & Encumbrances 55.3% of Adjusted Budget Spent (PY 52.5%) -3.3% Overall revenue decrease from PY -5.4% Local TPT collections from PY 2.8% Increase in spending 2.3% higher than historical budget (represents interest and permit revenue) FY 2025-26 thru Dec is $4.1M over (+2.3%) / FY 2024-25 Thru Dec was $17.3M over (+10.1%) / FY 2023-24 thru Dec was $11.9M (+6.7%) Budgetary Impacts Personnel/Staffing • PSPRS unfunded liability continues its paid off status, anticipating additional ongoing savings • Making progress on reduced vacancies, especially in Police Local Economic Impacts • Local revenues in line with budget • New retail, entertainment concepts, and businesses continue to open • Long tradition of strong financial management • Current AAA rating on GO and ETRO Bonds confirmed in December for recent bond sales The Brightside Personnel/Staffing/Benefits • Employee wage changes and increased healthcare cost estimates included in five-year forecast • The conversion of one-time funded fulltime temps to FTE • Many FTE requests for needed service delivery submitted • Ambulance staffing will be added in FY 2026-27 Economy & Inflation • Chemical, utilities and contract costs continue to escalate • Water purchase costs and Colorado River water cuts remain a concern Technology • Multi-year citywide Enterprise Resource Planning (ERP) Financial/Human Resource system replacement – big lift for staff • Cybersecurity posture needs continuous improvement • AI flexibility and planning is underway Legislative Impacts • Legislative Impacts to local tax base and Model City Tax Code continue to be watched • Federal uncertainty for Neighborhood Resource programs • Income Tax conformity and incorporation of San Tan Valley reduces State Shared Revenues The Challenges Budgetary Impacts Total revenues change with the ebbs and flows of the economy impacting primarily one-time revenues. Ongoing revenue is increasing at a gradual pace. Modest wage changes are estimated for years 2-5 and ongoing revenues continue to be within current revenue assumptions for structural balance. FY 2025-26 5-Year General Fund Ongoing Forecast Revenues vs Expenditures Future ongoing revenue increases and/or expense reductions may be needed to sustain services Preliminary FY 2026-27 5-Year General Fund Ongoing Forecast Revenues vs Expenditures Ongoing/One-Time Local Sales Tax (TPT) Preliminary Revenues Local TPT is 52.5% of General Fund revenue Sales tax revenues fluctuate due to economic volatility, including increases or decreases in development, inflation and consumer confidence Key Local Sales Tax Revenues by Category Higher fluctuations (increased one-time) experienced during Intel expansions State Shared Revenues (in Millions) 31.6% of General Fund in FY 2024-25 Spending Priorities PSPRS Pension Update – GOAL ACCOMPLISHED Tier 1 & 2 funded status increased to 98.8% combined: 94.1% to 100.2% for Fire 94.6% to 98.0% for Police Tier 3 funded status still over 100%: 109.6% to 110.4% for Fire 110.1% to 111.5% for Police Note: Current year $15M payment not reflected Chandler % Funded 2025- 98.8% 2024- 94.4% Based on current wages/counts, add’l reduction in FY 2026-27 is approx. $1.3M • Mandatory changes (i.e. Utilities, contractual, chemical, and CIP related increases) $6.1M (all funds) $2.7M (GF) • Full-time Temporary employees to be converted to FTE $2.4M • In addition to conversions, 82.775 FTE requested for delivery of services • Some may convert from contractors, and 30 are related to Ambulance Ongoing Requests Net of Offsets One-time Requests Net of Offsets General Fund $20.7M Total of All Funds $26.9M General Fund $7.7M Total of All Funds $12.3M Total Decision Package Requests Net of Offsets: $39.2M New Decision Package Requests Expenditures “Outflows” Prioritize Ongoing Demands (Maintain > Enhance > New) $25.9M $13.3M All Funds net of offsets Ongoing Funding Options Maintain existing service levels within core programs and strategic focus areas including contract and other increases Build the strength of our workforce to meet evolving resident expectations Convert successful social safety net programs to ongoing funding from grants Ensure sufficient ongoing funding for facilities, infrastructure, technology, and security New enhancements or additions, considering the option of one-time pilot programs first Priorities for Ongoing Dollars Maintain reserves sufficient to meet financial policies including PSPRS fully funded status New initiatives and capital that generate sustainable ongoing financial savings Focus operating and capital spending to move forward strategic focus area action items Reinvest in existing aging infrastructure, systems, including projects that generate ongoing savings One-Time Dollar Funding Options Preliminary Capital Improvement Plan (CIP) Current 10-Year CIP Council Guidelines Maintain secondary property tax rate Re-imagine resident amenities scheduled for replacement Prioritize aging infrastructure and plan for redevelopment 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 Manage bond authorization to complete projects desired by residents Balance timely completion and coordination of capital projects with impacts to neighborhoods and businesses Fiscal Foundations “Adding Sense to Dollars” Continued Focus on Chandler’s Aging Infrastructure Maintaining high quality of life for our residents 65.75 square miles 2,090 miles of streets 28,610 Street lights 230 signalized intersections 1,240 miles of potable water lines 1040 miles of sanitary sewer 70 developed parks (1,317 acres) 64 lighted fields 71 municipal buildings 867 fleet vehicles/ trucks 32 operating wells Inflation is still present driving costs higher Voter approved bond authorization will help us meet project needs for many years Additional focus will be on how projects effect ability to maintain property tax rate and their impact on utility rates Capital Project Review in Workshop #3 New Year CIP Considerations Assessed Values Not Yet Received Preliminary Property Tax Discussion Property Tax Rate Comparison Per $100 of Assessed Value Breakdown of $1 of Typical Chandler Property Tax Bill City of Chandler 11 cents Public Schools and Community College Districts 69 cents Maricopa County & Special Districts 20 cents *Based on 2025 Tax Bill information. Exact split will vary depending on the school district and any other special taxing districts on the bill. Property Tax Assessed Value Comparison FY 2026-27 projected increase is a combination of new property coming on the tax rolls and appreciation Primary property tax rate has been reduced for 10 consecutive years ($3.8M in ongoing tax reductions) 47 • Due to assessed values small increase last year, truth in taxation rules may not apply. We will know more once values are received • Evaluate Primary rate options • Leave rate flat, adding an anticipated $349,407 to the GF • Slight increase could fund additional needs • Evaluate Secondary rate to deliver commitments made in bond election with no change to rate if possible Property Tax Policy Options and Considerations Key Budget Dates Budget Event Date Council Budget Kickoff Completed 10/13/25 Citizen Budget Survey Completed 1/16/2026 Council Workshop #1 Tonight 2/5/2026 Council Workshop #2 03/23/2026 Council Workshop #3 CIP Focused 03/26/2026 All Day Budget Briefing 05/1/2026 Council Meetings Tentative Adoption 05/21/2026 Public Hearing and Final Adoption 06/11/2026 Adoption of Tax Levy 06/25/2026 Questions?