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FY 2026-27 Budget Workshop #2 Council Conference Room Monday, March 23, 2026 | 4:00 p.m. Adding sense to dollars FY 2026-27 Budget Theme New Fiscal Year 2026-27 starts 7/1/2026 “Adding Sense to Dollars” Council/Resident Process Staff Process Chandler Budget Process Timeline Strategic Framework Guides Our Decision Making Focus Areas Economic Vitality Sustainability and Technology Neighborhoods Connectivity Quality of Life Community Safety FY 2026-27 Budget Overview and General Fund Operating Budget Update Preparing for the FY 2026-27 Budget Goal: To ensure adequate funding of core services and efficient use of resources prior to requesting new funding Review three years of expenditures Confirm funding is adequate for each base budget account based on historical trends Focus review on core service delivery items Make budget adjustment recommendations based on findings Ensure departments have sufficient base budget to cover annual operational needs MZBB Process Review selected Departments/Divisions using Modified Zero Based Budget (MZBB) Annual Budget Evaluation 2025-26 Modified Zero Based Budget (MZBB) Results For all departments reviewed, reallocations between lines were made to better reflect spending, including redistribution across cost centers with-in a department to reduce future budget requests by repurposing existing budget Reviewed in FY 2025-26: • City Manager • Connections and Impact • Transportation Policy • Law • Human Resources: Shifted some costs to Self Insurance Funds based on actual work • Neighborhood Resources: Identified budget adjustments needed for Professional/Contract Services and Other Charges & Services under the Neighborhood Preservation and Housing & Redevelopment areas Over last 3-years of MZBB, reallocations of $523k have been implemented with $81k of recommended budget adjustments FY 2026-27 Budget Drivers Balancing slowing revenue growth with service and infrastructure needs Revenue Environment • FY 2025-26 budget to actual results are in alignment leading to more predictable FY 2026-27 projections • One-time revenues narrowing causing ongoing % to climb • State shared revenue adjustments (San Tan & Conformity) • Adding revenue generating or cost reducing positions • Monitoring federal grant funding closely • Major Revenues: 53.1% Local TPT and 31.9% State Shared Service & Workforce Needs • Adding new ambulance service FTE & budget appropriation, with revenue offset • Costs continue to increase just to maintain existing service levels • Adding front line positions to maintain parks, buildings, and fleet, as well as continue strong customer service Infrastructure & Capital • Continuing investment in aging infrastructure replacements, saving on maintenance in the long run • Maintaining current planned improvements while cost increases continue • Planning for future O&M on new capital • Delivering on promises to maintain infrastructure and advance capital projects Financial Strategy & Savings • Maintaining PSPRS funded status to lower ongoing pension costs • Completing solar investments to generate ongoing savings • Continuously looking for grant funding and partnership opportunities • Prioritizing revenue generating or cost reducing positions to help future proof operations Ongoing/One-Time Local Sales Tax (TPT) Proposed Revenues 53.1% of FY 2026-27 General Fund revenue Sales tax revenues fluctuate due to economic volatility, including increases or decreases in development, inflation and consumer confidence 93% 94% State Shared Revenues (in Millions) 31.9% of General Fund for FY 2026-27 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 one-time programs/personnel to ongoing funding Ensure sufficient ongoing funding for facilities and infrastructure including technology and security New enhancements or additions, considering the option of one-time pilot programs first FY 2026-27 Ongoing Decision Package Recommendations (All Funds) All Funds $29M in ongoing requests (PY $16.7M) $11.6M recomm. net of offsets (PY $9.5M) General Fund (GF) $23.1M in ongoing requests (PY $13.8M) $5.4M recomm. net of offsets (PY $7.1M) Recommendations to future proof Chandler Adds Ambulance services personnel and related O&M Adds maintenance costs related to new capital amenities Adds inflationary increases to maintain services Adds Public Safety Real Time Operations Center programs Supports transit services Surface water delivery increases Ongoing utility & chemical increases 77% of new positions have a revenue or re-allocation of expense offset FY 2026-27 Proposed Budget Positions Investing in People Who Serve Our Community General Funded Revenue or Reallocation Offset Meeting service needs with limited budget impact to help future proof Keeping pace with our growing city and keeping promises General Funded Positions | 13.5 FTE Buildings & Facilities Custodial Superintendent Fleet Services Sr. Technician Facilities Maintenance Sr. Technician →Clean public facilities + operational city vehicles City Manager Management Assistant AI Officer →Efficient operations + responsible tech adoption Community Services Urban Forestry Technician Parks Maintenance Sr. Technician →Safe trees + clean, welcoming parks Fire Fire Warehouse & Supply Tech 2 Firefighter Rovers →Equipment readiness + response time coverage Police Hiring Unit Supervisor (Civilianization) →Improves capacity + reduces sworn cost Management Services Procurement Officer Sr. .5 Env. Services Sr. Tech →Cost savings, compliance, risk reduction CAPA Broadcast Engineer "Keeping Pace With Our Growing City and Promises Delivered" Cost considerations- New FTE 13.5 Position Costs • Ongoing: $2,108,093 • One-time: $684,292 Revenue-Funded & Offset Positions | 44.3 FTE These Pay for Themselves and Help Future Proof Operations 44.3 FTE Fully or Significantly Offset by Revenue, Reallocation, or Savings ~76.6% of all proposed positions Net General Fund impact is a fraction of gross cost Fiscal Responsibility Built In Position / Group Dept FTE Offset Source % Firefighter – Ambulance Fire 27 Ambulance Revenue 100% Ambulance Mgr & Analyst Fire 2 Ambulance Revenue 100% Ambulance Fire Mechanic Fire 1 Ambulance Revenue 100% Opioid Response Team Fire 2 Grant / Revenue 100% Cultural Arts Production Staff Cultural 2.3 Program Revenue 50% Utility Services Rep Mgmt Services 1 Enterprise Fund 100% Business Compliance Inspector & Specialist Mgmt Services 2 Fee Revenue 100% Closed Circuit TV Analysts Public Works 2 Reallocation 100% Sr. Engineer & Const. Design PM Public Works 2 Capital Projects 80% Programmer Sr. Analyst (Contractor →FTE) IT 1 Cost Savings ✓ Cybersecurity Sr. Analyst (Contractor →FTE) IT 1 Cost Savings ✓ Senior Housing Recreation Specialist Neighborhoods 1 Grant Funding 100% TOTAL 44.3 ~76.6% of all proposed FTE — Cost considerations- Revenue Offset FTE Revenue Offset Net Impact by Fund Additional Positions for Consideration Can generate revenue or save expenditures to further align strategic plan set by Council • (1) Economic Development Project Manager (Retail) ($170,866 ongoing cost is equal to $720k in monthly taxable sales generated) • (1) Firefighter Rover (avoids mandatory overtime) • (1) Information Technology Contractor supporting ongoing technology (by converting to FTE, would save approximately $100K one-time costs) • (1) Senior Utility Maintenance Technician (reduced water loss) • (1) Metering Services Technician (faster meter replacements for better billing accuracy) Boutique Peer Comparison - Adopted FTE per 1,000 in pop.| FY 2025-26 East Valley Average 9.1 FTE per 1,000 Residents Includes recommended FTE 6.6 FTE per 1,000 Residents Includes Mesa, Scottsdale, Tempe, Gilbert & Queen Creek Of recommended positions are Frontline Service Positions 93% Ensures continued excellent service delivery while maintaining the lowest sales tax rate, lowest utility rates, and lowest overall cost burden to residents in the Valley General Fund Ongoing Forecast Ongoing revenue is increasing at a more gradual pace than expenditures. Modest wage changes are estimated for years 2-5 of the forecast. Ongoing revenues and expenditures will need refinement over next two years to ensure structural balance continues. Proposed 5-Year One –Time General Fund Balance Update One-Time Dollar Funding Options Maintain reserves sufficient to meet financial policies including PSPRS fully funded status New initiatives and capital that generate sustainable ongoing financial savings Focus operating & capital spending to move forward strategic focus area action items Reinvest in existing aging infrastructure, systems, including projects that generate ongoing savings 2026-27 One-Time Decision Package Recommendations (All Funds) Significant Recommendations Citywide Technology Projects, Cyber Security & ERP Primary and General Elections Enhanced Citywide Marketing Continued Transit Services One-time contracted services Ambulance equipment and supplies Human Services allocations, Heat Relief and Operation Open Door Water conservation Program One-time Utility Chemical Increases (GAC/PAC) All Funds $18.2M in one-time requests (PY $22.5M) $19M recommended net of offsets (PY $17.6M) General Fund (GF) $10.5M in one-time requests (PY $16.9M) $13.9M recommended net of offsets (PY $14.6M) Maintain Funded Status of PSPRS to Ensure Unfunded Liability Does not Grow Supports use of additional one-time funds to payoff any remaining unfunded liability on an annual basis Note: PSPRS has not released the modeler to confirm effect of actual rate of return to show impact to liability Police 94.6% to 98.0% Fire 94.1% to 100.2% __________________________ Total 94.4% to 98.8% Note: FY 2025-26 $15M payment not yet reflected No planned FY 2026-27 additional payment Based on current wages/counts, ongoing rate reduction for FY 2026-27 is approx. $2.6M ($12.3M total) 5-Year One-Time General Fund Balance Forecast Appropriated 15% Contingency ($55.8M of fund balance), Council Contingency $425K ($350K one-time & $75K ongoing), and other reserves Proposed 5-Year One-Time General Fund Balance Forecast Assessed Valuation and Property Tax Update $0.950 $1.000 $1.050 $1.100 $1.150 $1.200 $1.250 $1.300 0 500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 3,500,000,000 4,000,000,000 4,500,000,000 Primary Secondary Limited Combined Rate 28 Property Valuation and Tax Rate History Tax rate was increased during declining values, and decreased during periods of increasing values 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. Levy with Rates Unchanged Impact to Median Value Homeowner $0.01 change to Property Tax Rate equals $427,959 FY 2026-27 budget draft assumes primary tax rate remains flat, allowing for capture of ongoing revenue which will require a Truth-in-Taxation process Notes: FY 2009-10 was last time Truth-in-Taxation process was required. There have been 10 consecutive years of primary rate reductions. Budget Event Date Council Budget Kickoff Completed Resident Budget Survey with Council Videos Completed Council Workshop #1 Completed Council Workshop #2 Tonight Council Workshop #3 Capital Improvement Program 3/26/2026 All Day Budget Briefing 5/1/2026 Council Meetings Tentative Adoption 05/21/2026 Public Hearing and Final Adoption 06/11/2026 Adoption of Tax Levy & Fee Action 06/25/2026 Key Budget Dates Questions?