Unless Mesa leaders slash spending or bring in more money, the city will be in big trouble soon.
That was the message the city’s budget director gave the City Council at its annual planning session Thursday.
Jamie Warner unveiled a city financial forecast showing huge increases in debt payments and operating costs over seven years.
The situation will prevent the city from filling most vacant jobs without any changes in revenue or spending.
"It’s like hitting the wall," Warner said. "We have to restructure how we do business."
Mayor Keno Hawker said it’s not good news, but the council needed to see it.
"What it says is you should run for a two-year term and get the hell out of here," said Hawker, who is seeking reelection. The mayor called for fundamental changes.
Councilwoman Claudia Walters pointed out the no other Valley city has compiled a seven-year financial forecast, and the information could cast Mesa in a negative light when other cities could be in the same situation.
City debt payments are expected to soar from $48 million next year to $124 million in fiscal 2010-11, while the yearly operating costs on capital projects are projected to climb from $2.8 million to $21.5 million during the same period.
The result is the city will have to shelve more than 1,000 budget line items totaling $286 million over seven years, including replacement of city vehicles, equipment and city services, the forecast shows.
Meanwhile, the city’s ending fund balance will shrink from $40.8 million next year to $752,337 in fiscal 2010-11. Bonding agencies can charge the city higher rates if the fund balance dips below 10 percent of the annual budget.
Next year’s budget is estimated at $558 million. The projected budget for fiscal 2010-11 is $687 million.
The forecast includes no money to fill more than 200 city positions left open since last year to cut spending. It does call for hiring about 50 workers over seven years for new facilities.
The forecast shows that building new facilities isn’t the problem, it’s finding the money to run them. Projects such as fire stations and branch libraries are being delayed because they cost between $1.4 million and $2.4 million a year to operate.
Hawker said the next step is to form a citizen’s committee to prioritize city spending.
In 2001, the council directed the budget staff to compile a seven-year forecast. The process was delayed by the economic downturn following the Sept. 11, 2001, terrorist attacks.