East Valley, say hello to the folks at city hall.
They are the ones who pave your streets, send police and firefighters when you are in danger, bring clean water to your home, haul off your garbage and, with one flush, make your sewage disappear.
They build the parks where you and your kids can play, supply transit services, dispense the knowledge of the world at no charge via modern libraries, weave arts and culture into the fabric of our communities and, in a couple of cases, even give you a front-row seat to Major League Baseball.
None of this happens, of course, without dollars – millions and millions of dollars. And now is the time when city councils must weigh the available dollars against the public’s insatiable demand for services, on the one hand, and its natural desire to reduce taxes on the other.
Mesa expects downturn
As this budget season rolls toward final adoption of municipal spending plans in June, there is a general air of optimism fueled by one of the longest economic recoveries in American history, tempered by still-fresh cautionary memories of the Great Recession.
Mesa, in fact, is planning for a downturn; Candace Cannistraro, Mesa’s management and budget director, told the City Council in March there may be trouble ahead.
“At this point we are adding an economic correction to the forecast,” Cannistraro said. “We have not had an economic correction in quite some time … we feel relatively confident that the next five years we will experience some type of a correction.”
“Correction” is the term economists use to describe a slowdown in an overheated economy, sometimes severe enough to be called a recession.
That could create a double whammy for city budgets: First, local tax collections slow during the actual downturn. Then, two years later, the slowdown is reflected in lower payments from state-shared revenue because state revenue-sharing operates on a two-year time lag.
Chandler: Slow growth
Chandler doesn’t share Mesa’s worry about a future economic setback.
But Dawn Lang, Chandler’s management services director, said recent robust increases in the city’s income are likely to be replaced by more modest growth over the next five years. During that span, Chandler is projecting 2 percent annual increases in operating-fund revenue.
Lang has been helping chart Chandler finances for almost 11 years, a span that includes having to work through the loss of 130 city positions during the Great Recession. Lang said Chandler accomplished the reductions with voluntary retirement and buyout packages.
Now, she said, “Chandler is in very good shape. … We are experiencing a positive economic environment.”
Chandler’s City Council received a final budget proposal in early April that reflects a 6.3 decrease in overall spending over 2017-18. Most of that is attributed to lower capital spending, but Lang said even with a 0.3 percent decrease in general-fund outlays, the city has been able to add a few positions by shifting funds among departments.
‘Stable’ in Tempe
Tempe, like Chandler, thinks the economy is more likely to produce slow growth in coming years than a downturn.
“The budget is stable,” said Ken Jones, who is Tempe’s deputy city manager and chief financial officer. “The city has a little bit of expansion in the budget from one year to the next. We are keeping up with maintaining our programs and services and maintaining the capital assets that we have.”
A recent pattern of slow growth in the U.S. economy, Jones said, may reduce the chances of a recession in the near future. “A lot of economists you talk to will say we’re due for one, but … other economists say it could be a lot longer.”
Rather than trying to predict a recession, Jones said, “We just make sure we build up our fund balances to the point where we could overcome a normal economic downturn.”
Although Mesa thinks the economy could stumble in the coming few years, current projections are optimistic to the degree that some departments will be able to add staffing in the new fiscal year.
That includes the addition of a park ranger and four code-compliance officers. Both of those departments were decimated during the recession.
Further, Mesa is feeling good enough about its finances to consider a general-obligation bond election this fall – the city’s first since 2013 – to finance public-safety projects and other capital improvements.
“There’s a lot of requests (for projects),” City Manager Chris Brady said during a March 22 council study session. “But we have to be mindful of the impact that has on our residents.”
In addition to a bond vote, Mesa also is considering asking residents to increase the local sales-tax rate, which currently sits at 1.75 percent. The idea would be to provide more money for ongoing city expenses. Mesa voters in 2016 rejected a sales-tax increase aimed mostly at financing a proposed downtown campus for Arizona State University.
Endless wish list
The gap between what the public wants and what a city can afford was never more starkly on display than when Chandler hosted its “Budget Connect” meeting on Feb. 22.
In that meeting the City Council heard the results of an online citizen survey to gauge where Chandler could enhance city services.
Among the requests: More lighted ballfields, better community-based policing, more public transit, more downtown entertainment options, street improvements, more bike paths and bus routes, a light-rail connection to downtown, more frequent street sweeping, more pickleball courts, better traffic enforcement, more downtown bicycle cops, more help for the homeless, better environmental enforcement, weekend and evening recreation programs for kids, additional parks, better park maintenance, more free shows at the arts center, more senior services, a new lineup of special events, an art museum, cheaper utilities, better code enforcement and a better city website.
Other than that, the survey found, most Chandler residents are pretty happy with what their city has to offer.
Juggling wants, needs and available dollars can be harder during good times than bad, Lang said.
“When times are really tight and we’re having to do reductions,” you’re really looking at trying to save as many services as possible. But when times are positive like they are right now … I think there’s just more and more needs that come out.”
Chandler works hard, she said, to include citizen requests into its final budget plans.
Gilbert looks for money
Gilbert council members grappled with the same kinds of issues during a day-long financial retreat in early March – hearing, for example, that the town does not have enough money to fully build out two new parks under development, or to fund training facilities for police and firefighters.
That meeting also produced a discussion of Gilbert’s utility rates, which have not changed since 2009. City staffers recommended in March that water rates be hiked 11 percent. The money, Town Manager Patrick Banger said, would address water-quality issues and keep that utility’s financial reserves healthy.
On top of all that, Gilbert may ask voters for at least $48 million in bond money in the November election to fund capital projects – spending that would hike the average resident’s property tax bill.
Although the local retail economy and sales-tax revenues are strong, Gilbert Budget Director Kelly Pfost said the operating budget is tight – a reflection, she said, of Gilbert’s overall fiscal conservatism.