City Council

Mayor Cal Sheehy Lake Havasu City Vice Mayor Jeni Coke Police Facility Councilmember Nancy 2360 McCulloch Blvd North Campbell Lake Havasu City, Arizona Councilmember Jim Dolan 86403 Councilmember David Lane www.lhcaz.gov Councilmember Michele Lin Councilmember Cameron Moses City Council Budget/CIP Work Session Minutes - Final Thursday, May 13, 2021 9:00 AM 1. CALL TO ORDER Mayor Sheehy called the meeting to order at 9:00 a.m. 2. PLEDGE OF ALLEGIANCE The Mayor led in the Pledge of Allegiance. Mayor Sheehy announced that members of the public can attend in-person or watch or listen to the meeting on Channel 4, or live stream on the City’s website. He added that public comments are being accepted by emailing the City Clerk at cityclerk@lhcaz.gov at least one-hour prior to the posted start time of the meeting. 3. ROLL CALL Present: 7- Mayor Cal Sheehy, Vice Mayor Jeni Coke, Councilmember Nancy Campbell, Councilmember Jim Dolan, Councilmember David Lane, Councilmember Michele Lin and Councilmember Cameron Moses 4. PUBLIC HEARING Presentation, Discussion, and Potential Direction to Staff on the Budget for Fiscal Year 2020/21 (Year-End Estimates), Fiscal Year 2021/22 Annual Capital Improvement Plan City Manager Jess Knudson addressed the Council and said this is the third work session in review of the proposed Fiscal Year (FY) 2021-22 budget with a tentative and final budget adoption in June 2021. He said the proposed budget process has been different this year than previous years with unknowns in sales tax revenues, in response to the pandemic. He said over the last several months, Lake Havasu City has seen increases in tourism and sales tax revenues, which allows the City to look at solutions in the budget to address issues that the City has been facing for many years, including additional staffing and infrastructure needs. Administrative Services Director Jill Olsen said today’s work session will review the Lake Havasu City Page 1 Printed on 6/25/2021 City Council Minutes - Final May 13, 2021 operating budget, revenue and expenditure projections, and departmental budgets. She said any changes to the proposed budget today would be highlighted at the tentative budget adoption on June 8th. Ms. Olsen said this year’s operating budget includes a 9.6 percent increase in personnel over the prior budget, which is largely due to the full year implementation of the Positional Analysis Implementation (6.1 percent), as well as step increases for FY 2022. It also includes a 1.5 percent employer healthcare rate increase and pension rate increases for all general employees in the Arizona State Retirement System (ASRS) and all public safety employees in the Public Safety Personnel Retirement System (PSPRS). She said the ASRS rate increased from 12.27 percent to 12.41 percent, and the PSPRS rates increased as follows: o PSPRS  Police • Tier 1 & 2 from 56.47% to 63.53% (up 7 percentage points) • Tier 3 from 54.55% to 62.88% (up 8.3 percentage points)  Fire • Tier 1 & 2 from 51.54% to 57.58% (up to 6 percentage points) • Tier 3 from 47.97% to 54.71% (up 6.7 percentage points) Ms. Olsen reviewed the new full-time positions budgeted in the General Fund and Enterprise & Grant Funds as follows: General Fund Position City Attorney Assistant City Prosecutor City Attorney Legal Technician Administrative Services Procurement Specialist Administrative Services Oracle Application Support Analyst Administrative Services Computer Operations Specialist (2) Administrative Services Customer Service Technician (2) Police Public Safety Dispatcher (2) Development Services Building Inspector Parks and Recreation Parks Maintenance Superintendent Fire Firefighter Paramedic (5) Public Works Civil Engineer Public Works Equipment Mechanic I Enterprise & Grant Funds Position Public Works Dispatcher (Transit) Public Works Field Supervisor Public Works Instrumentation Technician Lake Havasu City Page 2 Printed on 6/25/2021 City Council Minutes - Final May 13, 2021 Ms. Olsen noted that the General Fund list does not include the addition of a part-time lobby receptionist at City Hall for FY 2021-22. She explained that many of the new positions have a savings in converting positions from part-time to full-time, and added that the five Firefighter Paramedic positions are contingent upon the Staffing for Adequate Fire and Emergency Response (SAFER) Grant. Ms. Olsen said the proposed budget includes an increase of $8.4 million in services, supplies and capital over the prior budget, with a $6.3 million increase in the General Fund, $734,000 increase in the Water Fund, and $1.1 million increase in the Wastewater Fund. She added that there is an increase due to supplemental items in the Police training/supplies/equipment budget of $143,000 (which is offset with donations, grants or other restricted revenue accounts specific to the Police Department), $268,000 for four additional police vehicles, $1.14 million for Fire vehicle/engine/trucks, $198,000 for Parks and Recreation vehicles/equipment, $700,000 for Information. Technology-related items, $1.5 million in Water Fund operations/maintenance/vehicles/equipment, and $1.9 million for Wastewater Fund operations/maintenance/vehicles/equipment. Ms. Olsen reviewed the other revenues and expenditures as follows: • FY 21-22 Contingency Budget = $2.657 million (all funds) o Included in budget for unfunded critical items • General Fund Contingency o $1 million (same as prior year) • Additional Potential Revenue/Expenditure o $6.5 million budgeted in the General Fund for anticipated funding from the American Rescue Plan Act (ARPA) o $5 million additional revenue potential (i.e. grants, donations, etc.) o $1 million for deferred facility maintenance o $3 million in HURF (fund balance) o Property Tax Rate unchanged  With Assessed Valuation increase – additional $263,000 Ms. Olsen reviewed the departmental budgets (which excludes depreciation) as follows: Department FY 21-22 ($ - in millions) Administrative Services 5.1 City Attorney 1.14 City Clerk 0.27 City Council 0.27 Lake Havasu City Page 3 Printed on 6/25/2021 City Council Minutes - Final May 13, 2021 City Manager 0.49 Community Affairs 0.11 Human Resources 0.53 Development Services 1.77 Fire 16.9 General Services 17.2 Municipal Court 2.3 Parks & Recreation 7.2 Public Works Admin & Engineering 0.15 Public Works Transit 1.3 Public Works Maintenance Services 1.0 Public Works Vehicle Maintenance 0.63 Police 19.2 Airport 10.75 HURF (Street) 10.73 IDD (Water) 24.33 Refuse 7.29 Wastewater Utility 34.3 She explained that the FY 2021-22 budget book provides more detail with any variances (increases or decreases) listed within each of the departmental budgets. Councilmember Dolan commended staff for their hard work preparing the FY 2021-22 budget. He spoke on the American Rescue Plan Act (ARPA) funding that is uncertain at this time. Mayor Sheehy said the guidance for the funds released so far appears to be very restrictive. Councilmember Moses said decisions regarding the budget will stem from revenue projects moving forward and asked how the City forecasts sales tax collections. Ms. Olsen explained that the City reviews prior year trends, taking into account any anomalies, and looks at what the sales tax revenues would be had there not been a pandemic, but still associated growth at a different level, and adjusts the City’s FY 2022 and forward projections based on that number. Councilmember Moses asked if the City is projecting steady growth in sales tax revenues each year, to which Ms. Olsen said yes, adding that the City is projecting an increase of approximately 3 percent annually. Councilmember Campbell said she would like to see the budget moving forward include funding for right-of-way infrastructure to improve broadband internet services in Lake Havasu City. She added that she would also like to see Main Street turned into a “smart Lake Havasu City Page 4 Printed on 6/25/2021 City Council Minutes - Final May 13, 2021 street” and possible funding to finish the Main Street sign. Ms. Olsen spoke on the legislative offset in subsequent years that has been included in the financial projections due to the State’s proposed tax credit (flat tax). She said the flat tax will reduce the amount of funding the City receives in state-shared revenues; however, if passed, would not affect the City until FY 2024. Mayor Sheehy said the proposed flat tax could have negative impacts on Lake Havasu City; however, Representative Regina Cobb has assured him of a fund in FY 2024 that could help support cities and towns if this does not come together. Councilmember Lane commended staff for their hard work, time, and effort in preparing the budget and recognized that staff has been doing more with less for a number of years and even though this year is showing a little more relief in the budget, staff is still very cognizant and conservative with their budgets. Councilmember Campbell was concerned that the ARPA funds would only go to cities and towns that showed a drop in revenue and Lake Havasu City may not fall into the category to be able to use those funds. Mayor Sheehy agreed and said there may not be an opportunity for Lake Havasu City to use those dollars; however, the funding has been budgeted in FY 2021-22 should the funds become available. Mr. Knudson and Fire Chief Peter Pilafas spoke on the replacement plan in the budget for fire engines in the Fire Department. Mr. Knudson said the first year of the plan includes a refurbish of one existing fire engine and replacement of one fire engine, with a tentative plan moving forward for a replacement and refurbish every other budget year. Chief Pilafas reviewed the plan and said the first year (FY 2021-22) includes replacing one fire engine, that is currently 20 years old, and refurbishing one fire engine, which is half the cost of a replacement. He spoke on the importance of having a five-year plan that provides reliable engines for the Fire Department to respond to the community’s needs. Mayor Sheehy commended staff for the strategic hires and positions in the proposed budget that will increase efficiencies. He said the budget conversations and financial outlook of the City today versus 12 months ago has completely shifted, allowing the City to offer valuable services to the citizens. 5. ADJOURN Upon motion by Councilmember Lane, and seconded, the meeting adjourned at 9:40 a.m. CERTIFICATION I hereby certify that the foregoing is a full and true copy of the Budget/CIP Overview Work Session Minutes of the Lake Havasu City Council held on the 13th day of May, Lake Havasu City Page 5 Printed on 6/25/2021 City Council Minutes - Final May 13, 2021 2021. I further certify that the meeting was duly called and posted, and that a quorum was present. ____________________________________ Kelly Williams, City Clerk/MMC Lake Havasu City Page 6 Printed on 6/25/2021