Eloy City Council Work Session - May 18, 2026: FY2026-2027 Tentative Budget Overview

On Monday, May 18, 2026, the Eloy City Council held a work session to review the proposed tentative budget for Fiscal Year 2026-2027. The meeting was called to order at 5:00 p.m. (note: the agenda listed a 4:00 p.m. start time, but the transcript indicates a 5:00 p.m. start). No public comments were made. City Finance Director Brian R. presented the budget overview, covering revenues, expenditures, personnel changes, and capital projects. The total proposed budget is $105,612,540, a reduction of approximately $10 million from the prior year's $115 million budget, primarily due to the completion of large capital transfers from the general fund to water and wastewater projects.

Discussion Items

• Budget Overview: The FY2026-2027 tentative budget totals $105,612,540. The general fund is $28.1 million (down $12.3 million due to reduced transfers out). Special revenue funds account for 33% of the budget, capital projects funds for 28%, enterprise funds for 12%, and the perpetual care fund for 2%. The budget is balanced with expenses matching revenues, and contingencies are built into funds such as the general fund ($2.7 million contingency).
• Revenue Outlook: City sales tax is up slightly (about $300,000), primarily from construction/manufacturing. The primary property tax rate will increase from 0.9769% to 0.9848%, a nominal increase. State shared revenue is conservatively budgeted at $3.6 million due to uncertainty at the state level. Water/wastewater rate increases (second of five) effective November 1, 2026, and a 4.8% sanitation increase (Waste Management) effective July 1, 2026, are included.
• Personnel and Compensation: The budget includes a 4% general wage increase for all employees, market adjustments for positions identified in the classification and compensation study (about $204,000 including benefits), and a 1% holiday incentive. Health insurance costs increase by approximately 4.8%. Two new positions are added: a public works inspector (costing $107,000) and a police dispatcher ($89,000). Minimum wage is programmed at $15.15 per hour.
• Key Cost Drivers: 4% wage increase ($430,000 including benefits), market adjustments ($204,000), two new positions, one-time cash payouts for retirements ($91,000), and a slight decrease in Arizona State Retirement contributions (from 12% to 11.97%).
• Fund-by-Fund Review: The director reviewed each fund, highlighting major changes:
  • Streets Fund: $5.58 million, up $4.1 million due to Sunland Gin/Erica Road project ($3.5 million) and increased operating costs.
  • Streets One-Time Fund: $1.9 million, with no specific projects identified but available for unexpected needs.
  • LTAF: $11,860, no significant changes.
  • Economic and Community Development Fund: $2.6 million, increase of $188,110; includes rollover projects for general plan update.
  • Police Impound and Public Safety Equipment Funds: Small budgets ($13,490 and $11,265) for public safety expenses.
  • Grants Fund: $14.69 million, increase of $1.8 million; includes three grant-funded personnel (Githem, HIDA, SRO) and $4.8 million for Sunland Gin road grant.
  • JCF and Court Recovery Funds: $67,680 and $192,130 for court-related expenses; potential use for security upgrades.
  • Opioid Settlement Fund: New $500,000 budget; total settlement over $2.1 million, funds to be used for opioid-related expenses.
  • Economic Incentive Fund: $5 million, no expenditures identified.
  • Smart and Safety Fund: $230,425 for public safety expenses from marijuana tax.
  • Water Allotment Fund: $130,000; holds funds for Linmark's water allocation; reimbursable if agreement canceled.
  • Cemetery Fund: $237,465, decrease of $176,705 due to completion of capital projects (backhoe, vegetation work).
  • Airport Fund: $1.06 million, increase of $656,000 for lease updates and policy work.
  • Perpetual Care Fund: $23,835, decrease reflecting plot sales.
  • Capital Projects Fund: $3.2 million for general administration capital projects, including police vehicles, senior center renovation, and flexibility for unforeseen projects.
  • Impact Fees: Parks ($1.2M), Police ($1.1M), Water ($378,380), Streets ($1.2M); wastewater impact fee fund exhausted. These funds are for growth-related expenses only.
  • Utility Obligation Bond: $22 million for water/wastewater improvements.
  • Enterprise Funds: Water ($4.73M, decrease of $3.73M), Wastewater ($5.22M, decrease of $9.79M), Sanitation ($3.05M, decrease of $674K). Reductions due to completion of major projects and bond payoffs. Contingencies established for each fund.
• General Fund Departments: Reviewed each department budget:
  • City Council: $352,500 (increase for community programs and partnerships).
  • Human Resources: $545,360 (increase due to ESI contract).
  • City Clerk: $655,700 (increase for E1 software support and risk retention pool).
  • Magistrate Court: $675,530 (slight decrease).
  • City Manager: $677,320 (increase for legal expenses).
  • Finance: $1.24 million (decrease due to removal of one-time payout, but increase in software subscriptions).
  • Legal: $214,845 (no change).
  • Community Development: $2.7 million (increase for outside plan review).
  • Contingency/Debt/Transfers: $9.78 million (includes $2.7M contingency, $200K for Veterans Park improvements, $50K for 250th 4th of July celebration).
  • Community Services: Administration ($671K), Parks ($687K), Recreation ($1.1M), Library ($308K), Facility Maintenance ($562K). Increases for programming, HVAC replacement, and air scrubber bulb replacement.
  • Police: Administration ($2.2M), Field Operations ($4.65M), Animal Control ($300K). Animal control budget increased by $100K to fund two potential positions and/or contract with Pinal County. Council expressed interest in bringing animal control in-house; further discussions planned.
  • Public Works: GIS ($67K), Fleet Services ($307K), Public Works Administration ($14K). Minor changes.
• Capital Projects: The CIP includes 42 projects totaling $37.1 million, primarily water/wastewater, streets ($9M, including Sunland Gin/Erica Road), airport ($2.7M), and general capital. Two new projects added: animal facility (in year five) and permitting software upgrade.
• Next Steps: The tentative budget will be adopted by resolution on June 8, 2026. A two-week public notice period follows. A special meeting for public hearing and final budget adoption is scheduled for June 25, 2026, at either 5:00 or 5:30 p.m. The property tax levy will be adopted at the regular council meeting on July 13, 2026.

Key Outcomes

• The council received the FY2026-2027 tentative budget presentation and discussed its elements. No formal vote was taken; the budget is scheduled for adoption on June 8, 2026.
• The council expressed interest in advancing animal control services, with funding available in the animal control budget ($300,000) and contingency fund ($2.7 million) for potential in-house positions and facility upgrades. Further discussions with Pinal County are ongoing.
• The council discussed the community outreach program allocations; a separate closed-door meeting will be scheduled (likely June 22, 2026, before the regular council meeting) to review applications, with final decisions brought to a future public meeting.
• The status of the HUD building purchase across from the police station remains uncertain due to HUD personnel changes; the project is still in the CIP but no budget has been allocated yet.