Lake Havasu City Council Budget/CIP Work Session Summary – May 14, 2026

On May 14, 2026, the Lake Havasu City Council held a Budget/CIP work session and public hearing on the FY 2025/26 year-end estimates, the FY 2026/27 annual budget, and the five-year Capital Improvement Plan (CIP). The agenda lists the meeting as Thursday, May 14, 2026, at 9:00 AM, while the transcript's opening states "Tuesday, May 14th, 2026"—a date discrepancy. No meeting minutes were available. Staff presented a high-level financial outlook and asked the council for clear final direction before the June tentative and final budget adoptions.

Budget Presentation and Financial Outlook

• Staff presentations by Mr. Knutson and Jill Olson covered the proposed FY 2026/27 budget, year-end estimates, and the CIP. No tax increases were proposed.
• Total personnel spending is projected to increase about 5.2% over the prior budget, driven by step/classification adjustments of about 3.5% and no cost-of-living adjustment. Health insurance rates are expected to rise just over 10%, ASRS is decreasing slightly, and PSPRS rates are projected up about 2.6% for fire and 6% for police.
• Mr. Knutson initially described eight new public-safety positions: four firefighter EMTs and four police service technicians. Later in the same presentation, Jill Olson referred to six firefighter paramedic positions, four police service technicians, and one part-time-to-full-time reclassification for an accreditation specialist. This discrepancy was not resolved in the source material.
• The estimated excess general fund fund balance is projected to decline from $43 million in FY 2021 to $23 million in FY 2027, and to about $1.6 million by FY 2031. Staff said the FY 2025 audited spending was $32 million below the expenditure limitation cap.
• The general fund contingency remains at $1 million, and $6 million is again added for unanticipated grants and donations. The budget stabilization reserve remains budgeted at 50%, roughly six months of operating revenue.
• The only CIP change made after the April 16 work session was moving $1 million of multi-use fields funding into FY 2027 and $6 million into FY 2028. Staff said no other project movements were possible due to insufficient funding in each of the five years presented.
• Water and wastewater utility fund projections show deficit spending in future years if no rate increases beyond already approved levels are assumed: two deficit years for water and one for wastewater.
• Street funding discussion noted $20 million in additional general fund transfers to streets from FY 2023–FY 2026 ($9 million, $1 million, $5 million, and $5 million), with no additional transfer in FY 2027 but street projects continuing from carryover funds, and $2 million planned in FY 2031. Vice Mayor Diaz said roads cost roughly $1 million per mile and the city has 800-plus lane miles.
• For water infrastructure, staff noted $4.5 million in proposed water main replacement for FY 2027, with $3 million in the current budget and $3 million prior. Staff cited about 6,000 smart meters installed, approximately 1,300 leaks investigated, and 50–60 residential audits completed.

Councilmember Discussion and Direction

• Councilmember Moses praised the accuracy of revenue forecasts and advocated funding a splash pad with city dollars rather than relying on uncertain grants. He argued the city can address roads and parks together rather than choosing one over the other.
• Councilmember Campbell presented findings from a 2023 $110,000 satellite leak-detection study covering 10% of the city's underground infrastructure: 72 leaks found, 27 on the utility side and 45 on the customer side, 11 considered utility loss, water-loss value of $334,000 per year, total revenue-loss volume of 85.7 million gallons per year, and 67 of 72 leaks that had not surfaced. She cited Lake Havasu's leak rate as 2.4 leaks per day versus the U.S. average of 1.3, 1.4 miles per leak versus 3.9 nationally, and 411% higher than the national average. She opposed adding the splash pad with general funds before the pool, questioned the channel bathrooms because the site involves Arizona State Trust Land and a resort lease, supported fire station and police storage needs, and suggested keeping $1 million for airport hangars as grant match. She also called for more discussion of north-side fields and effluent irrigation.
• Deputy Public Works Director Tim Kellett responded that the city has pivoted to data-driven programs, including smart meters, an AI platform for water main break prediction, and an upcoming pressure sensor pilot. He said injection wells have been cleaned and are injecting close to 1.5 million gallons per day, with Well 10 design nearly complete.
• Councilmember Coke supported the splash pad and had no major questions or concerns.
• Councilmember Lin questioned whether the city should invest in airport hangars or seek private partnerships, said she had believed a splash pad grant was likely based on retreat discussions, and stated she preferred the pool. She agreed to include the splash pad but asked for better communication and more detailed operating information.
• Vice Mayor Diaz supported public safety staffing additions, clarified that the city has four fewer positions than in 2009, said roads are woefully underfunded relative to need, and requested a historical spreadsheet of positions and salaries. He asked for location, cost, and maintenance details before final budget decisions.
• Mayor Sheehy supported the splash pad direction and highlighted $20 million in additional road investment over the prior four years.

Public Comments & Testimony

• A resident, Mr. Wetz, questioned the $20 million street funding figure and argued that roughly $20 million per year is needed to keep up with street maintenance over a 20-year cycle. He criticized water main work as reactive rather than proactive and said city staffing grew from 410 employees in 2016 to 510 now, with parks and recreation rising from 10 to 47 employees and another five proposed. Staff responded that parks maintenance was reclassified from public works into parks and recreation, which explains part of the increase.
• A mother said security asked her group to wait outside during the public hearing. She urged the council not to write off kids and said she had heard rumors that Councilmember Campbell does not care about youth. The Mayor and city staff clarified that no police officer asked them to leave; security was enforcing courthouse decorum because the building is a court building.
• A parent named Kristen, who said she has built a community of local families, asked for a true public splash pad and more outdoor recreation. She cited 436 petition signatures and 144 written responses from families, described the existing Mesquite splash pad as unsafe, unshaded, and used as a bathing/water source by homeless individuals, and noted neighboring cities like Bullhead City, Needles, and Kingman have shaded, fenced splash pads and pump tracks. She said only Mayor Sheehy and Councilmember Moses acknowledged her emailed materials.
• Donna Bess Carleton, a resident since 1969, said she would be willing to pay more in rates or taxes to fund roads, water lines, parks, and amenities for families and seniors.

Key Outcomes

• No formal vote was taken during the work session. The Mayor and a majority of responding councilmembers indicated support for staff direction to prepare a revised budget/CIP plan that includes $1.5 million in general funds for a splash pad, with an estimated annual operating cost of $54,800 for utilities, supplies, and personnel. Councilmember Campbell opposed the splash pad, and Councilmember Lin expressed a preference for the pool while accepting the splash pad with reservations.
• Staff will return with an updated plan at the next budget meeting. The tentative budget and five-year CIP adoption are scheduled for the first meeting in June, final budget adoption for the second meeting in June, and property tax levy adoption in July.
• Staff indicated they would evaluate possible offsetting adjustments, including airport hangar development and a police storage facility, and would bring more detailed splash pad location, operating, and cost information forward for council consideration.