Payson Town Council Work Study Meeting - Fiscal Year 2027 Draft Budget Discussion

The meeting, held on May 5, 2026, from 8:30 a.m. to 12:05 p.m. at Messinger Mortuaries, was a work study session focused on the proposed Fiscal Year 2027 budget. Town Manager Darren Coldwell and Finance Director Dave Christian presented a balanced budget with an estimated surplus of approximately $120,000 and a proposed 2.8% cost-of-living adjustment for employees. Council reviewed departmental budgets, discussed operational enhancements and capital priorities, and provided direction to staff on next steps. No formal actions were taken.

Consent Calendar

• No routine approvals or unanimous actions were considered; this was a work study session with no formal votes.

Public Comments & Testimony

• No public comment was accepted as work study meetings are intended for Council discussion only.

Discussion Items

• Budget Overview: Coldwell noted the budget was built collaboratively and reflects the Town's priorities. Revenue challenges were noted (e.g., state collections down ~$500,000). A 2.8% cost-of-living adjustment was included for all employees, with health insurance costs absorbed by the Town.
• Personnel and Compensation: Several vacant positions were frozen, no new positions added. Overtime reduced through scheduling changes. The Town shifted from merit-based increases to a straight COLA. A $100,000 savings from position vacancies was partly used for a $12,000 promotion. Employee benefits saw a 3.4% medical increase, 4% dental, 2% vision, but total benefit budget reduced by $130,000 due to census changes.
• Department Reviews: Council discussed budgets for Town Manager, Central Services, Town Attorney, Human Resources, Town Clerk, Economic Development, Information Technology, Community Development, Engineering, Public Transit, Grants, Visitor Center, Streets, Facilities Maintenance, Airport, Parks/Recreation/Tourism, Police, and Fire. Key topics included: in-house vs contracted services (e.g., engineering, facilities, marketing); road maintenance (Pavement Condition Index average of 37 out of 100); PFAS treatment costs estimated at $50 million; water meter replacement project identifying ~200 leaks; public transit transition to an Intergovernmental Transit Authority; visitor center AOT designation and parking constraints; airport hangar development proposals; park and trail projects; and the pool RFP.
• Capital Improvements: The capital budget totals approximately $8 million, including $750,000 for residential slurry seals (5–6 miles), ADA improvements, trailheads, vehicle replacement ($200,000/year), and ongoing projects. PFAS mitigation is a primary capital focus, with a $5 million WIFA grant expected. The event center (rodeo grounds) improvements are in early design phases, with an estimated $1.8–$3.5 million for vertical construction; $250,000 allocated for engineering and planning.
• PSPRS Debt: Council discussed options to refinance the Public Safety Personnel Retirement System debt. A 30-year extension could reduce annual payments but increase total interest. Private financing at ~7.2% was compared to a ~6% bond.
• Pool Project: The RFP for the pool project will be published in the paper on May 8, 2026. No funding is currently budgeted; Council expressed interest in exploring nonprofit partnerships and potential voter-approved funding.

Key Outcomes

• Council directed staff to continue pursuing grant opportunities and partnerships, especially for PFAS, roads, and transportation.
• Continue evaluating roadway maintenance and capital improvement priorities, including developing a multi-year plan.
• Proceed with publication of the Request for Proposals for the pool project (expected May 8, 2026).
• Continue discussions regarding the establishment of the Intergovernmental Transit Authority for public transit operations.
• Continue evaluating the Arizona Alpine Trail project; Council indicated willingness to consider a contribution of ~$16,000 with an invoice or service agreement.
• Provide additional information comparing costs of contracted versus in-house engineering services.
• Explore bonding options to refinance the PSPRS debt, with a presentation to Council expected at a future meeting.
• Council concurred with rescheduling the Special Council Meeting for the Tentative Budget from May 13 to May 20, 2026, at 5:00 p.m. at Town Hall.
• Staff will investigate possible budget adjustments to increase funding for event center improvements (e.g., permanent restrooms) within the capital budget.