Lake Havasu City finance staff told the City Council May 15 that the city’s undesignated general fund balance has fallen from about $43 million in fiscal year 2021 to an estimated just under $18 million for FY 2026, a $25 million decline driven largely by one-time spending on capital and other nonrecurring items.

“Between the lack of additional revenues and the expenditure limit cap that’s set by state law, we must continue to be thoughtful of how we’re spending our ongoing available resources,” Finance Director Jill Olson told the council during the budget overview. Olson said the city has been funding many capital and equipment items with one-time fund balance but that using one-time funds for ongoing personnel or recurring costs would create structural deficits.

The proposed FY 2025–26 budget materials show a roughly 7.2% increase in personnel costs from the prior year, which staff tied to the compensation and classification study, projected step increases and a 5% increase in health-insurance rates. Pension rates (Arizona State Retirement System and PSPRS) were discussed; staff noted small average changes and said public-safety pension costs are materially higher on a fully burdened basis.

Olson outlined proposed new positions: 15 new positions listed in the proposed budget (8 in the general fund, 5 in the highway user revenue fund, one split between water and wastewater, one in the water fund), with a net increase of 10 positions after reclassifications and reductions to part-time roles in parks and transit. Staff also proposed four apprenticeship positions (two fire, one police, one public-works) to grow local talent.

Other budget details presented: a contingency pool of roughly $2.6 million for all funds (including a $1 million general-fund contingency), roughly $6 million set as placeholder revenue/expenditure for unknown grants/donations, and a proposed property-tax rate that would remain unchanged at $0.6718 per $1,000 of assessed value. Olson said the budget books include department-level worksheets and variance explanations for council review.

Olson summarized the budget calendar: tentative budget and five-year CIP adoption is scheduled for June 10; a truth-in-taxation hearing and final budget adoption is scheduled for June 24; property tax rates and levies will be adopted in early July.

Ending: Olson and the city manager emphasized the council’s role in setting funding priorities for ongoing commitments, and staff said they will return with the tentative budget and detailed department worksheets for council review at the June hearings.