Florence council backs budget built on existing levy amount and supports 4% merit framework; funds set for wastewater, roads and park bathrooms

Florence — Town staff and council members on Monday used the first FY26 budget workshop to set the working framework for next year’s budget: keep the current levy dollars for existing properties while capturing new-construction revenue, implement a merit-based pay program funded at 4 percent and advance multiple capital projects including wastewater upgrades, transportation improvements and park bathroom design.

The town manager’s presentation said the FY26 budget totals roughly $97.8 million, with major capital lines including about $21.5 million in wastewater work and $15.9 million in transportation projects. Staff told council the proposed general fund is balanced for FY26 and that council action on the tax levy itself will come later in June; tonight’s discussion was a request for council consensus to set a budget baseline.

Why this matters: Florence is facing reductions in state-shared revenues and rising capital needs for water and wastewater infrastructure, while also competing regionally for public-safety and utility staff. Council’s near-term decisions shape whether the town preserves service levels, funds capital work, and keeps employees’ pay and benefits competitive.

Council direction on the levy

Finance staff presented five levy options. Councilors coalesced around the option that holds the town’s levied dollar amount steady for existing property owners (the option included no increase to taxes on existing properties, while new construction would pay its share). Staff said FY25 assessed value for the town was about $150.3 million and FY26 is budgeted at about $163.0 million (an 8.9 percent increase overall); the FY25 levy had been roughly $1.5 million with a rate of about 1.0289. Council emphasized this was not a final vote; the formal levy adoption is scheduled for June 17 and the tentative budget will return on May 6.

What staff will do next: staff will keep the FY26 budget built using that “Option 1” baseline and return the tentative budget on May 6; the final levy adoption happens in June.

Council direction on compensation and benefits

Town management recommended implementation of a merit-based compensation program tied to a new employee-evaluation timetable and requested funding for a 4 percent pool. Staff estimated the cost at roughly $346,000 for the FY26 budget; after individual merit ratings the average incremental increase is expected to be closer to 3 percent. Council members debated the merits and risks of merit systems versus across-the-board increases, but the council gave consensus support to a 4 percent funding level and to using a December/January implementation window after the new review program is in place.

Staff also noted insurance premium increases (medical about 4 percent, dental about 3 percent) that add roughly $129,000 to benefits costs based on current enrollment.

Personnel and operating highlights

The proposed FY26 budget includes seven new full-time positions (one in police, three in public works, one in utilities/water-wastewater, one in community services and one in courts). Staff said three of those positions had been previously frozen and are being restored. Staff also listed a multi‑year capital program totaling roughly $111 million across the next six years.

Capital, utilities and rates

Staff highlighted significant wastewater capital spending planned in FY26 and explained the town is budgeting WIFA (water infrastructure) loan proceeds in the enterprise funds: about $4.8 million in FY25 and an estimated $18.6 million in FY26 to support plant projects. Staff said the current sewer rate structure will not support the planned capital program and recommended a rate study in FY26; several councilors noted that the council will need to consider potential rate adjustments once the new utility director and the rate study deliver recommendations.

Transportation funds and long-term planning

Council and staff discussed the town’s reliance on HEERF (highway-user and related transportation excise) and TET (transportation excise tax) funds for road capital. Staff presented an eight-year projection that assumed additional financing and new funding sources to keep transportation project schedules intact; absent those, staff said HEERF could be unable to support capital after FY27 and would begin to require transfers from the TET fund for operations. Councilors raised San Tan Valley incorporation and other population shifts as risks to state-shared and county allocations.

Parks and facilities

Council directed staff to prioritize design work for restroom facilities at Main Street Park, and staff said design would be started early in the next fiscal year so construction could follow. Community Services staff said Heritage Park work is already under contract (including shade and other improvements) and that the Heritage Park fitness/obstacle course design is being deferred to a later year while staff refines scope and grant possibilities.

Public safety purchases

Council agreed to budget for one firefighter decontamination sauna (about $60,000) in the capital plan while continuing to pursue grant funding for a second unit; staff and council said a single unit placed at a station would provide immediate benefit while grant searches continue. Council also supported accelerating a police virtual-reality training simulator into FY26 after demonstrations and discussion of training value.

Other notable items

- Staff identified multiple fund-balance movements and capital projects across general, construction, HEERF/TET and enterprise funds; some fund spending is intentionally using reserves for long-delayed capital. - Staff estimated the general fund ending position for FY26 would be approximately $426,000 positive under the current baseline after the merit funding and other adjustments; staff cautioned that state-shared revenue trends are the largest uncertainty.

What happens next

Staff will bring a tentative budget on May 6 and the council will adopt the final budget and levy on dates previously posted (tentative adoption and final levy adoption in June). Staff said it will also commission the utility rate study in FY26 and return with more detailed financing and rate options for the wastewater capital plan.

Ending

Council members praised staff work and the revived budget‑committee process. All councilors emphasized the need to balance competitiveness for employees and the town’s fiscal health while advancing a multi-year capital program for roads, wastewater and parks.