Prescott Valley reports $6.4 million surplus; council set to review tentative budget May 22

Miss Morris, a finance staff member for the Town of Prescott Valley, told the Town Council at a May 1 study session that as of March 31 the town’s major funds were performing strongly and that recurring revenues have exceeded recurring expenditures.

"We had through year to date through March 31 $47 million in recurring revenues and recurring expenditures of $40 million, so we had a surplus at March 31 of about $6,400,000," Miss Morris said during the presentation.

The presentation covered the quarterly financial report, the five-year capital improvement program (CIP), personnel and benefits assumptions for the coming budget year, and the town’s plan to bring a tentative budget to council on May 22. Staff said business-type funds — water, wastewater and stormwater — also showed year-to-date surpluses. The water utility reported roughly $9 million in revenue against $6 million in expenses; wastewater reported about $5.3 million in revenue against $3.4 million in expenses; stormwater reported about $653,000 in revenue against $285,000 in expenses.

Nut graf: The surplus and the town’s cash-and-investments position give staff flexibility as they present a 2026 fiscal plan; council members praised staff work and directed that the tentative budget and a financing plan for the CIP be returned for formal consideration on May 22.

Staff said the raw list of CIP requests for fiscal 2026 totals about $80 million across a multi‑year forecast. Director Reuter (capital projects) highlighted two near-term projects: Glassford Hill Road, which staff said earlier phases and redesign work are intended to reduce right-of-way impacts and should be bid in late summer or early fall for a roughly 12-month construction schedule; and Lakeshore drainage improvements, a maintenance-driven project for two areas that was partly funded through Yavapai Flood Control District participation in design.

The staff presentation outlined potential funding sources for CIP and maintenance work: pay-as-you-go from fund balance, one-time revenues such as construction sales tax, federal/state/tribal grants (which can carry complex requirements), development impact fees governed by state statute, debt instruments (revenue or general obligation bonds), dedicated sales taxes and public‑private partnerships. Staff noted that some funding sources are restricted (for example, highway user revenue fund for transportation) and that the town holds a one‑third cent sales tax the council previously approved to pay for streets and related debt service.

Town Manager Gilbert Davidson and department directors described a fiscally conservative approach: balance ongoing revenues and ongoing expenses, use one‑time funds for one‑time projects, and maintain fund balance to preserve bond ratings. Staff said the town currently carries modest remaining debt obligations, naming a revenue refunding bond with principal falling sharply in coming years and a nearly‑paid WIFA loan.

On personnel and benefits, Director DeChant said the town negotiated health‑benefit renewal to limit a carrier increase to 19% after higher utilization. DeChant described a proposed 5% base pay adjustment to maintain market competitiveness and said additional funding for compression analysis would be considered midyear.

Council members thanked staff for the presentation. Vice Mayor Sircher said, "you crushed it," and Mayor Paguna and other council members praised the budget books and the level of detail staff provided. Council and staff discussed flexibility to reallocate resources midyear if needs emerge; staff said they would return May 22 with the tentative budget and the first-year CIP financing plan, followed by final budget action in June.

There were no votes or ordinances taken at the study session. Council asked staff to include a previously priced polling/engagement software in the tentative budget; staff said the software cost will be included when they submit items for tentative approval. Council also heard that Councilmember Williams had submitted a resignation effective earlier the same day.

Ending: Staff will present the tentative budget and a financing plan for the CIP at the council’s May 22 meeting; council action on the annual budget is expected in June. Council members and staff said they will continue work on CIP priorities and funding options, including potential use of freed capacity if dedicated street sales tax debt is paid down.