Budget review commission urges scrutiny of large capital projects, road funding and pension strategy

A commission appointed by the Scottsdale City Council urged more rigorous upfront scoping of capital projects, stronger cost-estimation and reporting, and continued focus on repairing the city's deteriorating roads during a work study session on April 22.

Budget Review Commission Chair David Smith and members outlined findings after eight public meetings and additional staff briefings. The group highlighted three broad concerns: a backlog of capital projects and change-order risk, the city's declining pavement condition index (PCI), and a large, long-standing public safety pension liability administered through PSPRS.

“With revenues flat, expenditures perhaps in your mind should not be going up $49 million,” Smith told the council, summarizing the commission’s review of the proposed fiscal year spending plan and the drivers behind a $49 million increase in operating costs. Commissioners noted about $10 million of that increase reflects new full-time-equivalent positions tied to last year’s parks and preserves ballot measure and roughly $12.5 million to salary adjustments.

On capital projects the commission recommended more advanced scoping and feasibility studies for major items before placing large cost estimates in five-year plans. Commissioners singled out several projects: the advanced water purification upgrade (large estimated increase tied to regulatory changes), the Cactus Park renovation (recommended delay until better cost and drainage analyses are complete), and the Rio Verde wildlife crossing, which the commission said requires a feasibility study to define scope and cost rather than rely on a preliminary $35 million estimate. Commissioner Mark Stevens told councilors, "the feasibility study would give us the pros and cons, justification, scope, cost, schedule, and then define it to something that makes sense." Several speakers from the McDowell Sonoran Preserve and conservation groups urged such a feasibility study.

Road conditions drew repeated attention. Commissioners recommended aiming for a PCI target in the mid-70s to 80s and prioritized completing work already in progress rather than adding new projects. Vice Chair Daniel Schweicker said Scottsdale’s PCI has fallen to about 63 and urged action: "It was 80 in fiscal 2018; we need to get back toward the mid-seventies," he said. Commissioners discussed strategies including better utility coordination to limit repeated pavement cuts and evaluating whether some maintenance work should be performed in-house to save contractor markups.

The commission also discussed the city’s pension liabilities and fund balances. Commissioners asked the council to weigh the trade-offs of applying cash reserves to pre-pay the Public Safety Personnel Retirement System (PSPRS) obligation. City Treasurer Sonia Andrews and staff presented that an additional $50 million payment would raise the funded status and could reduce annual employer contributions by roughly $4 million a year, but commissioners advised the council to consider alternatives and the opportunity cost of using fund balance for pensions instead of capital needs.

Commissioners proposed routine reporting to the council on fiscal sustainability, fund balances and project status to avoid surprises in future budgets. The commission did not make binding decisions; it presented recommendations for council consideration and invited further assignments.

The council heard public comment from preservation stakeholders who supported a feasibility study for a Rio Verde wildlife crossing; several speakers emphasized biological connectivity for deer and other species and urged timely study and public planning.