Lake Havasu Council reviews FY 2019–20 draft budget; tentative adoption set for June

Lake Havasu City Council held a budget work session on May 16, 2019, to review year‑end estimates for FY 2018–19, the draft FY 2019–20 operating budget and the five‑year Capital Improvement Plan. City staff said the council will be asked to adopt a tentative budget on June 11 and the final budget on June 25, with property tax levies to be presented July 9.

The presentation, led by staff, emphasized that Proposition 409 did not provide the city with new revenue but removed a cap that limited how the city could spend revenues it already collects. Staff said the proposed FY 2019–20 budget holds significant reserves and contingencies: a budget stabilization reserve just over $12,000,000 for the General Fund (about 25% of a five‑year average of revenues), contingency totals of roughly $2,200,000 across funds (General Fund $500,000; Wastewater $1,000,000; Water/IDD $500,000), and $2,700,000 proposed for capital outlay.

Why it matters: those reserves and contingencies shape how the city will respond to unplanned costs and revenue swings; staff also told council there is no new debt proposed for FY 2019–20 and that a planned PSPRS debt payment will reduce outstanding debt by more than $6,000,000 after an August 2019 payment.

Key budget drivers noted by staff included a 3.4% increase in personnel costs to allow for step and merit changes, a 7.6% increase in health‑care costs (roughly $600,000), and a roughly 7.1% increase in services (about $1,100,000) driven by studies and other one‑time consulting items. Supplies were shown up about 11.4% year‑over‑year with highlights including fire hose and turnout replacement, police fuel, and wastewater chemicals. Other expenditures were up about 11.7% (approximately $1,300,000) with some items offset by matching revenues.

Councilmembers and staff discussed specific line items during the presentation. Staff said trash service costs increased by about $325,000 and explained national market pressures on recycling (for example, reduced demand from China) are affecting collection economics; staff said cardboard remains the strongest recyclable market but other commodities have seen significant price declines. Jail contract costs were adjusted upward in the budget to reflect actual spending after prior under‑budgeting. The budget also includes $60,000 in improvements for school‑district tennis courts required under an intergovernmental agreement; the city expects to recoup half the cost from the school district and said the courts are open to the public.

Departments submitted more than 500 supplemental requests totaling about $12,800,000; the City Manager recommended approximately $4,800,000 in additions based on current funding and departmental prioritization. Staff said the capital outlay total for 2019–20 is roughly $2,700,000 (an increase of about $110,000 from the prior year) and that one‑time revenues are intended to fund those purchases. Contingency and stabilization reserves were presented as measures to manage revenue volatility, with the General Fund target roughly equivalent to three months of operating needs.

Next steps: staff will bring the tentative budget to council June 11, hold the Truth in Taxation hearing and final budget adoption June 25, and present property tax levies July 9. Staff said they can schedule additional work sessions if the council requests more review time.

Smaller items discussed during the session included planned changes to janitorial services (moving some contracted janitorial work in‑house), converting a vacant Special Events Coordinator into an Assistant to the City Manager position that would combine events, intergovernmental and public information functions, and a booster/pony pump to increase irrigation pressure at newly opened Cypress Park.

Ending: Council did not take formal action at the work session; staff will incorporate council questions and present the tentative budget for adoption at the June 11 meeting.