Mesa presents budget and utility forecast showing revenue shortfall and rising public safety costs

Mesa staff told the City Council on March 6 that a multi‑year forecast of the general fund and utility funds shows revenue pressures from the loss of a residential rental sales tax and slower sales‑tax growth, while spending pressures — most notably a public‑safety salary benchmark — are pushing reserves toward policy minimums in coming years.

Office of Management and Budget Director Brian Richel and staff walked council through the city’s homeowner‑cost comparison, a five‑year forecast and an itemized list of operating and capital pressures. Assistant City Manager Scott Butler and City Manager Chris Brady described a public‑safety benchmarking adjustment that staff said will add about $23 million in ongoing cost for sworn personnel, and staff discussed a range of potential responses including trimming nonessential spending, adjusting utility rates, and considering dedicated revenue options.

Why it matters: The forecast shows the city can manage near‑term obligations but faces a structural gap if revenues remain flat while personnel and commodity costs grow. That suggests limited capacity to add new ongoing programs without offsetting cuts or new revenue and sets the context for the manager’s proposed budget and public outreach this spring.

What staff presented

- Homeowner comparison: The city’s homeowner affordability comparison (fiscal 2024–25 basis) shows Mesa’s annual local‑government cost for a typical household at roughly $2,022 for city services; staff noted that adding state‑shared revenues would raise the total by about $1,300 more per year on average. The comparison normalizes water usage (6,000 gallons per month) and applies each municipality’s rate structure to that consumption to produce an apples‑to‑apples comparison.

- Revenue pressures: Staff identified three main revenue headwinds: the recent loss of a residential rental sales tax (staff estimated the impact for the general governmental fund at just over $18 million annually), a state flat‑tax change that reduces some revenues, and generally muted sales‑tax growth in the forecast period.

- Expense pressures: The single largest expenditure pressure is the public‑safety compensation benchmark for sworn police and fire personnel. Assistant City Manager Scott Butler said the benchmark and related adjustments would increase ongoing costs by roughly $23,000,000; staff also noted an additional cost for a step‑pay program (estimated roughly $1.5–2.0 million). Other expense pressures…