Payson council approves tentative FY 2025–26 expenditure limit, leaves major projects as placeholders

Payson’s Common Council on May 28 approved a tentative budget and an expenditure limitation for fiscal year 2025–26, passing Resolution No. 30451 by a 6–1 vote.

Dana (staff member), who presented the budget to the council, said the tentative budget “establishes the expenditure limitations for the town for next fiscal year.” The vote establishes the maximum the town can spend in the coming fiscal year; councilors may adopt a final budget at or below that ceiling when they meet again.

The tentative numbers presented to council include a general-fund expenditure limit of $44,000,000 and a combined set of funds that staff said brings total planned expenditures into the range discussed at the meeting (Dana described the tentative budget as balanced). Dana told the council that the town’s tentative budget relies on a mix of revenue and fund balance and noted differences between the town’s accounting schedules and the state budget schedules. Key items flagged in the presentation included:

- HEERF fund: Dana said the HEERF (federal relief) tentative budget showed about $11.2 million in revenues for 2025–26 and that HEERF capital spending in the tentative budget decreased by about $10 million compared with the prior year; the HEERF fund will carry over several capital projects (including bus-route improvements) into next year.

- Water and enterprise fund: Staff described a roughly $29–30 million tentative budget for the water/enterprise funds, with roughly $12.1 million in projected revenues and the plan to use about $17 million in fund balance to balance the fund in 2025–26. The presentation noted a multi‑year water-tank project on Hillcrest is in design and that construction was intended to bridge into the next fiscal year.

- Placeholders and contingencies: Council was shown a number of “placeholders” in the tentative budget so funds are available if council later directs work to proceed. Notable placeholders include $1.5 million held for possible event-center improvements (staff said that amount was to advance the project through schematic design if council chooses to do so), $8.5 million added to central services as a contingency for a large capital project or PSPRS payment, and a reduction of general-fund contingency from $1 million to $500,000.

- Capital and equipment: The budget includes an $1.3 million allocation in the capital replacement fund for a new public-safety radio system and funding set aside for an ordered fire truck arriving next fiscal year. Staff also listed asset-replacement items (about $265,000) and vehicle/vehicle-lease items tied to specific funds (for example, a lease for a parks water truck in the bed-tax fund).

- IT and software licensing: Staff noted ongoing software and licensing costs across departments; combining general‑fund and public‑safety licensing and related services brought annual recurring software costs toward roughly $1 million, including public‑safety licensing renewals.

Council discussion emphasized that approving the tentative budget sets an upper limit, not final spending authority. Dana summarized the procedural point: “This exercise is to establish our limit, our expenditure limit for next year,” and explained the council could reduce the amount at final adoption but not increase it above the tentative limit.

Several council members urged caution on general-fund spending and asked staff to return with refinements. Councilors also asked for clarity on projects that currently exist as placeholders — including event-center schematic design, Green Valley Parkway design work managed by ADOT, and the Hillcrest water-tank schedule — and staff said those projects will return for further review and separate approvals before construction or spending proceeds.

Council members also asked about possible settlement money (PFAS-related) and how it would be treated. Staff said any such settlement proceeds were currently treated as unrestricted revenue and placed in the general fund as a placeholder; council would later decide whether to allocate that revenue to water projects or other uses.

The council approved Resolution No. 30451 on a 6–1 vote; final adoption of the budget is scheduled for June 25, and a work session to refine allocations is planned for June 3.

The approval does not by itself authorize construction or contract awards for the placeholder projects; staff and council said further actions and specific appropriations will be required before any project work or spending begins.