Lake Havasu City reviews FY 2019-20 budget; police pay, reserves and capital needs highlighted

Lake Havasu City held a budget work session on May 16, 2019, where staff presented the proposed fiscal year 2019–20 operating budget, recommended contingency and reserve levels and outlined next steps for formal adoption. City staff recommended keeping the property tax rate flat, setting multi‑month budget stabilization reserves and approving capital and one‑time items while council and public commenters flagged concerns about police pay, vacant patrol positions and equipment needs.

City staff presented the overall framework and timeline. “This is the presentation for the draft budget that's coming up,” said Mr. Kitson, opening the staff presentation. Finance staff said the council is scheduled to adopt a tentative budget on June 11 and the final budget on June 25, with a Truth in Taxation hearing and property tax levy adoption to follow.

Why it matters: the budget sets staffing, service levels and one‑time investments for the coming year and establishes contingency reserves if revenues fall short. Staff emphasized that voter approval of Proposition 409 removed an expenditure cap (it did not increase revenues) and therefore reduced the need to cut services or issue additional debt, but available resources remain limited.

Key figures and proposals - Personnel: staff proposed a 3.4% increase in personnel costs to cover merit/step increases. - Health care: projected health‑insurance costs rise about 7.6%, roughly $600,000 citywide, reflecting the city’s self‑insured trust and actuarial projections. - New positions/reclassifications: the proposed budget converts a vacant Events Coordinator into an Assistant to the City Manager and proposes bringing janitorial services in‑house (creating corresponding positions). - Services and supplies: services were up about 7.1% (≈$1.1 million) and supplies about 11.4%; some increases (such as grant‑funded items) have offsetting revenue. - Capital outlay: one‑time capital outlays total about $2.7 million (an increase of about $110,000 over the prior year), including public safety vehicles and park improvements. - Contingency/reserves: total contingency across funds is roughly $2.2 million (General Fund $500,000; Wastewater $1,000,000; IDD/Water just under $500,000). Staff proposed a budget stabilization reserve for the General Fund of about 25% of a five‑year revenue average (about $12 million) and smaller stabilization levels in enterprise funds. - Debt: the proposed budget shows a $10.7 million decrease in budgeted debt compared with the prior year; staff said a final PSPRS (Public Safety Personnel Retirement System) debt payment in August 2019 will reduce outstanding debt by more than $6 million.

Major program notes and specific items - Property tax: “We are proposing that the property tax rate remain flat,” Jill Olsen said; staff estimated leaving the rate flat would yield about $230,000 and new construction about $71,000 (roughly $300,000 additional revenue total). - Supplemental requests: departments submitted more than 500 supplemental requests totaling about $12.8 million (excluding grant requests); City Manager approval recommendations for council review amounted to about $4.8 million in additions prioritized by departments. - Parks/schools: under a ten‑year intergovernmental agreement the city budgeted $60,000 for tennis‑court improvements on Lake Havasu Unified School District property; staff said $30,000 will be recouped from the district and the courts are open to the public under that agreement. - Trash/recycling: staff noted a $325,000 increase in trash service costs tied to national market changes for recyclable materials; staff said Lake Havasu’s program is in better shape than some larger cities but acknowledged continuing risk from commodity market shifts.

Public safety questions and public comment Council and staff spent substantial time on public safety funding, equipment and compensation. - Vehicles and gear: police and fire leaders told council that many frontline vehicles are more than a decade old and that outfitting patrol vehicles and replacing firefighter turnout gear and hose are significant, recurring costs. Fire staff said hose is tested annually and the target replacement lifecycle is about 10 years. - SCBA and federal grants: fire staff said the department will pursue FEMA grant funding for self‑contained breathing apparatus (SCBA), a purchase that could approach $1 million; if grants fail staff will return with alternative funding options. - Police compensation and staffing: Michael Fuller, president of the Lake Havasu Police Officers Association, told the council the department faces recruitment and retention problems and asserted officers are paid “anywhere from 15 to 18% below market average” and that the department currently has 10 vacancies. Fuller described a long‑running pay‑band issue in which a senior officer pay band was suspended during the recession and never reinstated, creating multi‑year pay disparities among officers performing similar work.

Council and staff response Council members asked detailed questions about reserves, contingency, benefits, and the planned positional analysis. Staff said the city participates in a multi‑entity self‑insured trust (NAABT) with Bullhead City and Kingman; trustees use actuarial analyses to set health‑care rates and recent increases have been modest. Staff and the city manager emphasized that a citywide compensation/positional analysis would be undertaken if council approves the budget funds for the study; city leaders described that study as the vehicle to examine the frozen senior‑officer pay band and other pay‑structure issues citywide.

Other items discussed - Booster pump at new Cypress Park to improve irrigation pressure. - Airport fund increases driven by grant‑funded projects. - A proposed $16,000 community survey to gather resident input on services and priorities.

Next steps Staff scheduled the tentative budget adoption for June 11, 2019, a Truth in Taxation hearing and final budget adoption for June 25, and property‑tax levy adoption on July 9. Staff asked council to compile questions during the presentation so staff can address them in follow‑up meetings.

Council recessed the public hearing after public comment and closed the work session without a formal budget vote; council actions on adoption are scheduled for June.