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Staff: Town’s general fund, HEERF reserves have grown; spending must be budgeted
Summary
Town staff told the council that multi‑year trend reports show large unassigned General Fund reserves (measured in months) and strong HEERF balances, but emphasized that restricted funds must be budgeted before they can be spent and recommended prioritizing one‑time projects and selective staffing.
Presenter outlined the town’s multi‑year budget picture and said the municipality is holding substantial reserves while remaining constrained by state law.
"Arizona cities and towns follow state statutes under Title 42 and Title 9," Presenter said, reviewing the legal framework that requires a balanced budget and tying the town’s process to that framework. Presenter walked the council through the budget calendar (drafting Jan–Mar, manager proposals Apr–May, tentative adoption in June and final adoption in July) and explained the major fund types: General Fund, special revenues (including HEERF), capital improvement, and enterprise funds.
Using the council’s monthly four‑year trend report, Presenter summarized General Fund pacing as of March: 75% (Mar 2023), 83% (Mar 2024), 75% (Mar 2025) and 62% (current fiscal year). Presenter cautioned those percentages reflect both timing lags in revenue reporting and larger approved budgets this year.
Presenter provided historic unassigned General Fund balances and months of reserves: FY2022 unassigned fund balance $5,400,000 (about 26 months at that year’s monthly expenditures), FY2023 roughly 27.9 months, FY2024 about 37.5 months, and FY2025 roughly 37–38 months. Presenter said the HEERF special revenue reserve has also been substantial (noted in the record at about $8.1–8.3 million depending on the year) and that those funds are restricted: "It needs to be budgeted. If it is not, then it moves on to the next fiscal year," Presenter said.
Council member (S6) urged that higher reserves create opportunity for one‑time investments and limited, strategic staffing: "You could begin to look more at these one‑time expenses," the council member said, while warning against broad hiring sprees.
The presentation closed with staff advice to the council: reserves give the town flexibility to pursue one‑time capital work or targeted staff additions, but restricted revenues such as HEERF cannot be spent without an explicit budget appropriation. The council agreed to review the five‑year capital plan in the coming meeting cycle to prioritize potential uses of those reserves.
