We'll move forward to uh our special council meeting for June 2nd, 2025. All our council members are present. Uh items 1 A and B are to conduct a public hearing on the proposed fiscal year 2526 budget and secondary property tax levy and a resolution approving the city's budget for the 2526 fiscal year. I declare the public hearing open. Miss Mosley, are there any other requests to speak? Just the one I have. I was going to say I think you have one and that is the only one that I received. Yes. Okay. Uh first we have Mr. Davis. Carrie Davis. Thank you for being patient. Thank you, Mayor, City Council. My name is Carrie Davis, and I like to congratulate our new city manager and his new position and wishing him well. I'd also like to thank uh council member first district Rich Adams for his vote at the uh meeting related to the tenative budget. According to the city's tenative budget for fiscal year ending June 30th, 2026, the prior [Music] year's general fund generated a surplus of nearly $22 million. The current year for 2024 2025 is projected to generate general fund deficit of nearly $39 million. The proposed budget that you're going to vote on this evening will show a general fund deficit of $18 million. I would recommend that in keeping with the city manager's recommendation to live within our means that this isn't living within our means and that you put this back to the city manager for reconsideration and I opposition to the current tenative budget. Thank you. Thank you, Mr. Davis. Uh Ryan or Mr. Mr. Kennington, would you like to respond to any of his questions? And then Mr. Butler, maybe you'd like to reply as well. So, mayor, council, I believe for the the question is the increase in the uh the deficit for net sources and uses for fiscal year 2526. A significant um factor in that is the benchmark that the city conducted. Uh the it was around for public safety themselves, just the sworn public safety was about $23 million increase that uh we did not anticipate, but then also the rest of the city was about $7 million on top of that. So it was about a $30 million um uh expense that the city was not uh looking um as part of forecasting. The other part of it is also we're seeing a reduction in our um in our revenues for the residential rental but then also uh a slowdown we're seeing a slowdown in our sales tax as a whole. Also what we are seeing is um reduced uh state shared revenues especially with the uh the um income tax um the flat tax that was implemented. So, a combination of those and then also we still do have some uh we saw some increases in retiree and healthcare benefits for the active those contributions. We've seen significant increases in the um in the pre uh in the expenses for those. So a combination of those expenses has uh shown a negative net sources and uses for 20 uh 2526 for the adopted budget. Thank you Brian M. Mr. Butler. Yeah, Mr. Mayor, council. No, and we appreciate we appreciate the the feedback um from the folks here uh tonight during this process. Um because I know everyone's well-intentioned about what's best for Mesa and uh and I appreciate council through this entire discussion as we've looked at um some of the things unfortunately that were outside of our control. And so just like any family though, we talk about we talk about treating this just as you would as you were managing your personal finances. Even though this is a lot more complicated sometimes, but it's still the basic principle of that you have set aides for those unexpected occurrences. An air conditioner quits and and that's a major expense or or a car car breaks down, you have to you have to make unexpected repairs. Well, we were we were hit with some unexpected um circumstances thanks to our friends at the legislature and and also thanks to the fact that we've got to stay competitive um with our public safety u funding. It's it's essential that we do that so we do stay u one of the safest big cities in America. So, um we did we did have some unexpected expenses that uh happened which really threw off um what we were projecting um had had those not occurred. That being said, that's why we built up our reserves. That's the reason why we can responsibly dip into those reserves until we grow oursel out of this situation. And it's not just me saying that. It's other groups that believe in the fact of how we're managing this. The Arizona Tax Research Association just uh in April put out um a critique of the way cities were handling u the unexpected loss of the residential rental tax and the flat tax and some of the others. And um they were criticizing some cities, frankly, for being too quick to raise taxes, too quick to just go to their voters or or if they were able to without um without going to the voters, raise their taxes. And they said cities have built up reserves for this very moment. And amen to that. That's what cities have done. And that's what Mesa has done. I can't speak to other cities and I can't speak to their unique circumstances. I can say though, we're delivering a balanced budget. We're delivering a budget that taps into our resource our our excess resources in order um to balance this budget and to make sure that we are able to deliver that quality service to our residents without dramatic changes to services and without having to make impacts on public safety and the other services that we we provide. But we have a path forward. We're not saying that we're okay with that. We made responsible adjustments to our budget and we plan to continue to make responsible adjustments and we'll adjust those uh the rate of those adjustments based on what our revenue is looking like based on the mac macro trends that are out affecting the economy from tariffs and everything else that we can't exactly know what the next few months or the next few years hold. But that's what our budget office does. they make fiscally responsible, conservative estimates so that we can plan um for all the situations down the road. And so sometimes that makes year five of a 5-year forecast look scary. But that's because we try to take everything into account. And that has been our track record at the city is to budget the most conservative that we can and then we make adjustments. And we have a proven track record, not over years, over decades of making those adjustments that are necessary to continue to deliver a balanced, responsible budget to this community. And so that is the commitment that you're hearing from staff now. That's the commitment that you're hearing from me in my new role as city manager that we will continue to make those adjustments and we'll continue to deliver a fiscally responsible budget and we'll make uh hopefully we don't have unexpected expenses of this magnitude. There's always unexpected expenses. I know Brian can attest to that. He sees it all the time. But we we did get a little bit of a sucker punch with with several things occurring at the same time. But we are in a position to navigate this because this council was fiscally responsible and resisted the urge to go and just invest in all the new programs and all the new projects that we could have during during that time. Why? Because we knew that unexpected things happen. We knew a recession could happen. So, uh, I think it at the at the most council, this is a testament to the way that this council and the city has budgeted over the years that we can take such a dramatic situation like this and be able to weather this storm and commit to being those good fiscal stewards that the city has a track record of approving it can be. So, mayor, that's our commitment to you. We'll continue to monitor this as we always do and we'll continue to deliver a fiscally responsible budget to the city of Mesa. Thank you, Mr. Butler. Any council members wish to speak on this? Vice Mayor, there seems to be a little bit of concern about the negative net sources and uses, right? It always Do you know how long how many years back that number has been negative? Mayor, Vice Mayor, uh Summers, we've over the last 10 years, we've adopted a budget that has had a negative net sources and uses, and that's due to our, as Mr. Butler said, our uh practice of conservatively forecasting both revenues and expenses. That allows us to have the buffer to weather any economic storm that we that was unexpected, any policy changes or unexpect an emergency that could cause unexpected expenses. So that's uh I would say that's sound financial modeling and and as Mr. Butler said as well uh sound uh creating a sound budget for council. So over the last 10 years we've seen it's been negative negative. I'm glad you said that cuz I looked it up and that was the answer. Thank you. Right. First of all, if I may just make a comment on this, I you can sit down. Thanks. Thanks, Mike. I want to thank everybody who attended the two public meetings. I know there were just two. This is actually the first time we've done it. So, we've we received information back from you with your concerns about how those were run and we're going to take that into consideration moving forward. I know Mayor Freeman um has made it a point to make sure that the public has input and and we did receive a lot of input both at those public meetings and any number of online blue cards that Holly had to uh continue to send us. And it really speaks to how difficult the budgeting is, right? Because there are legitimate concerns about the direction that the budget's heading, especially when it comes to revenue expenses. And on the other hand, the just multitudes of people who wrote in saying, "Please don't cut my parks program." Right? And and they're both something that we need to consider when we move forward. in making a budget. The concerns that we received uh about this budget for for fisc year 2526, it shows a negative net sources and uses. In short, what appears to be that structural imbalance that we talk about is a difference in quite simply what a city takes in to what it anticipates it spend. What is important to point out is that the 10 years that we've done this and shown a negative number is done intentionally as a conservative approach to our budget process. In fact, for the last decade, as was mentioned, the city has projected a negative net sources and uses. But let's remember, budgeting is not is a I'm sorry, budgeting is a continuous process. It doesn't end here today and then we go and spend Scott. I almost said Mr. Brady Mr. Butler and his staff now have a max they can spend. And now what they have to do is move forward and watch trends that come in. And they do that every month to make adjustments to make sure that at the end of the year what the projected budget is turns into what the actual budget is. Mix has typically ended its fiscal years in positive territory. That's the good news. For example, in fiscal year 1415, the adopted budget projected a $9.2 2 million net negative sources and uses. But by the end of the year, because of that ongoing budgeting, the actual budget was a positive 22.2 million. An adopted imbalance of 11.1 million and FY 2021 actually turned out to be 76.6 million in the positive. You guys missed that one, but good. And for the past two years, the adopted budget has been a projected negative -4 million and negative 255.6 million respectively, while the actuals came in at 34.7 in 2024 and 27.8 in the past year to the positive. Right? So this is a very intentional process and there are several sound fiscal reasons for this approach. One, it ensures a conservative revenue forecasting, preparing us for potential recessionary drops in revenue as mustard Mr. Butler alluded to a little bit ago. It assumes conservative expense forecasting in a way that as budgeting for every role that we have filled out through the year. And the budget also includes a full amount of cash funded capital projects in the coming year, even if those CIP projects that we just discussed earlier are spread across multiple years. We do this to ensure that we can meet our obligations even if the economic conditions worsen or unexpected costs arise. This promotes long-term fiscal stability. Conservative forecasts create a buffer that allows the city to respond more effectively to economic headwinds, emergencies, policy changes, new priorities without requiring mid-year cuts to programs or crisisdriven decisionmaking. I've been here before. I've seen this these headwinds. I sat not on this dasis, the the old one. This one's much better during the Great Recession on a three-year period where we had to find $100 million to cut out of our budget. That's painful. But where other cities responded by raising taxes or just cutting services or freezing hiring for police, this city got innovative, different services. It went out to the public and requested investment in capital infrastructure. I I credit this conservative budget approach for opening the Mesa Express Library and pretty soon we'll have a Gateway Library. We wouldn't have those without. We have several new fire stations in my district. While other cities have stretched their resources far too thin. I used to work for one. And our police who are very tired in the back are nearly fully staffed when on a large portion of Arizona departments they are hundreds of officers short. Even projects not in my district like the Central Mesa reuse pipeline, Northeast public safety facility will ensure water availability and help reduce crime in my district. So I have a duty of my neighbors to ensure prudent spending especially of those taxpayer dollars but also deliver on the initiatives that they have overwhelmingly supported. So once again I want to congratulate Mr. Brady or Mr. braves you. I knew it. Butler, I even wrote it down, Mr. Butler, for your new role as city manager. And remember, you asked for it. I trust in his ideas for creating a process to ensure greater efficiency and accountability. I think we should let him cook. We want to be a lean organization, but also one that invests in public safety and the quality of life amenities that our residents support. So with that, Mr. Mayor, I will support the motion. Thank you, Vice Mayor. Did I You made a motion. I'll hear a sec. So, let me just read I was going to make a comment. You want to make a comment? Don't I mean, did he take all our time? Pretty much. Are you going to order breakfast or We haven't closed the public hearing, so council, if you wish to. Yeah, I wish. Please go ahead. I can't I just just push. Did I make you lose your train of thought? Yes, that too. Uh, no, I appreciate all your com comments, Vice Mayor. I agree with all of them, but I just wanted to and and you kind of stole my thunder on the on the talking about our our conservative forecasting because I think that's really important and I'm glad glad you explained it and brought it up as well as um Mike Kennington. Um, we all know, you know, we had a couple hits as city manager Butler talked about that were beyond our control. The loss of residential rental tax and the increase in expense for public safety swarm personnel salary benchmarking. Some would say that that is we weren't prepared. That was bad planning. But with um nearly a 34% reserve fund, which is extremely healthy, I say that's good planning for a situation just like this. um to use our plan savings that are part of a reserve fund um to continue to live within our means. Most of us agree you cannot correct a $40 million in one year and so um I agree with the actions taken this year. The departments were asked for 2% base budget cuts resulted in 11 million in a reduction in expenditures. We've had to postpone some projects and cut on certain departments. Um, and remember, we are only uh voting for next year's budget. Um, as as Mr. Butler pointed out, uh, you know, the forecast is a planning tool and we will continue to adjust and monitor, but we're voting right now on the budget for 25,26, not for the second, third, fourth, fifth year out. those will continue to be adjusted. Um I agree with the conservative uh forecasting that we do do um to uh to have that um buffer when unplanned uh circumstances come up. Uh again I think that's good planning and um we see you know econom these things do happen economic downturns and pressures do come up uh and our budget continues to be fluid. We continue to adjust it as I said throughout the throughout the year. So, as as council member um uh vice mayor, I'm sorry, Summers pointed out, uh for the last 10 years, we've had a net negative sources and uses, but of seven of those 10 years, it's been positive. It's result in actuals that have resulted in a positive. Um so, for all of those reasons, uh because we I think it is good planning. I think that we will continue each year to look and we may have to make more cuts next year. We may have um unexpected increases in revenues due to sales tax and things like that. Um and and we'll keep our fingers crossed that we don't have to, but we certainly will uh we anticipate having to look at it again next year and and not do drastic cuts uh this year. um but take the continue to offer the services that our our residents um come to expect and enjoy. And again, as Council Member Summers mentioned, we it's a balance. We received as many or more uh constituents that are worried about their their programming and um their services than we received um asking us to make deeper cuts. So, we continue to balance those and we'll do it again next year. So, for those reasons, I I will be voting to approve this budget. Thank you, council member. Mr. Adams night here. Oh, there we go. Oh, budget cuts. Yeah, there you are. Um, thank you, Mayor. Um, just a few thoughts and comments. Um, I I'm excited about the opportunity to work with Mr. Butler and uh and his team and I take him at his word everything he said in his comments. I uh admire the fact that uh through this whole process um staff has been just just wonderful about presenting information, asking answering questions um very transparent. I haven't felt like anything I wanted to know wasn't provided. um you know and and and I will say this, I'm a fiscal conservative. I'm a credit guy. I've been a business credit guy for the last 30 years. So, I look at things from maybe a little bit of a different perspective. And um I I'll go ahead and explain myself. I don't mind being the I realize I'm the probably the uh the council member who's taking a different position on this, but I think it's important when we have a dialogue like this that rather than just voting a certain way, I like to explain why I'm voting as others have because I think that at least gives perspective and it allows people to understand. Um, I I've heard a lot of good things here tonight, but u here here's where I'm at. And I think we all recognize the budget in front of us. It it represents a loss of the rental tax revenue. It also represents an overdue and well-deserved increase in public safety personnel compensation. Absolutely necessary. I support that 110% and always will. Um, I also support our budget for core city services, utilities solidways streets infrastructure, all those essential things Mesa residents expect and that we deliver the Mesa way. I support taking good care of our city employees. These are the people who deliver our quality services and they do a great job and they deserve our support. The way I look at building a budget, there are essentials as well as non-essential expenses to weigh and these things are weighed based on revenue. Considering the differences should help prioritize reductions when reductions are necessary. I applaud the recent departmentwide call for a reduction in overall operating cost. However, I feel the focus could have been greater in the non-essential areas. That's where it gets difficult. Because for every person in this room, there's a different definition and a different belief of what non-essential is. And I understand that. That's that's why there's seven people up here, not seven people who all vote the same way. We are projecting that we will operate and here here comes the core of of of my position. We are projecting that we will operate at a deficit over the next five years. And let's call it an imbalance. I don't want to get tied up in terminology. while relying on our reserves, our savings account, if you will, to make up the difference. I understand that. I get basic accounting. And as some would argue, I can see some merit in the argument that since Mesa's reserve balance is high and that we've saved for a rainy day, we can we can invade that reserve to a certain extent. I am not comfortable on relying that on a five-year projection. It's too long in my opinion. I recognize we cannot cure the deficit or the imbalance we're looking at in one year. Probably not in two. The pain would be overwhelming and I'm not willing to support that. The essential city services, the services we must provide would also suffer if we tried to fix this boom right now. Can't do it. I do believe we should endeavor to cure our projected imbalances much sooner than the five or more years projected. It's the five-year period that I see on that projection. The projection exists for a reason and a good reason so that we can see that that's the issue for me. It's too long. I'd like to see it cured quicker. And that is the message my vote hopes to send to continue that conversation. I'm hopeful that when we begin our next round of budget work, maybe we see that tighten up a little quicker. And I fully recognize that um you know, tough choices are just that. They're tough. Nobody wants to make them. Nobody's nobody wants their ox gourd. and everybody's ax is different. So, I I'm I'm so respectful of the city finance team, uh Mr. Brady's past work, what what I think you're going to bring to the table, but uh for these reasons, I'm not able to support this budget. Thank you. Thank you, Mr. Adams. Miss, go for it. I I thank you, Mr. Adams, for your comments. appreciate it. But it does make me just want to clarify my position as well that five years is I agree is too long to do a correction course. But I also want to make sure that it's clear for me I am voting on the 2526 budget not the 2829 budget. So certainly uh there'll be work to do in the next several years, but for this vote for this budget, which is the 2526 budget, that's that's my vote. Thank you, Miss Bilsbury. And did you have a comment? Yeah, just um I have a few pages of a speech. Just kidding. Didn't know we were giving speeches tonight. Yeah. No, I um you know, in four and a half years on council, I have learned a lot about the budget and um about finances and I just want to express I and I appreciate all the comments that have been given um by my um fellow council members um even ones I might not agree with. I I appreciate the debate and the discussion. Um I just want to express my deepest uh trust and gratitude for our staff and for Mr. Brady and for my and all of you, Mr. Kennington, sorry, I should show you more respect. Um, Candace, Brian, your team, I mean, Irma, all of you. Um, we have so many people, so much transparency, so many eyes on this, so many um, intelligent, intelligent, smart, competent people working on this that have put Mesa in such an amazing position. And I just don't think I can shout that from the rooftops enough. We have a fiscally conservative city. We do. We have proof to show that and the hard decisions that are made every single day um support that and I'm I'm just really grateful for it. It doesn't mean we don't push you on things and ask you questions on things and ask you to change things. We just saw that with the parks budget. Um, you know, we are we all we don't just go along. We don't just say, "Sure, that sounds great." We all study this. We we ask all the questions and have the meetings and we go through all of our agendas and the budget and line items and all the boring stuff so that we can understand it as well. And I just um really want to say thank you for the position that we're in. Thank you, Miss Filer. Mr. radio just real quick. I I think uh for me in the last seven years I think seven plus years on council uh we think it's it's I I mentioned this you know it's a every year process right months in the making conversations like Miss Spillsbury mentioned council member Spillsbury and the rest of council the that's that's the uh the work that is put in by staff and the council and everybody involved and the constituents that uh have uh come into to uh the the council meetings and study sessions. So, it's a process, right? It's a process and and it's a yearly uh endeavor of figuring out what cuts, what what's what uh um monies come in, revenues come in and looking at how we adjust in those things. Right? So uh every year uh it's been you know upper 20s 30s as far as the uh the reserves and that's because of what been mentioned right as far as the planning process that has been initiated since you know once we we uh vote on this uh the the budget cycle begins you know uh as quickly as as as we vote on this uh for the next year. And so it it I think for for for me as far as my experience it it's been a a process that's you know it's a complex budget uh you know $2.6 6 billion, right? It's a it's a huge budget that has a lot of intakes and and outputs and and inputs. Uh and really looking at ways on how we can improve upon those services that we provide on a daily basis, right? And so for this I I've I've voted yes all my seven years because that's been the understanding that I've had uh as far as been working with staff and asking those questions and appreciate that's that work that has gone in and understanding what we do each and every year and right even though the forecast has five years right it it's each and every year we adjust and that's the beauty of this this budget you Once we start, you know, uh, uh, the discussion for our next year's budget, that's, you know, we're going to come up with the same things, right? Uh, and and looking at what's the the uh the inputs and and outputs that we have coming in for this next year, right? That's that's city city city government at at at its best and how we can you know progress each and every year uh in looking at making hard decisions or you know improving on the services that we provide right so uh that's why I support this budget and uh hopefully we uh can get this moving so well I wasn't going to say anything but I feel kind of left out if I don't I feel left out no in all our budget discussions, there has been a consensus overall among staff and council that we know we have work to do. Absolutely. We're not saying just because we're passing this year's budget is status quo for the following years. We know looking five years out, we have work to do and it's going to happen. Like um Council Member Heredia mentioned, it's already kind of in the works. like how are we going to be more aggressive? How are we going to continue the cuts? What measures do we have to make? What is our adjustments as we go along every month? So, this is not like, oh, we put it away and we'll bring it out next year at this time and look at it. Now, this is an ongoing conversation and for um estimating where we are to end this year and the next year and the next year. We absolutely are clear that the current financial status um based on the projection is not where we want to be. We want to make adjustments and we have to figure that out. Fortunately, our reserves gives us a way to gradually work through that and not be all of a sudden because we have no reserves. We got to cut staff starting July 1. We got to cut programming starting July 1. We can work into how we're going to deal with this. And that's what we're doing. We're passing the budget using reserves to get through this year and immediately right now looking at the next year and then rolling that out five years. And this is continual, continual, contin. So by passing this budget doesn't mean the work is over. It just means it's beginning. And we know not beginning, it's ongoing. and what um based on where we're going the outcome is going to be and that outcome will constantly change um based on what we are deciding would be a good move um good measures to do it economic activities and forecasts. So we have to look where we're going to make those decisions. We can't just react based on current year. Otherwise, we'd be laying off a bunch of staff and programming this year and then wait till next year and find out, oh, it wasn't that bad. Do you think we can get all those people back because we need them now? And people are upset and we can't we have to be in a gradual mode and we give ourselves the reserves in order to make those gradual adjustments. Um, absolutely we have work to do. it is not status quo and I support the budget as um written on our agenda. Thank you. Thank you, council member. Thank you for everyone staying as long as you have it this evening. I appreciate that. I want to end with a couple of notes. Number one, our city is financially doing well. I know there's work to do. Uh the city charter also says that the uh council if we we cannot just raise the sales tax in our city. we have to go to the city voters. So the charter says that we have to go to the voters to raise any sales tax in our city. Right now we're not considering that at all. May be perfectly clear as well at our constitutional general obligation bonds. We're at 14% of what we could obligate to our community members. 14% at a probably a $5 billion number. But that with that said, for $2,200 a year, you're receiving all of our city services, including your general obligation bonds. And I I really like the uh conversations we've had on DAS here tonight, because I think you can get the consensus. We're all working together to keep our budget intact and as strong as possible. But I've also asked our city manager to look at the future, our forecasts of what cuts there might be in our departments. And so he'll come back with a two two and a half and 3% uh projections for this coming next year budget season. So we have to start after tonight's vote. But when I was elected mayor, I made a commitment that we would hold citizenorganized meetings and we did have two and we're going to work on that process for the future and holding additional uh budget meetings out in the community. I think that's important for our transparency in our community. With that said, if there's nothing else, I will declare the public hearing closed and I will entertain uh a motion to approve the fiscal year ending 30 20 June 30th, 2026. That's item 1B. Is there a motion to approve this item? There is Miss Bilsbury. Thank you. Second by uh Council Member Dove, please cast your vote. Okay, motion passes 6 to one. Thank you very much. Uh this is all the items for our special council meeting. Is there a motion to adjurnn? Yes. Thank you, Vice Mayor. Thank you, Miss Goforth. All in favor say I. I. [Music] We'rejourn. Heat. Heat. Heat. [Music]