Consideration and Adoption of Resolution No. 2020-31:  A resolution of the Council of the City of Flagstaff, Arizona adopting the tentative estimates of the amounts required for the public expense for the City of Flagstaff for Fiscal Year 2020-2021; adopting a Tentative Budget; setting forth the receipts and expenditures; the amount proposed to be raised by direct property taxation; giving notice of the time for hearing taxpayers, for adopting of Budget and for fixing the tax levies. (Adopt Tentative Budget for City FY 2020-2021)

Arizona Revised Statutes (Sections 42-17101, 42-17102, and 42-17105) require that each municipality adopt and publish, in a specified format, a tentative budget. The adoption of the tentative budget has the effect of establishing an amount that cannot be exceeded in the final adoption of the budget.

Furthermore, the adoption of the tentative budget sets into motion a legally mandated time sequence of actions to which the Council must adhere to adopt a final budget and to levy property taxes.

The tentative budget must be adopted to set the appropriate sequence of events in place for final budget adoption.

The Fiscal Year (FY) 2020-2021 budget is the guiding document for the financial plan of the City.

The adoption of the Annual Budget and Financial Plan provides Council direction and financial resources to support the Council Goals, Regional Plan and Team Flagstaff Strategic Plans.

• September Priority Based Budget Retreat on September 24, 2019
• December Council Retreat on December 5, 2019
• February Budget Retreat on February 3, 2020, and February 4, 2020
• Council Budget Work Session on April 23, 2020, and April 24, 2020

The City may delay the tentative budget adoption until no later than the 3rd Monday in July.  While the City would be able to continue operations through a Continuing Disclosure resolution, the City would not be able to commit to any expenditures directly related to the FY 2020-2021 budget.

The budget is generally presented for tentative adoption in late May or early June to assure funding is appropriated within Council Priorities and Objectives at the beginning of the fiscal year.

At the September Council Priority Based Budget retreat, Council reviewed and updated the Council Priorities and Objectives.  These Priorities and Objectives were used to develop the FY 2020-2021 proposed budget.  During the February 2020 budget retreat, Council provided further direction on the FY 2020-2021 proposed budget based on the Council Priorities and Objectives.  During the April 2020 budget work session, Council provided additional requests, and they are included in the budget.  After the April budget work session, divisions provided revised year-end estimates and carryover of funding primarily for capital projects.

The adoption of the tentative budget sets into motion a legally mandated time sequence of actions to which the Council must adhere to adopt a final budget and to levy property taxes.  If this time sequence is not met as required by statute, the tentative adoption, final adoption of the budget and property tax levy actions, and related publications must be started over. 
 
The process is prescribed through the Arizona Revised Statutes. The tentative budget must be adopted no later than the 3rd Monday in July.  The schedules for Council budget and property tax levy actions are as follows:
 

• June 2, 2020 - Tentative adoption of the budget by Council??????
• June 16, 2020 - Proposed budget and property tax levy public hearing
• June 16, 2020 - Final budget adoption (done in a Special Meeting)
• June 16, 2020 - First reading of property tax ordinance
• July 7, 2020 - Final reading and adoption of the property tax ordinance

Funds must be appropriated to allow for expenditures to occur.  The tentative budget must be adopted to set the appropriate sequence of events in place for final budget adoption.

The proposed budget was built on revenue estimates prior to the COVID-19 pandemic.  Staff will be seeking adoption of the budget based on these estimates to set the maximum allowable expenditures.  While revenues may be less than the adopted budget, we do not currently have data to support specific declines.  The City could always spend less than the adopted budget, however we cannot exceed budget even if revenues are higher the adopted. 

In April 2020 the City Council adopted a 2020 Economic Recession Plan ("Recession Plan").  The City will use the Recession Plan for guidance in expenditure reduction measures to ensure we stay within the revenue resources we receive as a result of the current financial uncertainties related to the COVID-19 flu pandemic. The City is closely monitoring financial revenue data as received in order that the City may make appropriate spending decisions. 

The Community has the opportunity to present any questions or concerns regarding the budget before the final budget adoption occurs in June.

Inform and Involve: The Community has the opportunity to be involved at the public hearing held in conjunction with final adoption.  Citizens are welcome to attend Council Budget retreats. The City Manager’s recommended budget was discussed during the Council Budget Retreat on April 23 and 24, 2020.  Public participation was available.  Notice of the proposed change in the primary property tax and a public hearing is posted on City social media per A.R.S. Section 9-499.15 and is being published per the A.R.S. Section 42-17107 "truth in taxation" requirements.   Notice of the estimates of the revenues and expenses and a public hearing is being distributed and published per A.R.S. Section 42-17103.