Budget Process

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Creating a budget is a continuous process requiring planning, maintenance, and review. Use the drop down to learn more about the Budget Cycle, Budget Maintenance, and Budget Requirements and Limitations.

The Budget Cycle

Creating a budget is a process that requires planning and review. The figure below outlines the 12 steps in the budget cycle starting with forecasting revenues and expenditures. Click on the figure to see all the steps in detail.

Budget Cycle

Budget Management

The adoption of the budget by the City Council sets the maximum expenditures that can be made during the fiscal year. The dollar amount is set based on the anticipated activity during the time period. Much of the activity not related to personal services is presented to the City Council for review and consideration before it is acted upon. Some examples are: construction contracts, purchase contracts, service contracts over a set amount, agreements to accept grant funds and intergovernmental agreements with other governmental entities.

Budget management is an on-going process and involves not only the review and oversight of the financial aspect of the budget but also of the progress toward the desired outcomes of the various programs. The following is used to help in manage the City budget:

  • Budget to Actual Financial Review
    The Office of Management and Budget (OMB) and the Financial Services Department monitor budget to actual spending and provide reports to city management. Central staff works with department staff monthly to review spending patterns and ensure proper posting and reporting of transactions.
  • Target to Actual Performance Review
    Departments track actual performance measure results against targeted results. OMB’s Performance Excellence Team works with department staff to align measures with goals and objectives and to assist with proper reporting of data.
  • MesaStat Meetings
    The City Manager meets with each department on a regular basis to review financial information, to review progress on achieving desired outcomes, and to receive a general status update.
  • Budget Amendments/Modifications
    In order to achieve the desired outcomes, department directors have the authority to realign resources within their departments. Budget adjustments between departments or between funding sources must be presented to the Office of Management and Budget (OMB) for verification of budget capacity and the appropriateness of the funding source.

Budget Requirements and Limitations

The City of Mesa is bound by the requirements of the Arizona Constitution, various state statutes, the City Charter, generally accepted accounting principles (GAAP), and City financial policies. Restrictions include limitations on the amount of annual expenditure appropriation, as well as limitations on actual expenditures. There are also requirements for the issuance, type and amount of debt; budget calendar dates; and the number and type of public notices that must be made as part of the budget process.

 

The Arizona Constitution requires the adoption of a balanced budget, which is “all-inclusive” (Title 42 Arizona Revised Statutes (A.R.S.)). This means that budgeted revenues and other resources must be equal to budgeted expenditures and that no expenditure may be made without appropriation. Because of this, it is incumbent on the City to ensure that the budget includes sufficient appropriation and contingency for unanticipated revenues (e.g., unanticipated grant awards) that may become available during the fiscal year as well as unanticipated expenses.

 

In November 2010, the voters of Mesa passed a Locally Controlled Alternative Expenditure Limitation, also known as the “Home Rule” Option. The Home Rule Option allows the City to determine its own expenditure limitation, within available revenues and other resources. The Home Rule Option remains in effect for the four fiscal years following its passage by the voters. In the case of Mesa’s 2010 Home Rule option, this includes FY 2011/12 through FY 2014/15. In November 2014, the voters of Mesa passed a continuance of the Home Rule option which includes FY 2015/16 through 2018/19.

 

The amount of primary property tax that a county, city, town or community college district may levy is limited by the Arizona Constitution. Each taxing entity's limit was established in 1980, and that limit can increase by 2% each year, plus any new construction. As the City of Mesa does not levy a primary property tax, the City is not subject to the requirements for limiting primary property tax levies.

 

Secondary property taxes in Arizona may only be levied for voter-approved budget overrides, special districts, or to pay for bonded indebtedness. The City first instituted a secondary property tax levy for the repayment of bond debt associated with the 2008 bond election. The first receipts of secondary property tax occurred in FY 2009/10. Since then the levy has been updated based on the authorization of additional general obligation bonds by Mesa voters.