Step 1 - Departments Prepare Annual Work Plans
Departments develop and review annual operational work plans that identify the planned work and the personnel, materials, and capital items needed to conduct that work for one year. The operational plan identifies who will do what and with what resources. These plans also identify a means to evaluate progress and whether the department’s goals and objectives were achieved. The plans are presented in the Department Operational Plans section of this document.
Step 2 - Forecast Revenues and Expenditures
Prior to the start of the budget process, the Office of Management and Budget (OMB) prepares a preliminary multi-year forecast of revenues and expenditures. A comprehensive forecast process helps prepare for potential adverse events and circumstances. The forecast provides a framework that assists Mesa’s elected officials and executive team in making decisions about the direction of the City. The forecast of revenues and expenditures is discussed further in the Revenue and Expenditure trends portion of this section.
Step 3 - City Council Reviews Strategic Priorities and Establishes Budget Priorities
An updated forecast is presented at a strategic planning workshop held with the City Council, City Manager, and the City’s Executive team. The purpose of the workshop is to review the City’s long-term strategic priorities, provide updates to Council on the status of the current fiscal year’s initiatives, and receive direction from Council on priorities for the upcoming budget cycle.
Step 4 - Base Budget Guidelines Established
Based on forecasted City resources, departments are allocated a portion of those resources to fund their operations.
Step 5 - Departments Submit Base Budget and Funding Requests
A department allocates its base budget to core business processes based on the resources apportioned to the department each year. Departments submit requests for additional resources to the City Manager, through OMB. The requests can be for one-time or ongoing budget increases. Based on available funding and Council priorities, the City Manager may recommend additional funding in base budgets.
Step 6 - OMB/City Manager Review Department Budgets and Performance Plans
OMB and the City Manager review the budget submissions to ensure that Council priorities are followed, legal regulations are adhered to, and City functions are properly supported. Budget submissions are reviewed for alignment with available resources.
Step 7 - City Council Reviews Department Budgets and Significant Issues
OMB provides preliminary budget information to the City Council through a combination of reports and presentations. The City Council receives additional information from departments as needed. The City Council provides direction on issues and projects included in the upcoming budget.
Step 8 - City Manager Submits Budget to City Council
Based on feedback received from the City Council, the City Manager submits a balanced budget to the City Council for consideration.
Step 9 - City Council Establishes Tentative Budget
Per State statute, the City Council tentatively adopts a budget. The tentative budget sets a legal ceiling or maximum dollar amount for the Final Budget.
Step 10 - City Council Seeks Public Input
In addition to comment cards throughout the budget process, City Council publishes notice for public input during one or more public hearings.
Step 11 - City Council Adopts Final Budget
The City Council may incorporate feedback and then adopts a Final Budget.
Step 12 - Departments Review Progress Toward Work Plan Outcomes
Departments review progress towards achieving desired outcomes from their Annual Work Plan, evaluating the factors that enabled them to exceed performance targets or what factors prevented them from achieving departmental goals and objectives. They decide on actions to build on success or to correct steps in the process to meet future goals.
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 Financial Services monitor budget to actual spending and provide reports to 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. Office of Innovation and Efficiency 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.
We are bound by the requirements of the Arizona Constitution, various state statutes, the Mesa City Charter, generally accepted accounting principles (GAAP), and our 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 us 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.
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 we do not levy a primary property tax, we are 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. We 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.