The city of Mesa was anticipated to adopt a more than $1 billion budget Monday, June 22 and while the city shaved about $60 million from last year’s budget a series of rate changes and modifications for city services were planned.

Everything from modifications to utility rates and reassessment of fees for business done within the city of Mesa were on the agenda for the June 22 regular meeting.

Utility rate changes are anticipated to go into effect July 1 in the areas of water service, waste water service and natural gas, according to a May 21 staff report to Mesa City Council. The total amount of money derived from these changes is $6.2 million.

Water service fees will increase for the 134,000 residential and commercial accounts served by the city of Mesa by 3.4 percent, which on average will cost $13.80 more annually and $1.15 monthly, the report shows.

Waste water service will increase for the 117,000 residential and commercial accounts served by the city of Mesa by 6.5 percent, which on average will cost $15 more annually and $1.25 monthly, the report shows.

Natural gas service fees will increase for the 53,000 residential and commercial accounts served by the city of Mesa by 0.3 percent, which on average will cost $8.23 more annually, the report shows.

According to the council report, utility fee remits are the third largest source of revenue for the city of Mesa after sales tax and state-shared revenues.

But none of the new fees are going to be used to pay for the pending General Fund deficit, according to Mesa Mayor Scott Smith.

The city’s general fund pays for core services such as police, fire and parks and recreation, according to Chuck Odom, city of Mesa’s budget director.

The city, at one time, faced a $60 million General Fund budget shortfall, but through reductions in workforce and reorganizations of city departments the city was anticipated to adopt a balanced budget on June 22.

However, if the state legislature were to take impact fee and vehicle license tax remits away from cities and towns Mesa would be facing a General Fund budget deficit once again, Mr. Odom explained.

"Over the last couple of years council and staff have set up long-term fee changes," Mayor Smith explained in a phone interview. "We wanted to make it more consistent so people and the city can be more cost effective."

Mayor Smith called the changes to fees for residential and commercial utility bills and increases to charges for use of Mesa parks, facilities and museums a "normal adjustment structure."

When asked if the recent downturn in local and national economies was a catalyst for the changes to fee structures, Mayor Smith responded with a resounding "no."

"Anytime you are in a financial situation you are always concerned," he said of the current economic state of affairs. "We are not using fee increases for any type of general fund deficit."

Mayor Smith says the city of Mesa is focused on one objective, which is maintaining quality services for citizens. He says the changes to fee structures within the city must not be viewed as the city grabbing for money to compensate for the General Fund deficit.

"Any rate change is being reinvested in the system," he said of money generated from fees going to pay for operating costs. "We have changed the way we do business. We took that as an opportunity to change those philosophies."

Although Mayor Smith says the changes to fee structures throughout city services were not done solely because of the General Fund deficit — it did speed things up.

"It certainly has been a catalyst for us to do things earlier and faster than anyone ever thought," he said. "In many ways it has both been a challenge and opportunity."

Mayor Smith says Mesa City Council is facilitating a change to how the city does business.

"We have learned to live with less and still maintain a high level of service," he explained. "If we are able to do that now just think when the economy recovers."

Mr. Odom confirmed that dollars gathered from utility rate increases next fiscal year have been frozen and will not go into the city’s General Fund.

Mr. Odom called the proposed rate changes a "self-contained situation."

"The transfers have been frozen," he said of previous fiscal years where utility fee remits were funneled into the city’s General Fund. "All we are doing is cost recovery."

Mr. Odom explained the utility rate changes are on a five-year plan aimed at not putting a burden on residents who use the services.

"We don’t want to put rate-shock on anyone, but we do want to recover what we are mandated to do by the feds," he said of federal regulations pertaining to maintaining certain levels of service and upkeep of equipment.

Mr. Odom says the drastic changes to how the city of Mesa does its business — namely layoffs and restructuring of city departments — has been "quite painful."

"I think everyone has been extremely professional, responsive and responsible for the changes made," he said. "Council has looked at the service delivery changes, addressed them, looked at them and has gone forward with them."

Mr. Odom and Mayor Smith believe with the changes made by the city of Mesa it is well-positioned for future fiscal cycles.

"We are always responsive to what the economy is giving us, but I don’t see it bouncing back in the near term," Mr. Odom said of his outlook on the possibility for an economic rebound in the near future.