Transcript Municipal Budgeting in Arizona: What Budget Leaders Need

Municipal Budgeting in Arizona:
What Budget Leaders Need to Know
2007 GFOAz Summer Training
August 8, 2007
Tom Belshe, League of Arizona Cities and Towns
Pilar Aguilar, City of Avondale
Revenue Sources
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State Shared Revenues
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State Transaction Privilege Tax (Sales Tax)
State Income Tax
Highway User Revenues Funds (HURF)
Local Transportation Assistance Fund
(LTAF)
Vehicle License Tax (VLT)
Population Requirement for State Shared
Revenues
Revenue Sources
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Federal Revenues
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Block Grant Programs
In theory, a block grant program is designed to fund
various Federal programs within a broadly defined area.
 The Federal government has curtailed a number of
programs. The amount of Federal assistance, type of
programs and the projects for which the money can be
expended from other sources are constantly changing.
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Revenue Sources
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Local Revenues
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Property Tax
Local Sales Tax (TPT)
Business License Tax
Franchise Tax
Fines & Fees
Development Impact Fees
The Model City Tax Code
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All of the cities and towns in the state that
impose a local sales tax have adopted the model
city tax code with various options.
Twin goals of the MCTC
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Provide a greater degree of uniformity among cities
and towns
Individual cities and towns retain the right to
determine the items taxed as well as the exemptions
to be granted
State Imposed Expenditure Limitation
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Base Limit
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Actual payments of local revenues for FY 1979-80
The Economic Estimates Commission determines
limit for every city and town
Consists of expenditures “controlled” by the State
limitation
Does not include those revenues specifically
exempted from the limitation
State Imposed Expenditure Limitation
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Alternative Limitation Options
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Local Home Rule (Alternative Expenditure)
Limitation
Permanent Base Adjustment
Capital Projects Accumulation Fund
One-time Override
All Options Require Voter Approval
State Budget Law Requirements
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Developing the Budget
Budget Adoption
Final Budget Adoption
Adoption of Levy
Truth in Taxation
Encumbrances
Primary Property Tax Limitation
Limited to an increase of 2% over the previous
year's maximum allowable primary levy plus an
increased dollar amount due to a net gain in
property not taxed the previous year.
Subject to Truth in Taxation
Truth in Taxation
If the proposed primary tax levy, excluding
amounts attributable to new construction, is
greater than the amount levied by the city or
town in the previous year the council must
publish a notice.
Truth in Taxation
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Truth in Taxation Notice Requirements:
 The notice has to be published twice in a newspaper
of general circulation in the city or town.
 The first publication shall be at least fourteen but
not more than twenty days before the date on which
the proposed levy is to be discussed. The second
publication must be at least seven but not more than
ten days before the hearing
 The notice has to be published in a location other
than the classified or legal advertising section of the
newspaper
Truth in Taxation
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Truth in Taxation Notice Requirements (cont’d):
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The notice must be at least one-fourth page in size and shall
be surrounded by a solid black border at least one-eighth inch
in width
The headline of the notice must read “Truth in Taxation
Hearing - Notification of Tax Increase” in at least eighteen
point type and the text must be in substantially the same
form as the statute
In addition to publishing the notice according to the above
requirements, it is required that the city or town to issue a
press release with the same information included in the
notice required above
Budget Cycle
Strategic Planning/Forecast
Evaluation
Implementation
Agency Preparation
Citizen
Input
Management Review
Legislative Action
Public Participation
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Annual resident appreciation night
Semi-Annual resident satisfaction survey
Citizens’ CIP Committee
Open house meetings
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Rate/fee changes
Council workshops/goal setting
The Budget Process
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Rate & Fee Review
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Capital Plan Development
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August - October
Revenue Estimates
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July - December
September - November
Council Retreat
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November
The Budget Process
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Manager’s Budget Kickoff
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Expenditure Estimates
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January - March
Council Review
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January
April
Budget Adoption
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May & June
Financial Forecast
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Historical data
Tax rates
Economic indicators
New legislation
Fee/cost recovery analysis
Operating impact of CIP
Capital Budget
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Council goals
Operating impact
Debt capacity
Development fees
Operating Budget Development
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Council goals
Demographic growth
Inflationary pressures
New programs
Carryover
Performance measures
Budget Balancing
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Plan debt service payments first
Match ongoing expenditures with ongoing
stable revenues
Identify best uses of one-time funding
Reduce costs where possible
Identify new revenue sources
Contingency Budget
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Allows for unforeseen emergencies
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Can cover revenue shortfalls
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Natural Disasters
Legislative Action
Citizen Initiatives
Economic Recession
Only available to City Council
Grant Management
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Cost/Benefit Analysis
Review grant requirements
Maintain necessary documents/records
Monitor grant expenditures
Uniform Expenditure Reporting System
(UERS)
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Annual expenditure limitation report
Financial statements prepared according to
GAAP
Reconciliation of the financial statements to the
expenditure limitation report for cities and
towns
Alternative Expenditure Limitation
Report
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Adjustments/Exclusions
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Grants and Aid
Bond Proceeds
Amounts received as trustee/custodian
HURF in excess of 1979-80 distribution
Debt service requirements
Contracts with other political subdivisions
Due to Auditor General within four months of fiscal
year end along with audited financial statements
Questions