Annual Expenditure Limitation: Dealing with the Bottom Line GFOAZ Conference - February 22, 2018

Agenda City of Tempe Profile Services Provided Tempe’s Expenditure Limit Authorizing Expenditures in Excess of Limit Why Permanent Base Adjustment for Tempe?? Tempe Historical Permanent Base Adjustments Proposed Permanent Base Adjustment Questions/Discussion

City of Tempe Profile Founded in 1867 as Hayden’s Ferry Name changed to “Tempe” in 1880; incorporated in 1894 Home Rule City Charter approved by voters in 1964 Council-manager form of government Current population: estimated at 182,500 Cecilia 5

Services Provided Public Safety (police, fire, building safety, etc.) Transportation (road construction, maintenance) Public transit (bus, light rail, multi-use paths) Sanitation Water and Wastewater Cultural and Recreational Services General administrative KJ 15

Tempe’s Expenditure Limit 1979-80: Arizona voter’s passed a law (AZ Constitution, Article IX Section 20-21) imposing expenditure limits for each jurisdiction Purpose: Control expenditures and future growth in spending Limit was based on programs/services in existence at the time (Base Expenditure Limit) Tempe’s inaugural Base Expenditure Limit: $29.5 million Base Expenditure Limit adjusted each year for inflation and population growth Annual expenditure limit determined by State Economic Estimates Commission This was in response to Proposition 13 in California Tempe’s population in 1979/80 was approximately 102,000 Tempe’s budget in 1979/80 was a combined $64.3 million

Authorizing Expenditures in Excess of Limit Permanent base adjustment Alternative expenditure limitation Modified expenditure limitation Note: Voter-approved designation of new revenue source does not automatically equate to increase in the limit All of these require voter approval

Why Permanent Base Adjustment for Tempe?? Desire to expand existing or add new services as needed Supportive City Council Supportive Electorate Desire to reduce frequency of need to request voter approval of increased spending limit

Tempe Historical Permanent Base Adjustments $15 million base adjustment approved by voters on May 14, 1996 (Prop. 400) Increased base from $29.5 to $44.5 million Expenditure limit increase of$45.2 million (from $98.3 to $143.5 million) Transit services (bus, light rail); residential recycling; Kyrene Reclamation Plant $21 million base adjustment approved by voters on May 21, 2002 (Prop. 400) Increased base from $44.5 to $65.5 million Expenditure limit increase of $74.5 million (from $158.1 to $232.6 million) Tempe Center for the Arts; Tempe Town Lake; Multi-use Centers Plan for a base increase in 2008 abandoned due to economic downturn

Proposed Permanent Base Adjustment Proposition 404 on the March 13, 2018 election ballot City is requesting approval of $30 million base adjustment Approval would increase current base from $65.5 to $95.5 Would result in expenditure limit increase of $153.6 million (from $342.3 to 495.9 million) Expanded transit (Orbit, Streetcar); pay-as-you-go capital financing; public safety Increased spending to come from current state and local sources If proposition is approved, City anticipates not having to request another base increase for at least 10 years

Questions / Discussion