Attachment A - Expenditure Limit Overview.pdf
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ATTACHMENT A Expenditure Limit Overview State Spending Limit: • Also known as “Expenditure Limitation” • It is a State Constitutional limit approved by voters in 1980 which restricts annual spending limits of cities and towns. The limit applies to all local revenues. • Limits spending to 1979-80 actual levels adjusted for population growth and inflation. However, original limitation does not account for voter-approved increases (transit, public safety, parks and preserves), regional services (Sky Harbor, wastewater treatment) or Federal/State mandates (clean water, FAA). • The Constitution includes provisions for exceeding the limit with voter approval. • The Home Rule Option, also known as an Alternative Expenditure Limitation, must go to voters every four years. If Home Rule Not Approved: • The City will exceed the spending limitation and the State will withhold state-shared revenues in a formula-based amount set by statute. The City would need to reduce expenditures by an estimated $1.5 billion or more annually to comply with the formulaic limit, based on analysis completed from the last expenditure limitation process in 2020. City of Phoenix Process: • Since 1980, Phoenix has had ten spending limit options approved by voters. • Through Home Rule approved by Phoenix voters, the limit has been set at the adopted budget since 1999. • Each of Phoenix’s prior options have been studied and recommended by a Citizen’s Task Force. • Voters last approved the Home Rule Option in November 2020. • Phoenix’s current Home Rule period expires on June 30, 2025. • Solution must be presented to voters in November 2024 to be effective July 1, 2025. Citizen Task Force Process: • To be appointed by Mayor and Council in November 2023. • Review the revenue and expenditure forecasts prepared by City staff (Feb/Mar 2024). • Study the potential effects of the Constitutional limit. • Recommend a solution to Council in April 2024.