Attachment E 2023-24 GF Revenue Estimates Report.pdf

BUDGET AND RESEARCH DEPARTMENT REPORT 
B.R.D. NUMBER 
 2023-06 
SUBJECT 
General Fund Revenue Estimates 
DATE ISSUED 
March 16, 2023 
This report provides additional detail on General Fund (GF) revenue estimates to explain 
recommended revenue projections. The City is committed to providing a transparent and open 
budget process. Providing this information enhances the review and understanding of how revenue 
projections are developed to better facilitate discussions during the annual budget development 
process.  
Careful examination of revenue estimates is required to ensure projections are as accurate as 
possible to maintain fiscal stability and long-term budget management. Predicting future revenue 
growth is challenging and requires a consistent and diligent analysis based on sound forecasting 
principles and methods. Revenues are monitored closely, and an updated revenue report is 
prepared and distributed to the City Manager’s Office, the City Council, and the community for 
review monthly. General Fund revenues are comprised of several categories, all of which are 
unique and require separate analysis. The primary revenue categories include local taxes and 
related fees, primary property taxes, state shared sales, income and vehicle license taxes, and 
user fees and non-tax revenues.  
Included in this report is an explanation of how GF revenue is projected, the sources relied upon to 
assist in developing estimates, economic assumptions and the methods used to analyze revenues. 
Also included are historical revenue actuals and growth rates, the recommended revenue 
estimates for 2022-23 and 2023-24, and an explanation of the influencing factors used by staff in 
analyzing each major revenue category. The below table summarizes the 2022-23 and 2023-24 
estimated GF revenues and the primary reason for the variance: 
GF Revenue 
Category (millions) 
2022-23 
Estimate 
2023-24 
Estimate 
Amount 
Change 
Percent 
Change 
Primary Reason for Difference 
Local Taxes 
$679.4 
$699.2 
$19.8 
2.9% Moderate growth in city sales tax 
collections expected.  
Primary Property 
Tax 
200.2 
207.3 
7.1 
3.5% Increase in assessed property 
valuation. 
State Shared Sales 
Tax 
241.6 
248.6 
7.0 
2.9% Moderate growth in state-shared 
sales tax collections expected. 
State Shared 
Income Tax 
308.2 
435.7 
127.5 
41.4% 
Based on collections received two 
years prior. Growth due to the 
State increasing the distribution to 
cities from 15% to 18%. 
State Shared 
Vehicle License Tax 
79.1 
85.6 
6.5 
8.2% 
Increase expected, as alternative 
fuel vehicle license tax discount 
was eliminated after 12/31/2022. 
User Fees & Non-
Taxes 
151.9 
154.8 
2.8 
1.9% Moderate growth in this category is 
expected.  
Total 
$1,660.4 $1,831.2 
$170.8 
10.3% 
ATTACHMENT E

Revenue Projections & Trusted Sources 
 
Projecting revenues involves complex analysis and continuous monitoring to identify variances and 
recommend adjustments so that expenditures do not exceed available resources and a balanced 
budget can be maintained. As part of the overall forecasting process, assumptions about the 
direction and strength of the national, state and local economy are considered along with indicators 
such as population, job growth and personal income. Information on program and service activity 
levels, rates, and fees that influence certain revenues are evaluated and proposed legislation is 
monitored to determine potential impacts to revenue categories such as sales taxes, state shared 
revenues, emergency transportation service revenues and property taxes. For instance, House Bill 
2003 proposes to reduce corporate income tax by 0.9 percent to 4.0% for 2023 and continue to 
reduce the tax by 0.5% for each subsequent year until it reaches 2.5% in 2026. This reduction could 
lead to a decrease in state-shared income tax revenue starting in 2025-26 due to the two-year 
distribution lag. The estimated reduction to revenue could range  from $11 million to $34 million per 
year for fiscal  years 2025-26 to 2028-29 and beyond, assuming all other factors remain the same. In 
addition, information from city departments on user fees and non-tax revenue is requested and 
analyzed each year as part of the technical budget review process. Finally, trusted economic and 
financial sources are relied on to provide certain revenue projections and insight into the overall 
direction and strength of the economy and include experts from the State’s Finance Advisory 
Committee (FAC), Joint Legislative Budget Committee (JLBC), Arizona State University, University 
of Arizona (UofA) Economic and Business Research Center (EBRC), Arizona Department of 
Revenue, National Blue Chip, Western Blue Chip, and the U.S. Bureau of Labor Statistics and 
Bureau of Economic Analysis.   
 
The City is also a member of the Forecasting Project through the EBRC at the UofA. This project is a 
community-sponsored research program providing project members with economic forecasts for 
Arizona and the Phoenix-Mesa metro area. Budget & Research (B&R) staff attends quarterly 
meetings, participates in discussions with other local government and private enterprise members, 
and receives quarterly economic reports. In the fall of 2014, Budget and Research consulted with the 
University of Arizona’s Eller College of Management, EBRC to enhance the City’s sales tax revenue 
forecasting process. Dr. George Hammond, EBRC Director, and Dr. Alberta Charney, Senior 
Research Economist, spent several months working with City staff to develop an enhanced 
econometric sales tax forecasting model for all categories of city and state sales taxes. In the 
summer of 2017, staff worked with EBRC to update the tax forecasting model. In March 2021, the 
EBRC revised the City’s model again by including online sales tax. The City began collecting sales 
tax from online marketplace retailers effective October 2019 just prior to the pandemic, which helped 
to offset losses experienced in the leisure and hospitality sales tax categories during the pandemic. 
The EBRC leads the State of Arizona Forecasting Project, which provides in-depth economic 
forecast analysis and databases on a subscription basis to businesses, organizations, and 
government via membership. The additional consulting with Dr. Hammond has provided the City with 
solid, independent economic and statistical expertise used to develop a statistically valid forecasting 
model specifically for the City of Phoenix. The projected growth rates in each category of sales tax 
for  the 2023-24 estimate and the out years of the forecast are based on projections developed with 
the enhanced econometric forecasting model. 
 
Economic Assumptions 
 
Several of the primary revenue categories are influenced by the economy and the sources mentioned 
above provide valuable information about the expected growth of the economy. These sources are 
used in developing projected revenue growth rates. B&R staff continuously monitors economic 
variables and what these experts are predicting when developing revenue estimations.

The U.S. economy exhibited surprising resilience in the second half of 2022 after real GDP had 
declined in each of the first two quarters and the war in Ukraine created a geopolitical crisis.  
 
Historic high inflation not experienced since the early 1980s also occurred in 2022, primarily due to 
pandemic-related federal stimulus and supply-chain issues. The Federal Reserve has been tasked 
with maintaining stable price growth by increasing interest rates to tame inflation, which may slow 
the economy. It is for this reason some economists forecast either a meaningful slowdown in the 
2023 economy or a mild recession. However, historic low unemployment and wage growth may 
prevent a recession in the current year, which creates additional economic uncertainty and revenue 
forecasting challenges for the current fiscal year and 2023-24.  
 
Arizona's economy and revenue growth have consistently outperformed the national average 
throughout the pandemic, and this trend is expected to continue, albeit at a slower pace due to the 
impact of the national economy. According to the Governor's presentation for the 2023-24 budget, 
Arizona ranked 5th in personal income, 6th in GDP growth, 7th in job growth, and 8th in population 
growth among all states. The continued movement and expansion of high-tech manufacturing firms 
in Arizona is expected to promote further growth. However, Arizona has also experienced some of 
the highest inflation rates among all states due to persistently high housing prices. Due to the impact 
of the national economy, a significant slowdown in growth across all major economic indicators is 
anticipated for 2023, although Arizona and Phoenix are expected to outperform the national 
economy. 
 
Revenue Forecasting Methods 
 
Several forecasting methods and practices are used to estimate City revenues and vary depending 
on the type of revenue being analyzed. Evaluating historical growth patterns and current actuals is an 
important component to analysis and provide insight into the direction of the various revenue 
categories and the growth needed to achieve estimated revenues. Information is also collected from 
the economic sources mentioned earlier to ensure current and subsequent year estimates are 
reasonable and in-line with what these experts are predicting. The State FAC provides valuable 
information from a panel of respected economists and financial professionals. Included in their 
materials are projections of state sales tax and income tax collections. These projections are 
considered when developing city sales tax, and state shared sales and income tax revenues for both 
the current and subsequent fiscal years. Additionally, information is collected from city departments 
during the annual technical review process to analyze the user fee and non-tax revenue category. 
The department’s knowledge of the revenues generated by various city programs and services is 
essential to developing accurate projections. Staff also considers one-time revenues, adjustments, 
and contractual agreements impacting growth when developing estimates. 
 
In conjunction with considering historical growth, current trends, and information from trusted 
sources and departments, B&R staff uses several forecasting methods when preparing the 
estimates. The most common methods of revenue estimation used are averages of actual revenue 
experience by varying periods, annualization of year-to-date actuals, and most often a percent of 
prior year method. This last method involves analyzing the amount of revenue collected at a point in 
time during prior fiscal years, for example, the 7-month actuals represented a certain percentage of 
the total collections for the entire fiscal year, and then applying it to current year-to-date actuals.  
This method accounts for the seasonal nature of many city revenues and is often a more effective 
method than using an averages or annualizing approach. Additionally, the growth rate needed to 
reach the budgeted or estimated revenue is considered. If the percentage growth needed for the 
remaining months of the fiscal year is substantially higher or lower than the current growth rate, 
adjustments are made to arrive at a new estimated revenue amount for the fiscal year.

Once the current fiscal year estimate is developed, assumed growth rates are then applied to this 
amount to arrive at a projected revenue amount for the following fiscal year. These assumed growth 
rates take into account historical and recent trends in revenue data, one-time revenue adjustments, 
and information from city departments and our trusted sources to ensure projections are not overly 
conservative or aggressive.  
 
Finally, as part of the annual budget development process each year, revenue estimates are 
presented to the City Manager’s Office, the City Council and the community as part of the GF Five-
Year Forecast, the proposed Trial Budget and City Manager’s Budget recommended for 
consideration and approval prior to final budget adoption in June.  
 
General Fund Revenue 
 
To assist in explaining the basis for how GF revenue is estimated for each of the major categories, 
historical revenue growth and estimated revenues for the 2022-23 and 2023-24 fiscal years are 
provided graphically, along with a description of the revenue category and the methodology used to 
develop recommended revenue estimates beginning with total GF revenue.  
 
Total General Fund Revenue 
 
$1,026 $1,053 $1,075 $1,106 $1,173 $1,221 $1,259
$1,379
$1,496
$1,660
$1,831
5%
3%
2%
3%
6%
4%
3%
10%
8%
11%
10%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
200
400
600
800
1000
1200
1400
1600
1800
2000
Actual & Estimated General Fund Revenue $
% Change
$Millions
 
 *Projections for 2022-23 and 2023-24 assume no fee increases, changes to state shared revenue formulas or legislative     
changes that have recently been proposed or discussed during the current legislative session.  
 
As mentioned, GF revenue consists of local taxes and related fees, primary property taxes, state 
shared sales, income and vehicle license taxes, user fees and non-tax revenues. Estimating 
revenues for each of these categories is conducted separately to more accurately predict the 
amount of revenues for the current and following fiscal year. Each category is unique with 
respect to the variables that comprise the revenue and influence growth. Variables that impact 
revenue growth include economic factors such as inflation, consumer sentiment, discretionary

income, population, unemployment, job growth and construction activity. Other influencing factors  
may include legislative action, City Council policy directives, legal restrictions and mandates, 
state statutory formulas, program enhancements or reductions, and changes in rates and fees. 
For these reasons, evaluating each major category separately is preferred and generates more 
accurate revenue projections. 
 
Local Taxes and Related Fees, 38% of Total General Fund Revenue  
 
$421
$427
$437
$441
$453
$490
$501
$559
$650
$679
$699
2%
1%
2%
1%
3%
8%
2%
12%
16%
5%
3%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
200
300
400
500
600
700
800
Actual & Estimated Revenue $
% Change
$Millions
 
 
Local taxes and related fees consist of city sales taxes, privilege license fees and other excise taxes. 
The majority of revenue is derived from city sales taxes which is comprised of 15 general categories 
collected based on a percentage of business income accruing in each category. The chart on the 
following page provides the current local sales tax rates by category and the percentage allocated to 
each fund. Privilege license fees are assessed to recover the costs associated with administering 
the local tax system. Other excise taxes include the jail tax and the excise tax collected on water 
service accounts, which provide resources to help offset jail costs paid to Maricopa County and other 
GF services.  
 
Sales tax can be volatile and typically correlates to the local economy and consumer spending 
behavior. Increases in sales tax collections are expected when the local economy expands due to 
underlying fundamentals such as increases in population, discretionary income, business expansion, 
jobs and real estate growth. The opposite holds true during times of economic contraction or 
recession as evidenced in 2008-09 and 2009-10 during the Great Recession, and most recently 
during the COVID-19 pandemic. The federal stimulus assistance provided during the pandemic and 
more than expected revenue collections from retail and contracting sales taxes offset the revenue 
loss in the hospitality and leisure sales tax categories which prevented a severe decline in City 
revenues. Additionally, the recent surge in inflation has positively impacted the City by drawing in 
greater tax revenue from higher-priced taxable goods and a rise in wages. However, the retail 
category which is the largest sales tax category has started showing a significant slowdown in recent

months and economists predict a mild recession or economic slowdown as the Federal Reverse 
continues to increase interest rates to fight against inflation. Staff analyzes historical and recent 
trends in sales tax data by category, evaluates cumulative growth and uses an econometric 
forecasting model constructed by the UofA to develop projections. Estimates provided by the FAC 
and JLBC are also considered to ensure projections are reasonable and not overly aggressive or 
conservative in nature. Given the additional economic uncertainty, staff is closely monitoring revenue 
collections and may revise revenue estimates as more information is available.  
 
Currently, the growth estimated in 2023-24 of 2.9% assumes continuous growth over 2022-23 and 
accounts for current trends in actual collections. Projections provided by the UofA were used to 
develop city sales tax estimates. Privilege license fees and other excise tax projections are 
developed using the existing fee structures, assumptions about historical trends, averages, recent 
collection experience and use of the percent of prior year method to account for seasonal influences 
in revenue activity. Privilege license fees in 2023-24 are estimated to be flat. The growth estimated 
in 2023-24 for other excise taxes assumes conservative growth and continuation of current year-to-
date experience. 
 
Current Local Sales Tax Rates by Category 
 
 
 
 
General 
Fund 
 
 
N’hood 
Protection 
2007 
Public 
Safety 
Expansion 
 
Public 
Safety 
Enhance. 
 
Parks 
& 
Pres. 
 
 
Transp. 
2050*** 
 
 
Conv. 
Center 
 
 
Sports 
Fac. 
 
 
Capital 
Const. 
 
 
 
Total 
 
 
 
 
 
 
 
 
 
 
 
Advertising 
    – 
– 
– 
– 
– 
– 
0.5% 
– 
– 
0.5% 
Contracting 
 0.7% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
0.5% 
– 
– 
2.3% 
Job Printing 
 0.7% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
0.5% 
– 
– 
2.3% 
Publishing 
 0.7% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
0.5% 
– 
– 
2.3% 
Transportation/Towing 
 0.7% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
0.5% 
– 
– 
2.3% 
Restaurants/Bars 
 0.7% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
0.5% 
– 
– 
2.3% 
Leases/Rentals/ 
  Personal Property 
 1.2% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
– 
– 
– 
2.3% 
Short-Term Motor 
Vehicle Rental 
 1.2% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
– 
2.0% 
– 
4.3% 
Commercial Rentals 
 1.3% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
– 
– 
– 
2.4% 
Lodging Rentals 
Under 30 Days 
 1.2% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
2.0% 
1.0% 
– 
5.3% 
Lodging Rentals 
30 Days and Over 
 1.2% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
– 
– 
– 
2.3% 
Retail (Level 1 – 
amounts = < $11,631 
for a single item) **** 
 1.2% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
– 
– 
– 
2.3% 
Retail (Level 2 – 
amounts > $11,631 for 
a single item) **** 
 1.2% 
0.1% 
0.2% 
– 
0.1% 
0.4% 
– 
– 
– 
2.0% 
Amusements 
 1.2% 
0.1% 
0.2% 
– 
0.1% 
0.7% 
– 
– 
– 
2.3% 
Utilities 
 2.7%* 
– 
– 
2.0%** 
– 
– 
– 
– 
– 
4.7% 
Telecommunications 
 2.7% 
– 
– 
– 
– 
– 
– 
– 
2.0% 
4.7% 
*The General Fund portion of the utilities category includes the 2.0 percent franchise fee paid by utilities with a franchise agreement.

**The Public Safety Enhancement designated 2.0 percent sales tax applies only to those utilities with a franchise agreement. 
***The Transportation 2050 Fund (Proposition 104) was established by the voters effective January 1, 2016 and replaced the Transit 
2000 Fund (Proposition 2000) to fund a comprehensive transportation plan with a 35-year sunset date. The Proposition increased the 
transaction privilege (sales) tax rates by 0.3% for various business activities.    
**** Proposition 104 also established a two-tier tax rate structure applicable to retail sales of single items in excess of $10,000, to be 
adjusted biennially for inflation. Effective January 1, 2018, the first $10,303 (Level 1) is subject to the 2.3% tax rate, while transactions 
over $10,303 (Level 2) are subject to the 2.0% tax rate. The criteria for Level 1 and Level 2 were adjusted on January 1, 2022, and the 
current threshold is $11,631, which will be adjusted again on January 1, 2024. 
 
Primary Property Tax, 11% of Total General Fund Revenue 
 
$144
$138
$141
$146
$155
$162
$170
$182
$192
$200
$207
9%
-4%
2%
3%
6%
5%
5%
7%
6%
4%
4%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
50
70
90
110
130
150
170
190
210
Actual & Estimated Revenue $
% Change
$Millions
 
 
Arizona property tax law provides for two separate tax systems. A primary property tax is levied to 
pay current operations and maintenance expenses. Therefore, primary property tax revenue is 
budgeted and accounted for in the GF (and is illustrated in the above graph). A secondary property 
tax levy is restricted to the payment of debt service on voter approved long-term general obligation 
debt. Therefore, the secondary property tax revenue is budgeted and accounted for as a special 
revenue fund. The primary property tax levy forecast reflected here is based on the net assessed 
value stated in the annual “Levy Limit Worksheet” for the City of Phoenix, issued by the Maricopa 
County Assessor, multiplied by the projected primary property tax rate. The primary property tax 
revenue forecast assumes that 99% of the projected primary property tax levy is actually collected. 
 
The annual amount of the primary property tax levy is limited by the Arizona Constitution to a two 
percent increase over the prior year levy limit plus an estimated levy for previously unassessed 
property (primarily new construction). Provisions in Chapter XVIII of the City Charter limit the City’s 
primary property tax rate to $1.00 per $100 of assessed valuation with the exception of costs to 
operate library services. The proposed 2023-24 primary property tax rate, not including the portion of

the rate allocated to cover the Library Department operating costs, is $1.00 per $100 of assessed 
valuation. The total proposed 2023-24 primary property tax rate is $1.2857 per $100 of assessed 
valuation, which is reduced from the current rate of $1.2989 due to the constitutional levy limit. 
 
State Shared Sales Tax, 14% of Total General Fund Revenue 
 
$127
$132
$138
$144
$156
$165
$172
$201
$230
$242
$249
7%
4%
4%
5%
8%
6%
4%
17%
14%
5%
3%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
50.0
100.0
150.0
200.0
250.0
Actual & Estimated Revenue $
% Change
$Millions
 
 
State sales tax revenues received by the City are governed by Arizona State Statute §42-5029. 
State sales tax revenues are split between a “distribution base”, of which Phoenix receives a share, 
and a “combined non-shared” category, which is allocated entirely to the state. With the exception of 
some tax categories, the distribution base consists of either 20, 32, 40, or 50 percent of collections 
depending on the tax category. State statute §42-5029 stipulates of the monies designated in the 
distribution base the Arizona Department of Revenue shall pay 25 percent to incorporated cities on 
the basis of relative population percentages. The population share changes annually based on 
Census Bureau Population Estimates. The 2023-24 City of Phoenix population share is estimated at 
27.87 percent and is based on the 2021 Census Bureau Population Estimate.  
 
State sales tax is estimated similar to how city sales tax is forecasted. Staff analyzes historical and 
recent trends in sales tax data by category and evaluates cumulative growth when developing 
revised estimates. Projections provided by the UofA EBRC, using an econometric sales tax model, 
were used to develop 2023-24 estimates; and information from the FAC and JLBC were considered 
to ensure current fiscal year estimates are reasonable and in-line with what these experts are 
projecting.

State Shared Income Tax, 24% of Total General Fund Revenue 
 
$162
$175
$174
$191
$200
$197
$215
$240
$213
$308
$436
9%
8%
-1%
10%
5%
-2%
9%
12%
-11%
44%
41%
Actual & Estimated Revenue $
% Change
$Millions
 
 
State shared income tax revenue, also known as the Urban Revenue Sharing (URS) Fund, was 
established by voter initiative in 1972 and is governed by Arizona Revised Statute §43-206. The 
statute stipulates that 15 percent of the net proceeds of state individual and corporate income tax 
collected two years preceding the current fiscal year be distributed to incorporated cities and towns. 
Laws 2021, Chapter 412 (Tax Omnibus) increased the Urban Revenue Sharing distribution from 
15% to 18% starting in 2023-24. Individual cities receive their portion based on the cities’ share of 
the state population. The 2023-24 City of Phoenix population share is estimated at 27.84 percent 
and is based on the 2021 Census Bureau Population Estimate. This rate will change annually based 
on Census Bureau Population Estimates. As a result of the initiative, Arizona Revised Statute §43-
201 stipulates the area of income taxation is preempted by the state and a county, city, town or other 
political subdivision shall not levy an income tax as long as the Urban Revenue Sharing Fund is 
maintained as provided in state statute §43-206. 
 
Since state shared income tax revenue is based on actual collections from two years preceding the 
current fiscal year, the 2022-23 and 2023-24 projected revenue is known and is based on actual 
collections received in 2020-21 and 2021-22, respectively. The surge in 2022-23 is due to the State 
deferred income tax filings in the 4th quarter of 2019-20 to 2020-21 due to the pandemic. The 
continued solid growth in 2023-24 is because the URS distribution to cities has been increased from  
15% to 18% to compensate for the anticipated individual income tax loss starting in 2024-25 due to 
the tax rate reduction.

State Shared Vehicle License Tax, 5% of Total General Fund Revenue 
 
$52
$55
$60
$62
$67
$70
$71
$80
$79
$79
$86
7%
7%
8%
3%
8%
5%
0%
13%
-1%
1%
8%
-80%
-60%
-40%
-20%
0%
20%
20
30
40
50
60
70
80
90
Actual & Estimated Revenue $
% Change
$Millions
 
 
State shared vehicle license tax has been distributed to cities and towns since 1941. The tax is 
levied per $100 of a vehicle’s assessed value. For the first 12 months of the vehicle’s life, the 
assessed value is 60% of the manufacturer’s base retail price. For each subsequent year, the 
assessed value is 16.25% less than the previous year. The rate per $100 of assessed value is $2.80 
for new vehicles and $2.89 for renewals. The Arizona Department of Transportation (ADOT) collects 
and distributes the tax according to Arizona Revised Statute §28-5808. The distribution to individual 
cities is based on their relative population within the county. The 2023-24 City of Phoenix population 
share is estimated at 38.93 percent and is based on the 2021 Census Bureau Population Estimate. 
This rate will change annually based on Census Bureau Population Estimates. 
 
Vehicle License Tax (VLT) revenues are often correlated to the overall strength of the economy. 
Similar to sales tax revenues when the economy is growing this revenue category also exhibits 
growth, as illustrated in the above graph. Revenues are estimated by evaluating historical growth 
patterns, year-to-date cumulative growth and applying the percent of prior year method to year-to-
date actuals, which accounts for the seasonality in collections. Staff also considers projections 
provided by ADOT, which are published annually for this revenue source, and any available recent 
economic information pertaining to projections on the local economy and vehicle sales when 
formulating recommended current and subsequent year estimates. The expected 8% growth in 
2023-24 is mainly attributable to the policy change for alternative fuel vehicles. Starting from January 
1, 2023, the formula used to calculate VLT for alternative fuel vehicles is the same one used for 
other vehicles, instead of using only 1% prior to 2022 and 20% in 2022 of the manufacturer's base 
retail price of the vehicle.

User Fees and Non-Tax Revenues, 8% of Total General Fund Revenue 
 
$121
$125
$125
$122
$142
$137
$131
$117
$132
$152
$155
1%
3%
0%
-2%
16%
-4%
-5%
-11%
13%
15%
2%
-110%
-90%
-70%
-50%
-30%
-10%
10%
30%
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
Actual & Estimated Revenue $
% Change
$Millions
 
 
User Fees and Non-Tax Revenues include collections from licenses and permits, fines and 
forfeitures, cable television fees, user fees from several City departments designed to recover the 
costs of providing specific City services including Parks and Recreation, Library, Planning, Police, 
Fire, and Streets; other service charges including interest income, parking meter revenue, in lieu 
property taxes, sales of surplus property, various rental income, parking garage revenues and 
concessions; miscellaneous service charges in Finance, Housing, Human Services and 
Neighborhood Services.  
 
B&R staff relies on departments to provide essential information concerning activity levels, fee 
increases or decreases and program changes which impact the variety of revenue sources in this  
category. Technical revenue reviews are conducted twice each fiscal year as part of the annual 
budget development process. Departments are asked to provide revenue estimates and reasons for 
changes from prior year actuals. Staff conducts a line-item analysis of all revenues and uses various 
methods including annualization and percent of prior year, as well as consideration of one-time and 
contractual revenues, program enhancements or reductions and other adjustments when developing 
estimates.  
 
The expected growth rate of 1.9% in 2023-24 assumes a moderate growth for the overall collections. 
However, some GF non-tax revenue categories are anticipated to decrease in 2023-24 due to 
discontinued revenue sources, a decline in actual collection trends, or a one-time revenue in 2022-
23, including cable communications, Municipal Court fines and forfeitures, other service charges, and 
other miscellaneous receipts.

In addition to the technical reviews conducted twice each fiscal year, B&R staff monitors revenues 
monthly to determine if adjustments to projections are needed. The proposed estimates  
are then reviewed by B&R management and the City Manager, and finally incorporated into the GF 
proposed revenue projections for consideration by the City Council and the community.  
 
This report is for informational purposes only and is intended to provide the City Council and the 
community with explanations on how GF revenues are analyzed and developed to better facilitate 
discussions during the annual budget development process.   
 
 
 
 
 
 
 
 
 
   Dan Wang, Ph.D.  
   Deputy Budget and Research Director