04 15 26 Resolution No. 2635 - Permanent Base Adjustment - Chief Financial Officer Kevin Artz
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PERMANENT BASE ADJUSTMENT – RESOLUTION 2635 April 15, 2026 BACKGROUND • Arizona Constitution and Arizona Revised Statutes impose an expenditure limitation on every City and Town in the State. • Baseline expenditures from FY 1979-80 • State Economic Estimates Commission adjusts limitation each year • Standard inflation rate • Population growth BACKGROUND • Budget 1979/80 $966,494 • Population (1978) 4,190 • Population (2025) 8,689 • Population growth 8689/4190=2.0737 • Inflation growth 3.8685 • 2026-27 Exp Limitation $966,494 x 2.0737 x 3.8685 = $ 7,753,412 BACKGROUND • Alternative options to the State-imposed limit • Home Rule • Permanent Base Adjustment • Capital Projects Accumulation Fund • One-Time override • Expenditures from certain revenue sources are excluded from the expenditure limitation • Bond proceeds • Interest income • Grants • Intergovernmental revenues WHY DOESN’T THE STATE-IMPOSED LIMITATION WORK IN TOLLESON? • Assumes the 1979/80 budget provided sufficient service levels • Volunteer Fire Department • Regional WWTP • Senior Center, Library, Aquatic Center • Does not account for new revenue sources • Additional Wastewater revenues • Increases in sales tax rates • E-Commerce Revenue • Does not account for increases in commercial activity • Growth factor covers population and average inflation – not revenue growth • Regional shopping destination PERMANENT BASE ADJUSTMENT • Permanent base adjustment modifies the expenditure base from 1979-80 • Provides stability to service levels • 40,000,000 x 2.0737 x 3.8685 = $320,884,338 RECOMMENDATION • Staff recommends that Council approve Resolution 2635 providing for a permanent adjustment to the City’s 1979- 80 base expenditure limitation in the amount of $39,033,506, which would establish the base limitation at $40,000,000.