FY27 Road Paving Funding Options - 2.24.2026

FY2027 Road 
Funding Options

Road Paving Needs & Restrictions
• Streets continue to be a topic of discussion
• Town is spending about $10 million on road projects this fiscal 
year:
• Palomino reconstruction (capital project)
• Richwood reconstruction
• Thistle reconstruction
• Other roads identified by BOSS data (9/2/2025 Council meeting) 
• Based on previous discussions, Town roads need about $30-$50 
million of additional roadwork (after $10 million this year)
• New Town Dashboard shows roadwork completed since 2019

Road Paving Needs & Restrictions
• Streets continue to be a topic of discussion
• Town Council has continued making key decisions to put more funding 
into Streets Fund, including $1.5 million this year
• Finance projects that the Streets Fund will have about $6 million at the 
end of this fiscal year (after completion of about $10 million of road 
projects)
• Expenditure Limitation restricts Town from increasing spending
• Town staff has taken steps to allow one-time higher spending in the FY2026 
budget
• Other options could increase near-term funding and spending, such as debt 
that goes out longer than one year
• Spending debt proceeds and repayment of debt are excludable from the 
expenditure limitation

Streets Fund – FY25 Actual Activity 
Streets Fund
HURF $1.8M
VLT $1.2M
TPT (0.2%) 
$1.4M
Investment Earnings + other $0.6M
Transfer in $4.0M
Total Revenues/Transfers $9.2M
Total Expenditures $7.3M
•
Road Paving $4.9M, and
•
$0.7M for:
•
sidewalk repairs
•
concrete
•
striping, etc.
Other Streets Needs $1.7M
(see next slide)

FY25 Actual Streets Fund – “Other Streets Needs”
• Streets Fund includes other expenditures:
• Salaries & Benefits for Streets staff & other contractual services
• About $1.1 million annually
• Rights of Way Maintenance
• About $500,000
• Street Signs
• About $60,000
• Street Vehicle Maintenance
• About $13,000

Streets Fund – FY27 Projected Revenues
Streets Fund
HURF $1.9M
VLT $1.3M
TPT (.2%) 
$1.3M
Investment Earnings + other $0.1M
Transfers in ??
Total Revenues/Transfers $4.7M
Total Expenditures:
•
$?? For Road Paving
•
$2.2 million for Other
Road Paving ??M
Other Streets Needs $2.2M

Streets Fund – Ongoing Revenues
The Town has 
been able to 
budget more than 
this base amount 
because we have 
accumulated 
savings in our 
Streets Fund 
balance

Projected Streets Fund Balance and Situation
$9.6M
$14.2M
General Fund
$25.8 Million
$7.1 Million
Cap Projects Fund
$9.1 Million
Streets Fund
•
About $14M of transfers into Streets Fund over 
past 4 years have helped staff complete more 
roadwork (including about $10 million this year)
•
$6 million projected fund balance is 
about 15-20% of what’s needed to 
complete all remaining road paving work.
•
As discussed, the Expenditure Limitation 
restricts how much the Town can 
budget/spend each year
•
Debt does not count toward Expenditure 
Limitation
•
Town can increase road spending
•
But, Town would pay interest on debt

Streets Fund – Expenditure Limitation
• Arizona Constitution and statutes require municipalities to 
spend below the expenditure limitation
• The Town’s FY27 preliminary Expenditure Limitation set by 
the Economic Estimates Commission (EEC) is $38.2M
• EEC adjusts Expenditure Limitation every year based on:
• Inflation
• Changes in population

Streets Fund – Expenditure Limitation
• Council has authorized transfers of $12.4M into Streets Fund from 
General Fund and Capital Projects Fund (FY23 through FY25)
• Another $1.5M has been transferred from General Fund in FY26
• Some revenue sources (exclusions) do not count towards 
expenditure limitation
• Total budget can be higher, but must be below limitation after exclusions are 
considered
• Unused excludable revenue can be banked, or carried forward to future years
• HURF is an excludable revenue of about $1.8M per year and 
Investment Earnings are excludable
• Staff re-evaluated past 3 years and maximized carryforwards for Streets Fund

Streets Fund – Expenditure Limitation 
• Excludable Revenue Sources – Carried Forward
• Highway User Revenues (Gas taxes) – about $1.8M per year
• Investment Earnings
Streets Fund FY25 
Carryforward
About 
$9.5 
million
About 
$5M
Streets Fund FY26 
Projected 
Carryforward
After FY26 
Road Projects

Road Funding Options – What are bonds?
• A bond is a type of loan made by an investor to a 
borrower (or bond issuer)
• Bond issuers (e.g., the Town) pay principal and interest 
to investors
• Cities and towns across the country issue tax-exempt 
municipal bonds to finance capital projects (e.g., 
governmental facilities, infrastructure, etc.)

Road Funding Options – What are bonds?
• Arizona municipal bonds are typically repaid from utility revenues, 
excise tax revenues, or property taxes (general obligation or “G.O.”)
• Generally, the interest income on Arizona municipal bonds is exempt 
from federal income taxation, and exempt from Arizona income 
taxation
• Borrowing at “tax-exempt” interest rates enables Arizona cities and 
towns to have lower interest costs
• In some instances, issuers may also refinance, redeem or defease the 
bonds to restructure the payments, achieve savings, or pay off the 
debt early

Previous Town Attempts for Road Bonds
• 2011 GO Bond - Failed
• For street/transportation-related purposes (broad)
• $29.6 million – Failed at Ballot (44% for the bonds)
• 2013 GO Bond - Passed
• For transportation/street upgrades (including rebuilding Saguaro Blvd) 
– (more specific)
• Up to $8.2 million – Passed at ballot (about 67% for the bonds)
• GO Bonds issued in FY2015 for $7.6 million and repaid over 5-year 
period

$11 million could be 
applied to BOSS 
data roads or these 
specific roads

Other Important Considerations
• MAG includes Palisades Blvd (between Shea Blvd to 
Saguaro Blvd) in its future planned Prop 479 Phase IV 
projects
• Between 2041 and 2046, MAG would pay for 70% of the Town’s 
reconstruction costs, up to $17 million

General Obligation Bonds
• Raises additional tax revenues to pay debt through secondary property tax levy
•
Town, by statute, will levy secondary property taxes to pay debt service on “new money” general 
obligation bonds (A.R.S. §35-458)
• Council approval required to proceed with election
•
Recommended election would take place in November 2027 – Special Election
•
Proceeds could be used starting in Fiscal Year 2028-29 (starting around July 2028)
• Typically, 15-25 years repayment period (10 or 20 years in our realistic scenarios)
• Very strong bondholder security: the borrower is obligated to levy property taxes in 
an amount sufficient to pay debt service. As a result, G.O. bonds are typically 
considered more secure than alternative bond types (e.g., revenue bonds), resulting 
in a lower interest rate for the issuer
• Proceeds and debt service payments do not count toward Expenditure Limitation
Option #1

General Obligation Bonds – Election Timeline
Option #1
Recommended timeline

General Obligation Bonds
• Per Arizona Constitution, the Town may only be 
indebted up to 26% of its net assessed full cash value
• 6% category for general municipal purposes
• 20% category for “water, artificial light, or sewers, when the works 
for supplying such water, light, or sewers are or shall be owned 
and controlled by the municipality, and for the acquisition and 
development by the incorporated city or town of land or interests 
therein for open space preserves, parks, playgrounds and 
recreational facilities, public safety, law enforcement, fire and 
emergency services facilities and streets and transportation 
facilities”
About $62M of borrowing capacity
About $206M of borrowing capacity
Option #1

General Obligation Bonds – Realistic Scenarios
Option #1
•
10-year repayment period
•
Assumes 5% coupon rate
•
About $1.47M payment per 
year
•
$694k interest in first year
•
$70k interest in final year
•
$14.7M of total debt service for 
$11.2M bond

General Obligation Bonds – Realistic Scenarios
Option #1
•
20-year repayment period
•
Assumes 5% coupon rate
•
About $1.81M payment per 
year
•
$1.4M interest in first year
•
$86k interest in final year
•
$36.25M of total debt service 
for $22.3M bond

Pledged Revenue Obligations – Excise Tax Pledge
• Does not increase Town tax revenues
•
Principal and interest payments are made from existing excise tax revenues that the Town pledged towards 
repayment of the debt
•
0.2% of 2.9% TPT = excise tax for Streets Fund 
•
About $1.4M per year
•
Town Council may send a local sales tax rate increase to voters (must be in even years), but is not required 
to do so
• No voter authorization required. 
•
Can move forward with Council approval.
•
If accompanied by excise tax increase, November 2026 is next allowable election 
• Funds can be available to Town within months
•
Since this financing type does not require voter approval, the financing could be complete as early as July 
2027 (FY2027-28)
• Typically, 15-25 years repayment period (10 or 20 years in our realistic scenarios)
• Proceeds and debt service payments do not count toward Expenditure Limitation
Option #2

Estimated Fees for a Bond Issuance

Council 
Questions?