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

2. 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

3. 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

4. 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

5. Tempe’s Expenditure Limit
: Arizona voter’s passed a law (AZ Constitution, Article IX Section ) 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

6. 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

7. 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

8. 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

9. 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 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

10. Questions / Discussion