Background/Summary:
Each year, the City undertakes a comprehensive program to develop a balanced budget. The annual budget serves as the major policy and financial planning tool of the City, detailing how resources will be allocated, and how City Council’s priorities can best be addressed.
For FY 2018, the City of Peoria budget appropriation totals $590 million, an increase of 18.71 percent from the previous year. The proposed budget consists of four major components, including planned operating expenditures, estimated capital improvements, annual debt obligations, and appropriated reserves.
The operations component of the budget totals $277.4 million, which represents a 3.05 percent increase from the FY 2017 level. In total, the operating budget supports 1,204 full-time equivalent positions, of which 12 are new requests for the FY 2018 budget.
The capital budget includes investments in various capital improvements throughout the City and is the first year of the 10-year Capital Improvement Program. Overall, the $212.2 million FY 2018 capital budget represents an increase of 65 percent from last year’s capital budget, while the 10-year Capital Improvement Program totals $660.3 million and represents a 12.1 percent increase from one year ago.
The FY 2018 annual debt obligations are estimated at $45.9 million. This category includes annual City debt service payments for issued general obligation and revenue bonds.
State budget law requires a jurisdiction to adopt a Tentative Budget that sets the maximum level of appropriation for a fiscal year. As a result, the FY 2018 budget includes contingency appropriation, which provides authority to expend reserves to cover unforeseen or emergency situations. The contingency level is based on the City’s financial reserves, and totals $54.5 million for the upcoming year.
Each year, as part of the City’s strategic budgeting approach, department directors engage their employees to discuss trends, options and opportunities for addressing citizen needs. As part of this process, the departments perform an analysis to determine the true cost of the services they provide. Using this information, department directors then align their work plans with the Council’s policy goals and submit associated budget requests to achieve desired performance outcomes.
The result is a budget that works within existing resources, but also includes modest additions to ensure service levels are maintained in our programs and activities. Also, the plan strives to maintain or replace existing assets as needed and to address the demands of growth throughout the community. Lastly, the City’s economic development efforts continue to be funded in a manner that produces beneficial results. A key focus of the City’s economic development pursuits is to ensure that services and amenities are well balanced and targeted to maximize business opportunities in Peoria.
The City Manager’s recommended budget was delivered to the City Council on March 21 of this year. At the Council Budget Study Sessions, held on March 29 and March 30, Council members reviewed the proposed budget in detail, and evaluated the issues affecting each City department. After this review process, Council instructed staff to complete the development of the FY 2018 Tentative Budget incorporating changes discussed at the study sessions.
The FY 2018 Tentative Budget, as recommended, does not propose increases in the city’s sales tax or property tax. However, the budget does include adjustments to the water, wastewater, and residential solid waste rates. These rate increases are needed to address growing cost pressures and capital requirements. The utility rate adjustments are anticipated to impact the typical residential customer’s monthly bill by 2.51 percent, or $1.98. Overall, Peoria residents continue to enjoy comparatively low utility rates among Valley cities. The budget also includes minor adjustments for certain recreation program fees to recover appropriate costs for these services.
It is recommended that the annual budget for FY 2018 be in place by July 1, 2017, in order to have continuing legal authority to make payments for salaries, expenses and other obligations of the City of Peoria. Adoption of the Tentative Budget at this time will comply with the requirements set forth by Arizona Revised Statutes for the publishing of the proposed budget and public hearings held prior to final budget adoption.
The total proposed Tentative Budget estimate is $590,000,000. Once adopted, this amount sets the maximum legal expenditure limit for the Fiscal Year 2018 Annual Budget. The 2018 Final Budget cannot exceed the total expenditures set by the adoption of this tentative budget. The Tentative Budget does include $54,550,000 in contingency appropriation within the total budget. Throughout the year, only the City Council has the ability to utilize this contingency appropriation to address unexpected needs or emergencies.