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 FY2024, the City of Peoria budget appropriation totals $950 million, an increase of 21.3 percent from the previous year. The primary reason for the increase in the total budget is the capital budget. Because of supply change issues, labor shortages, and general construction cost inflation, the carryover from FY2023 was much larger than normal. In addition, the city added and advanced several large water projects with the goal of developing a redundant water supply in the event that surface water from the CAP canal is reduced.
The proposed budget consists of four major components, including planned operating expenditures, capital improvements, annual debt obligations, and appropriated reserves.
The operations component of the budget totals $416.4 million, which represents a 12 percent increase from the FY2023 level. In total, the operating budget supports 1,389 full-time equivalent positions.
The capital budget includes investments in various capital improvements throughout the City and is the first year of the 10-year Capital Improvement Program. The $410.6 million FY2024 capital budget represents an increase of 44.1 percent from last year’s capital budget, while the 10-year Capital Improvement Program totals $1.1 billion and represents a 1.9 percent increase from a year ago.
The FY2024 annual debt obligations are estimated at $48.8 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. This was done on May 2, 2023. As a result, the FY2024 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 $74.2 million for the upcoming year. The City Council has the sole authority to utilize this contingency appropriation for unexpected needs or emergencies.
The City Manager’s recommended budget was delivered to the City Council on March 20 of this year. At the Council Budget Study Session, held on March 29, Council members discussed the proposed budget. The changes discussed at that meeting were incorporated into the Tentative Budget and into this Final Budget.
The budget as submitted limits the financial burden placed on our residents through rates and fees. The FY2024 recommended budget assumes no increase to the overall property tax rate of $1.44 for the upcoming year. Likewise, the city’s retail sales tax rate remains at 1.8 percent.
The FY2024 budget includes a combined utility rate adjustment of 9.05 percent for the average residential user of water, wastewater, and solid waste services. The adjustment to the water rate is being driven by inflationary pressures on labor, water supply, chemicals, and electricity, but also by the drought situation on the Colorado River, which requires large infrastructure investments to build redundancy in water supply. Solid waste is being hit hard by the high costs of fuel and vehicles, as well as by reduced recycling revenues and increased landfill costs. The start date for the utility rate adjustments will be July 1, 2023. Overall, Peoria residents continue to enjoy comparatively low utility rates among Valley cities.
It is recommended that the annual budget for FY2024 be in place by July 1, 2023, in order to have continuing legal authority to make payments for salaries, expenses and other obligations of the City of Peoria. Adoption of the Final 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.