Title
2022-23 City Manager's Proposed Budget
Description
This report transmits a balanced fiscal year (FY) 2022-23 Proposed City Manager's Budget for community review and comment. No action is required at this time. Action on the FY 2022-23 budget is scheduled for the May 17, 2022 Council meeting.
THIS ITEM IS FOR INFORMATION AND DISCUSSION.
Report
The 2022-23 Proposed Trial Budget presented to City Council on March 29, 2022 included a General Fund (GF) surplus of $76M. No changes have been made to the projected surplus. As presented, it was proposed to allocate $21M of the surplus to City Council and community priority areas and to set-aside $55M for future spending initiatives next fiscal year or in future years. It was also noted the $55M in set-asides could be used next fiscal year if needed to provide budget flexibility if an economic slowdown or recession were to occur. In keeping with the important practice of engaging the community on the proposed budget, during the month of April staff solicited feedback at 11 community budget hearings, via the FundPHX interactive budget tool and received comments directly to the Budget & Research Department. This feedback from our residents was taken into consideration and changes to the proposed GF budget are reflected in this report. No changes are proposed to Non-GF additions presented in the 2022-23 Trial Budget.
Summary
Due to the leadership of the City Council and strategic use of resources, the $76M GF surplus represents a solid financial outcome since the COVID-19 pandemic began in the spring of 2020. Phoenix has emerged as an economic leader due to strong job and population growth along with a diversified employment and business sector. However, there is reason to be cautious as we look forward due to the recent war in Europe, unknowns about the direction of the pandemic, and rising inflation all of which are causing additional economic uncertainty. Based on community feedback, the 2022-23 City Manager's Proposed Budget recommends increases for community priority areas from $21M to $24M with a commensurate reduction in the proposed set-asides from $55M to $52M. Proposed changes to the 2022-23 Trial Budget and community input on the budget is summarized in this report. This report also includes detailed schedules on the 2022-23 proposed budget for all City funds (Schedules 1 - 11).
The proposed 2022-23 GF supplementals totaling $24M and proposed GF set-asides of $52M are discussed in this report and detailed in Attachment A. Also, included are proposed 2022-23 Non-GF supplementals totaling $4.9M detailed below and in Attachment B.
Community Feedback
Resident input was solicited at 11 virtual community budget hearings held between April 2, 2022 and April 15, 2022. Residents also provided feedback online using the FundPHX tool and comments were received directly to the Budget & Research Department via email and voicemail. In total between March 1, 2022 and April 20, 2022, staff received 624 comments from 368 individuals on the proposed Trial Budget. Several residents commented multiple times on the same topic. A summary of the number of resident comments by topic is listed below. The public can access all comments received on the budget, including the written minutes and video recordings of completed budget hearings, at https://www.phoenix.gov/budget/hearings.
Resident Comments for additional funding/support for the proposed budget:
- (79) in support of installing pickleball courts at Desert Foothills Park in Ahwatukee.
- (43) additional funding for Street Transportation maintenance, cleaning, and repair.
- (35) in support of gated alleys.
- (31) additional funding for public safety and the Police Department.
- (30) additional funding for street improvements at 3rd and 5th Avenue in the Willo neighborhood.
- (28) additional funding to establish a community-led Public Health Committee.
- (27) additional funding for roadway and pedestrian safety, speeding enforcement, street racing, Vision Zero, and the Roadway Safety Action Plan.
- (26) additional funding for training and hiring Police officers.
- (24) additional funding for mental health services and non-police interventions.
- (24) additional funding for public safety and supportive services in the Village Meadows neighborhood.
- (21) in support of funding for immigrant/refugee services, the proposed City Navigator position, and the International Rescue Committee (IRC).
- (21) additional funding for expanded Parks and Recreation services, and improvements to trails and facilities, lighting, restrooms, sports facilities, and tree and shade coverage.
- (21) additional funding for affordable housing and supportive services, rental assistance, and housing for veterans and victims of domestic violence.
- (20) additional funding for programs assisting individuals experiencing homelessness.
- (17) additional funding for Human Services, substance abuse, childcare, and senior programs.
- (17) in support of funding for Arts and Culture.
- (14) additional funding for expanded Public Transit services, dedicated bus lanes and bays, shaded bus stops, and light rail extensions.
- (13) additional funding for the 19th Avenue Corridor Safety Plan.
- (12) in support of climate and sustainability programs, water conservation, Climate Action Plan, Tree and Shade Master Plan, and the Office of Heat Response and Mitigation.
- (11) additional funding for expanded Neighborhood Services programs, Blight Busters, and animal control services.
- (10) additional funding for hiring and improved training of Park Rangers.
- (10) additional funding for historic preservation and the Warehouse and Threatened Buildings Grant program.
- (9) additional funding for traffic signals and street lighting.
- (4) additional funding for Planning and Development services, support for vacant storefronts, land reuse programs, and ensuring equitable communities.
- (4) additional funding to expand the Green Organics program.
- (3) additional funding for Library services.
- (3) additional funding to renovate Cactus Park Precinct.
- (3) in support of the Trial Budget.
- (2) in support of funding for the Public Defender’s Office.
- (2) additional funding for more full-time staff at the Pueblo Grande Museum.
- (2) additional funding to address street flooding.
- (2) in support of economic development, and support for small and micro-business owners.
- (1) additional funding for the Fire Department.
- (1) additional funding to support local elementary schools.
- (1) in support of the Sunnyslope Works program.
- (1) additional funding for faster replacement of damaged garbage and recycling containers.
- (1) in support of 24/7 customer service support.
- (1) additional funding for Information Technology Services.
- (1) additional funding for Aviation.
- (1) additional funding to improve response times to water leaks.
Resident Comments for reduced funding/opposition of the budget:
- (17) in opposition of increased funding for Police or in favor of reducing the Police budget.
- (3) reduced funding for Golf.
- (2) in opposition of increased funding for Light Rail.
- (2) in opposition of increased funding for the Law department.
- (2) in opposition of increased funding for Human Resources.
- (1) in opposition of increased funding for Housing.
- (1) in opposition of increased funding for Arts and Culture.
- (1) in opposition of increased funding for Human Services.
- (1) in opposition of increased funding for Sustainability.
- (1) in opposition of increased funding for Environmental Programs.
- (1) in opposition of increased funding for Library.
- (1) in opposition of increased funding for Community and Economic Development.
- (1) in opposition of increased funding for Fire.
- (1) in opposition of increased funding for Communications.
- (1) in opposition of increased funding for the Equal Opportunity Department.
- (1) in opposition of dedicated pickleball courts at Desert Foothills Park.
- (1) in opposition of the Trial Budget.
General Resident Comments received:
- (2) proposed procuring services from outside vendors in areas of Human Services, Arts, Economic Development and Climate and Sustainability.
- (2) promoted using electronic communication for the City Services bill to reduce costs associated with hard copy mail.
- (1) promoted rescinding tax-exempt status for churches.
- (1) promoted regulation for short term rentals.
- (1) promoted stronger tax policies for wealthier residents.
- (1) requested updates to the City Code.
In addition, the following social media statistics were recorded from March 4, 2022 to April 20, 2022:
Facebook Posts - 17
- 585 Views
- 28 Likes
- 2 Shares
- 2 Comments
Twitter - 95 City of Phoenix Tweets (across three City accounts, including the City’s bilingual account)
- 8,951 Views
- 63 Likes
- 19 Retweets
YouTube - 11 City of Phoenix Videos
- 1,485 Views
- 4 Likes
- 1 Comment
Proposed Changes and Additions to the City Manager's Budget
As presented, the City Manager's Proposed Budget includes several recommendations that continue to move the City forward in addressing critical community priorities. Changes to the 2022-23 GF Trial Budget based on community input totaling $3.0M are identified in this report as *NEW* and are included in Attachments A and B. The following is a summary list of the proposed changes:
- Community Arts Grants - increase proposed grant funding from $75K to $275K.
- Electric Vehicle Study - add resources for an electric vehicle infrastructure study of $250K.
- Elevate Education Workforce Program - add funding of $750K focused on "Elevate EdAZ" to connect youth to the workforce.
- Gated Alley Program - convert the program from the pilot phase to ongoing with GF resources totaling $627K.
- Historic Preservation - increase proposed funding for the Threatened Buildings Grant Program from $200K to $500K.
- Pickleball - add $21K to resurface tennis courts and add lines to create two pickleball courts at the Desert Foothills Park located at 1010 E Marketplace SE.
- Roadway Safety - increase ongoing funding for Roadway Safety Action Plan projects from $600K to $1.2M.
- South Mountain Environmental Education Center - add $229K to reopen the center located at the base of South Mountain Park.
Including the above changes to the proposed budget from community feedback, GF priorities include the following recommended increases totaling $24M by category and are summarized below:
- Affordable Housing - $1.5M
- Climate & Sustainability - $1.6M
- Economic Development, Planning & Innovation - $2.4M
- Historic Preservation & Arts - $0.8M
- Homelessness, Immigrant/Refugee Support & Fast Track Cities - $3.0M
- Parks & Recreation and Library - $3.0M
- Public Safety & Criminal Justice - $6.9M
- Roadway Safety - $1.2M
In addition to the above City Council priority areas, proposed additions totaling $3.6M are included to support general government departments including: Budget & Research, Finance, Human Resources, Information Technology, Law and Public Works. *NEW* An additional Assistant City Attorney IV position is included for the Law Department to litigate risk management cases for the City. The cost of the position is offset with a reduction in contractual legal services. Detailed information on GF supplementals is included in Attachment A.
As mentioned above staff is proposing to set-aside $52M of the projected $76M surplus for future City Council spending initiatives, or to provide resources needed to maintain a balanced budget in the event of an economic downtown. The set-asides will provide budget flexibility and can be used next fiscal year or in future years at Council's direction. This would also allow for more time to determine the ongoing impacts to revenues from the pandemic and diminishing Federal COVID-19 aid, inflation and now the war in Europe.
Proposed GF Set-asides include $30M that could be used in the future to address employee compensation and to provide resources needed for recommendations from the ongoing Classification & Compensation study. Labor negotiations will begin in December 2022 and it is imperative to offer competitive pay to employees given the tight labor market. Further, the Classification & Compensation study will be completed next fiscal year and is anticipated to result in increased labor costs.
The remaining $22M in set-asides could be used for the above City Council and community priority areas, and/or to provide resources for future operation and maintenance costs from a potential General Obligation (GO) Bond Program, or possibly ARPA initiatives the City Council may want to continue once stimulus funding is depleted. Under the direction of the Mayor and City Council, Budget & Research Department staff began working with City departments to identify unfunded capital needs that could be addressed with a potential 2023 GO Bond Program. The program would require voter approval at the November 2023 general election. The GF Five-Year Forecast presented on February 22 did not assume ongoing operating costs in the later years of the forecast from either GO Bond projects or ARPA initiatives. Given the uncertainty of these potential needs, it would be financially prudent to reserve GF budget capacity to be able to address operating costs for new bond projects or to transition temporary programs to the GF when ARPA stimulus funding expires.
The proposed budget also includes additions of $4.9M for Non-GF Departments including Aviation, Planning and Development, Solid Waste, Streets Transportation and Water. Detailed information on proposed Non-GF budget additions, including the number of positions and dollar amount by department, is provided in Attachment B.
Proposed 2022-23 General Fund Additions - $24M and 170.5 positions
Below is a summary highlighting proposed GF additions by City Council priority area. In addition, it's important to note that ARPA funds may likely be leveraged for some of these same priorities. Detailed information about each supplemental, including the number of positions and dollar amount by department, is provided in Attachment A.
Affordable Housing - $1.5M and 0.0 Positions
Funding of $1.5M is proposed for the Housing Department to provide resources to maintain and increase the scope of permanent supportive housing services, and for Phoenix Starfish Place. The Affordable Housing Fund provides support services to low income residents including self-sufficiency services, homelessness prevention, counseling, employment and youth services. Grant funding is not expected to provide the resources necessary to meet the needs of Affordable Housing residents and General Fund support is requested. Funding will be used to pay for staff to provide these critical services to residents. Additionally, funding is proposed for Phoenix Starfish Place, which is dedicated to the healing and empowerment of human trafficking survivors by providing safe and affordable housing, case management and support services for residents. Funds will be used to pay for staff, maintenance, utilities and unit upgrades.
*NEW* Climate & Sustainability - $1.6M and 3.0 positions
Negative impacts from rising temperatures and climate change call for strategies to reduce pollutants, carbon emissions and combat the urban heat island effect in order to improve air quality and life for residents. The City Council approved Climate Action Plan requires implementation of projects, strategies and policies to achieve goals, report results and engage the community. Proposed additions in this category include a Climate Action Plan Manager, Operations Analyst and an Electric Vehicle Manager in the Environmental Programs, Public Works and Office of Sustainability Office respectively. These positions will evaluate effectiveness of electric vehicle infrastructure and implementation, conduct policy research on climate adaptation and mitigation, conduct community education and engagement on climate initiatives, implement climate and resilience protocols and conduct vulnerability assessments. Additionally, increased funding is proposed for the award winning and successful Cool Pavement Program administered by the Street Transportation Department to apply surface treatments for two additional neighborhoods per year designed to reduce the urban heat island effect. The Cool Pavement Program was recently awarded the Women in Transportation’s 2022 Innovative Transportation Solutions award. *NEW* In addition to the Operations Analyst for the Public Works Department $250K is proposed to conduct a comprehensive electric vehicle study to support the Phoenix Climate Action Plan and the Electric Vehicle Task Force recommendations. The study will include an equitable assessment of electric vehicle charging stations, infrastructure needs, and an implementation plan for City vehicles.
*NEW* Economic Development, Planning & Innovation - $2.4M and 10.0 positions
Phoenix is a national leader for attracting businesses, demonstrating successful economic development efforts, meeting community demands for planning activities, and implementing innovative policy. Resources are recommended to further economic development, support planning activities and to enhance the newly created Office of Innovation. Proposed additions include: positions for the Community and Economic Development Department (CEDD) to formalize an international trade program to remain competitive with global markets, enhance marketing opportunities to increase jobs, and create a Vacant Commercial Storefront and "Funertainment" team. This category also includes staff additions for the Planning and Development Department for general and long range planning to process growing development applications requiring zoning adjustments, and to execute City Council priority projects including transit oriented development, the Housing Phoenix Plan and downtown redevelopment areas, and staff for the Office of Customer Advocacy to assist property owners and businesses with efforts to activate vacant storefronts and expand the Adaptive Reuse Program. Funding is also proposed for the Office of Innovation to provide resources to conduct three to four projects per year focused on testing and prototyping, and for an AmeriCorps VISTA member to support capacity building, community engagement, and innovation in low-to-moderate income areas of the City. *NEW* Funding in the amount of $750K is proposed for the Elevate Education Workforce Program focused on Elevate EdAZ: connecting education and business for a thriving community program managed by the Greater Phoenix Chamber. This program would allow CEDD to connect to an existing program through an established 501c3 partner to facilitate the Mayor and City Council's priority of assisting youth to develop the future workforce.
*NEW* Historic Preservation & Arts - $0.8M and 0.0 positions
The Historic Preservation Commission has requested General Funds for the "Threatened Buildings Grant Program" to preserve historical buildings. Based on community feedback it is proposed to increase the grant funding amount from $200K to $500K per year. The program will require owners to convey a conservation easement to the City and would protect the public's investment in the building. Additionally, residents indicated a desire to increase resources proposed for the Office of Arts and Culture for community arts grants from $75K to $275K bringing funding to $1.2M per year. These grants are awarded to artists, arts and culture organizations, youth, and neighborhood groups to execute high quality arts programming. Funding is also proposed to increase the current public art maintenance budget by $40K to adequately protect and refurbish the City's art collection.
Homelessness, Immigrant/Refugee Support & Fast Track Cities - $3.0M and 17.0 positions
The city has a growing homeless, immigrant and refugee population in need of assistance. The city also has residents who continue to suffer from HIV and AIDS who need treatment and resources. The City Council approved the Strategies to Address Homelessness Plan in 2020 to find solutions specifically to identify ways to help individuals suffering from homelessness and to work with community partners to connect people to resources. Additionally, private businesses are negatively impacted by homeless encampments resulting in incidents of trespassing, blight, liter and hazardous waste. Proposed additions are included for the City Manager's Office and the Human Services Department to expand the team dedicated to helping those suffering in our community from homelessness to achieve the goals of the Council approved plan. Resources are also included for the Neighborhood Services Department for a private property clean-up pilot program to fund a temporary position and contractual services for clean-up of private property required due to homeless encampments, and to expand the C.A.R.E.S. program by adding staff to manage the growing number of cases to provide timelier response to the community. A new navigator position is also proposed to work with immigrants and refugees to connect individuals to resettlement agencies, or to obtain referrals for services such as housing, employment, healthcare, and to assist with a successful transition into the community. Finally, ongoing funding to continue the $250K allocated in the 2021-22 Budget for Fast Track Cities (FTC) is proposed. This addition will provide ongoing resources to reach the FTC initiatives goal for 90% of Phoenicians to be aware of their HIV/AIDS status and to enroll in antiviral treatment. The City of Phoenix is one of 25 cities in the U.S. working to end the AIDS endemic.
*NEW* Parks & Recreation and Library - $3.0M and 15.5 positions
Supplementals are included in the Trial Budget for the Parks & Recreation Department and Library Department to enhance community services. For the Parks & Recreation Department additional resources are proposed to provide enhanced after school programming including tutoring and educational support for children at facilities and within the departments Phoenix Afterschool Center (PAC) program. Additional Urban Park Rangers are included to provide a greater presence of rangers in City parks, and resources needed for Eastlake pool renovations are also proposed. The Library Department supplemental is included to launch a new bookmobile at 67th Avenue and Lower Buckeye Rd. Initially the bookmobile will operate five days per week and offer programming and access to computers from a fixed location, however the intent is to eventually build a new library at the site with proceeds from a future GO Bond Program. If the bond program is approved by Phoenix voters, the bookmobile would transition into a mobile library and be used across the City. *NEW* One-time funding of $21K to renovate and repair two tennis courts at the Desert Foothills Park located at 1010 E. Marketplace in Ahwatukee to include adding lines for pickleball. The additional lines will result in a total of four pickleball courts (two on each tennis court). Resources are also proposed in the amount of $229K to reopen the South Mountain Environmental Education Center (SMEEC) located at the base of South Mountain Park and will include 2.5 FTE to operate the center four days per week to offer residents culturally relevant educational programs and access to the facility. This addition includes a park ranger position that will also support work at Pueblo Grande Museum under the supervision of the City Archaeologist.
*NEW* Public Safety and Criminal Justice - $6.3M and 92.0 positions
Included in the Trial Budget are several supplementals for Fire, Police, Municipal Court and Public Defender. The Fire Department is in need of additional sworn positions to permanently staff Fire Station 72 located at 33027 N. Cave Creek Rd., and for additional rovers to meet minimum staffing requirements to ensure effective service delivery for the community. Additional civilian positions are also included for Fire Prevention to perform inspections of outdoor combustible storage facilities and information technology support for the electronic care patient reporting system (EPCR). Additions for the Police Department include: additional civilian investigators to continue civilianization efforts to provide support to the Violent Crimes, Family Investigations, Property Crimes and Drug Enforcement Bureaus; new civilian positions to process the increased amount of body worn camera footage and to provide timelier response for public records requests; information technology positions for the Business Application Team that supports critical systems including the computer aided dispatch and records management systems; and additional positions for the Laboratory Services Bureau to process evidence for violent crimes and provide oversight of the Crime Scene Response operations. The above positions for the Police Department in 2022-23 will be funded by excess sworn vacancy savings resulting in no additional cost to the budget. Additional funding for Police is included for the 19th Avenue Community Safety and Crime Prevention Plan to improve the safety of area residents, businesses, and students. Funding will be used for additional civilian staff and technology to decrease violent crime and address quality of life concerns in the area. Finally, the Municipal Court and Public Defender's Office is in need of new positions to provide case management support for the Phoenix Intimate Partner Violence Court to assist victims of domestic violence, and for a new Veteran Court Attorney and Behavioral Health Attorney. *NEW* Residents indicated the desire to continue the Gated Alley Program with ongoing GF resources. The proposed addition includes $627K for one full-time position to administer the program and annual funding to accommodate 45 public alley segments each year based on equity and need in the city.
*NEW* Roadway Safety - $0.6M and 0.0 positions
As a result of community input received at budget hearings, an increase from $600K to $1.2M is proposed for the Road Safety Action Plan (RSAP), which was adopted by City Council on March 2, 2021. The plan addresses comprehensive roadway safety issues on City streets. This additional funding combined with funds added in 2021-22 would provide $1.8 million in General Funds annually. This funding will help implement safety improvements targeted at both engineering and education based traffic safety measures. Such improvements could include traffic signals, streetlighting, HAWK pedestrian signals, crosswalks, sidewalks, public service announcements (PSAs), and safety education campaigns. Funding will also be utilized in the development of the RSAP to engage the community to ensure equity in the selection and prioritization of traffic safety improvement projects.
Additionally, the Street Transportation Department has modified its five-year capital improvement program to add an additional $5M of Transportation 2050 funding in 2022-23 to increase resources for its Mid-Block Streetlighting Program. As there have been budget hearing comments regarding additional roadway-related safety funding, such as for streetlighting, sidewalks, and HAWK signal funding, it is important to highlight that within its five-year capital improvement program, the Street Transportation Department has allocated significant resources to implement programs and projects directed at improving road safety. These include funding for Pedestrian and Bikeway Improvements ($38M), Street Lighting ($9.5M - now $14.5M with the additional $5M), Traffic Signals and HAWK Signals ($47M), Sidewalks and ADA Improvements ($41M), and General Roadway Safety Improvements ($99M). In addition, the Street Transportation Department actively pursues regional and federal grant opportunities, leveraging local funding resources to address roadway safety, such as the upcoming “Safe Streets and Roads for All Grant Program,” a key new element of the Bipartisan Infrastructure Law.
GF Position Conversions to Maintain Services - $0.8M and 45.0 positions
The proposed budget includes converting 45.0 GF temporary positions to ongoing status. Funding for these positions has either been identified in each respective department's existing operating budget, and therefore represent a no-cost addition to the GF, or is included as a budget increase in the proposed budget. The position conversions are requested because the duties of each position are no longer temporary in nature and are necessary to maintain existing service levels. GF position conversions are included by department in Attachment A.
Proposed 2022-23 Non-General Fund Additions - $4.9M and 132.0 positions
The City budget is made up of three fund sources: the General Fund, Enterprise Funds and Special Revenue Funds. Recommendations for the General Fund were discussed above. Enterprise Funds include Aviation, Water, Wastewater, Solid Waste and the Convention Center. These funds, with the exception of the Convention Center, are funded with user fees. The Convention Center includes fees paid by those who use the facility and Convention Center parking garages and certain earmarked sales tax categories. Enterprise funds can only be used for costs directly associated with delivering enterprise services. The Special Revenue Funds category includes federal and state grants, gas taxes (AHUR), debt service, the Development Services Fund, the Public Safety Specialty Funds, the Phoenix Parks and Preserve Initiative (PPPI) and the voter-approved Transportation 2050 Fund. These funds can only be used in accordance with grant and other statutory rules.
Total Non-GF proposed additions are summarized below by department. Detailed information about each supplemental, including the number of positions and dollar amount by department, is provided in Attachment B. Below, is a summary of the Non-GF additions:
Aviation (Enterprise Funds) - $0M and 31.0 positions
Due to growth at the airport, including a new Terminal 4 concourse and two new PHX Skytrain stations, new positions are required to effectively support operations. The costs of positions will be absorbed in Aviation's current operating budget by reducing contractual services no longer needed. These positions will support the following divisions of the Aviation Department: Facilities and Services, Operations, and Technology. Positions are also required for a new Sustainability section and Asset Management section within the Facilities and Services Division to establish a formal sustainability management team and to centralize asset management to effectively ensure all buildings, equipment and grounds are safe, clean, user friendly, and efficient.
Neighborhood Services (Special Revenue Funds) - $0.6M and 6.0 positions
The supplemental request for the Neighborhood Services Department includes converting existing temporary CDBG grant funded positions to ongoing full-time positions. This will assist the department in timely completion of City Council approved grant funded neighborhood enhancement infrastructure projects. These positions work with multiple City departments, federal agency representatives and contractors related to grant compliance activities. This request also includes converting Lead Safe Phoenix grant funded temporary positions to ongoing status and adds a new ongoing administrative position. These positions are needed due to increased complexity and reporting requirements per the U.S. Department of Housing and Urban Development and to perform critical financial and programmatic analysis and oversight.
Planning and Development (Special Revenue Funds) - $0.0M and 10.0 positions
New positions are needed for the Development Services Fund to establish an ombudsman program to provide additional support to customers with unresolved concerns regarding planning, permitting or plan reviews; and for the Growth and Infrastructure Section to evaluate complex analysis of short-term infrastructure funding costs and long-term impacts to ensure new development does not negatively impact city services for existing residents and businesses. Proposed additions also include converting two temporary positions to ongoing status and new positions for the continued support of the SHAPE PHX project. SHAPE PHX will replace the department's current permitting and inspection software applications. Finally, three new positions for the Commercial Plan Review and Residential Inspections sections due to increasing workloads. The cost for new positions will be offset in 2022-23 with excess vacancy savings.
Public Transit (Special Revenue Funds) - $0.9M and 6.0 positions
The Public Transit Department is in need of funding to extend fixed route bus service in north Phoenix on Norterra Parkway and North Valley Parkway north of Happy Valley Road effective April 24, 2023. The extension will operate at a 30-minute frequency Monday through Sunday and will connect neighborhoods and businesses into the region’s extensive transit network. Additional positions are also needed to address the increasing workload and complexity for managing additional programs, funding, and new requirements resulting from an increase in Federal Transit Administration (FTA) grant funds. The recently enacted federal Bipartisan Infrastructure Law has increased FTA formula funding by roughly 30%, approximately doubled the FTA Capital Investment Grant program funding, and added several new FTA discretionary/competitive grant programs. These positions will provide support in the areas of applications, funds management, reporting, compliance, subrecipient oversight, grant closeout and complex and specialized procurement activities.
Solid Waste (Enterprise Funds) - $1.1M and 15.0 positions
Additional funding and positions are needed for the Public Works Solid Waste Division to support refuse and recycle collection services due to growth and to maintain existing and future service levels. The request is consistent with the financial plan recommended by the Solid Waste Rate Advisory Committee and approved by Mayor and City Council. Positions are also needed for part-time interns to assist with implementing innovations and operational efficiencies and to support the expansion of the Solid Waste Equipment Operator Apprenticeship Program which aides in workforce development. The program focuses on diversifying the workforce by performing outreach to youth, women, and veterans.
Street Transportation (Special Revenue Funds) - $0.0M and 12.0 positions
New positions to be funded by the Arizona Highway User Revenue (AHUR) Fund are necessary to provide internal and external support for programs, projects, and services focused on several Council priorities, and for the long range transportation team. The team will partner with the Arizona State Land Department, the City of Phoenix Planning & Development and Community & Economic Development departments, as well as other regional partners to support the city’s planned growth. These new positions will provide analysis and infrastructure planning to attract and spur economic development, help address road safety, and determine future transportation needs. This supplemental also includes conversion of two temporary positions associated with the Street Maintenance Worker Apprenticeship Program to ongoing status. The cost for new positions will be offset in FY 2022-23 with excess vacancy savings.
Water Services (Enterprise Funds) - $2.3M and 51.0 positions
The Water Department is in need of additional funding for new positions, utilities, materials, and vehicles to operate and maintain three new water production wells and eight aquifer, storage and recovery (ASR) wells scheduled to be completed by December 2022. Additionally, the Lake Pleasant Water Treatment Plant is owned by the City of Phoenix and is currently operated and maintained by a service agreement with Veolia Water. The request includes the required positions needed to progressively staff the plant upon conclusion of the contract. This proposed supplemental also includes conversion of six temporary positions to ongoing status to address substantial, multi-year business needs that are continuous in nature based on increased work effort and new or expanded programs.
Non-GF Position Conversions to Maintain Services - $1.4 and 30.0 positions
The proposed budget includes converting 30.0 Non-GF temporary positions to ongoing status. Funding for these positions has either been identified in each respective department's existing operating budget, and therefore represent a no-cost addition, or is included as a budget increase in the proposed budget. The position conversions are requested because the duties of each position are no longer temporary in nature and are necessary to maintain existing service levels. Non-GF position conversions are included by department in Attachment B.
Additional Information
The proposed balanced 2022-23 GF budget is $1,777.6M. This is a $170M increase or 10.6% from the adopted 2021-22 GF Budget of $1,607.6M. The increase accounts for the proposed additions and set-asides detailed earlier in this report and increases in capital pay-as-you-go projects, employee pension costs, setting the contingency fund to 4.25% of GF operating expenditures, and additional resources to replace aging fleet. The increase also accounts for the second year of the negotiated employee compensation increases. Projected GF resources are estimated at $1,777.6M and includes the estimated beginning balance of $183.8M, estimated revenue of $1,587.3M and fund transfers and recoveries of $6.5M. GF revenues of $1,587.3M represent annual growth of 9.5% over 2021-22 and is largely due to growth in state shared income tax, which is based on collections from two years prior and is artificially high as a result of the State's decision to delay income tax filings in the fourth quarter of 2019-20 due to the COVID-19 pandemic. Revenue growth also includes estimated increases in city and state sales taxes. Schedule 2 included in this report provides more information on City revenue estimates and additional information can be found on the Budget and Research website at https://www.phoenix.gov/budget.
For all funds, which includes General, Enterprise and Special Revenue funds such as grants, and all debt service and pay-as-you-go capital costs, the proposed 2022-23 budget is $5,557.8M. Details on the 2022-23 proposed budget for all City funds is attached to this report in Schedules 1-11 and include:
- Resources and expenditures by Fund for 2020-21 actual; 2021-22 estimate; and 2022-23 proposed budget.
- Proposed revenues for all City funds by major source.
- Proposed operating expenditures by department, including fund source.
- Proposed debt service by program, source of funds, and expense type.
- Preliminary 2022-23 Capital Improvement Program budget financed by operating funds.
- Proposed interfund transfers.
- Proposed full-time equivalent (FTE) positions by department.
- Preliminary 2022-23 Capital Improvement Program resources and expenditures by capital fund, program and fund source.
- Summary of proposed property tax levy and rate information.
Next Steps
The remaining key dates in this year's budget process are as follows:
Date Event
May 3, 2022 City Manager's 2022-23 Proposed Budget
May 17, 2022 City Council Budget Decision
June 1, 2022 2022-23 Tentative Budget Ordinance Adoption
June 15, 2022 2022-23 Funding Plan and Final Budget Ordinance Adoption
July 1, 2022 2022-23 Property Tax Levy Ordinance Adoption
On July 1, 2022 City Council is scheduled to adopt property tax as the last step in the legally required budget adoption process. Primary property tax revenues support operating costs for General Fund programs and services, while secondary property taxes pay the bonded debt service for facilities like libraries, police and fire stations, storm drains and parks. The total combined primary and secondary property tax rate for 2022-23 of $2.1130 represents a 0.3% reduction from the 2021-22 combined rate of $2.1196. The proposed primary property tax rate for 2022-23 of $1.2989 is 0.5% lower than the 2021-22 primary property tax rate of $1.3055 and is consistent with City Council policy to maximize the primary rate within City Charter Limits. The primary property tax rate decreased due to the state constitutional 2% levy limit, which limits the Primary Property Tax of a city, county or community college district to an amount 2% greater than the prior-year levy on previously-taxed properties. The secondary property tax rate remains unchanged at $0.8141. Although the primary property tax rate decreased by 0.5%, the primary property tax revenue estimate increases for 2022-23 to $199.2M, which is $7.9M or 4% more than the 2021-22 revenue estimate of $191.3M due to increasing net assessed valuations (property values) and new construction. Additionally, State law requires a Truth in Taxation hearing notice to property owners, which requires notification any time the average primary property tax bill increases, even if the tax rate is not increased. The law does not require notice on the City’s secondary property tax. The hearing is scheduled to take place at the City Council Formal meeting on June 15, 2022.
Department
Responsible Department
This item is submitted by City Manager Jeffrey Barton and the Budget and Research Department.