Budget planning for Tempe’s 2012-13 fiscal year was due to wind down June 28 with a final City Council vote, including the councilmembers’ decision on the city’s property-tax level and rate.
The fiscal year begins July 1.
Economic recovery is coming to Tempe as predicted, say officials, with monthly sales tax revenues improving modestly. Yet the city is planning carefully for the coming fiscal year, noted staff involved in the budget process.
Plans revolve around two separate aspects of the budget: operating budgets like the general, transit, golf and other funds that pay for day-to-day operations and the capital improvement program, which uses secondary property taxes to repay bonds that cover the costs of repair and construction projects.
Capital Improvement Program — If the 2012-13 levy is held steady, as the council was expected to approve, the city of Tempe portion of the property tax bill on a median-value home will decrease in 2013 from what it was in 2012.
That’s because, in 2011-12, the Maricopa County Assessor’s Office valued the median Tempe single-family home at $149,500, resulting in the city’s property tax on that home being set at $267.05 at the current rate of $1.79 per $100 of assessed valuation.
In 2012-13, the value of the median single-family home in Tempe will drop to $124,500, so the city’s property tax on the median home next year will be reduced to $266.60 if the new rate ends up as expected at $2.14.
Tempe residents have been reminded that their own tax bills could increase or decrease based on the assessed values assigned to their specific properties by the Assessor’s Office.
The proposal adheres to a council policy set last year to keep the total property tax bill – also known as the property tax levy – on existing properties relatively constant from year to year. That policy mandates that the city can never increase the annual levy on existing properties by more than the Consumer Price Index rate of inflation, which is currently 2.7 percent for 2012-13. For next year, the council is considering a lower-than-allowed 2 percent.
How Tempe reports its CIP budget is different this year, which accounts for a new way of looking at the city’s overall funding process.
In 2011-12, the CIP was noted as $49.3 million; for 2012-13, it is $124.2 million.
That is not because Tempe is undertaking a variety of new projects, rather that it now intends to re-appropriate each year any CIP funds that were previously approved by council but not spent in the prior year.
Tempe budget planners say they believe it is more transparent for those projects to come before the council again each year.
Operating budgets — Leading to the June 28 vote, the City Council on June 14 approved operating budgets for the coming fiscal year which, including all funds, totals $470.9 million.
Observers who have followed the planning process for new Tempe’s budget may note that the 2012-13 amount is more than the $363.3 million operating budget in 2010-11. Officials explain, however, that there are a few reasons for the increase, including that Tempe is using part of its fund balance to pay off $74 million in debt earlier than expected in order to save money in interest down the road.
In addition, the city is now noting, for accuracy’s sake, any grants, donations or restricted funds that it receives as part of the operating budget.
Tempe is cutting 3 percent from the General Fund budgets over the next several years in anticipation of the July 2014 expiration of the temporary two-tenths of a cent sales tax approved by voters in May 2010. For 2012-13, that cut is $5.2 million, to be made through reductions in departmental budgets, with no impact to city services.
In the Transit Fund, the 2012-13 fiscal year is the last in a three-year budget-balancing plan to restore that fund to long-term health. The city has cut $3 million from that budget and plans to retire $54 million in debt earlier than expected.
For more details on the 2012-13 budget, visit www.tempe.gov/budgetplan .