Fiscal Year 2013-14 Operating and Capital Budget Planning

The City of Tempe has begun the process of drafting its operating and capital budgets for the 2013-14 fiscal year. These will not be finalized until June 2013, but the work is starting early in order to ensure plenty of time to plan and work with city employees. The city also is examining revenue and expense projections for the next five years.

There are two separate aspects of the budget: operating budgets like the General Fund, Transit Fund, Golf Fund and others that pay for day-to-day operations; and the Capital Improvements Program (CIP), which uses secondary property taxes to repay bonds that fund repair and construction projects. Each year, the City Council sets both of these budgets.

Operating Budgets
The Tempe City Council is keeping its commitment to voters by allowing a temporary additional sales tax to expire on June 30, 2014. The 2013-14 fiscal year is the last in which Tempe will have the additional sales tax as part of its operating budgets. Before voters approved the additional tax in May 2010, Tempe pledged that it would be a temporary, four-year tax. It has allowed Tempe to avoid having to cut too deeply into essential city services as part of balancing the budget during the devastating recession. Since the tax was approved, Tempe has continued to cut its budget in small increments each year, in order to lessen the impact of the tax’s eventual expiration.

Now, Tempe is looking at ways to gain control over rising personnel costs, which include things like salaries, healthcare benefits and contributions to state retirement systems. With the City Council’s guidance, City Manager Charlie Meyer will begin working with employees on this issue when the various agreements with employee groups open as scheduled for negotiation in late 2012.

Capital Improvements Program (CIP)
The City Council will continue to implement its policy to keep the total property tax bill – also known as the property tax levy – on existing properties relatively constant from year to year. The 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 2012-13, Council approved a lower-than-allowed 2 percent inflationary adjustment.

Discussions will begin in early 2013 with the City Council and with community members about priorities for capital projects.