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June 2013

   
Each year the Budget Office performs an analysis of the estimated annual amounts paid by the average residential Tempe household for direct services provided by the City of Tempe as well as the estimated total annual amount paid in City of Tempe property and transaction privilege (sales) taxes. These amounts are then compared to the estimated annual amounts paid by the average residential household in seven comparison cities in the Phoenix metropolitan area.

For purposes of this comparison, we utilized the property tax, sales tax and utility service rates as of May 2013. The analysis assumed the same household consumption averages for all cities for both water and wastewater services. However, for property tax purposes, we utilized the median single family home value in each respective city in the analysis. The sales tax amounts are based on the Phoenix metropolitan area median household income. As such, this analysis is intended to reflect what the average residential household would pay for each of the services or pay in taxes in their respective city.
 
 
Overview      
 Text Box  COS 2013 Overview Chart

 

     
Solid Waste     
 
 
2013 COS Solid Waste 
 
The annual amount for single family residential solid waste services is estimated at $240 for the City of Tempe. The amounts noted above are based on a residential customer with a once per week collection, based on the rates as of May 1, 2013.   
     
     
Water and Wastewater   
2013 COS Water and Wastewater 
 
The annual total amount for water and wastewater services for a single family residential customer in the City of Tempe is estimated at $622. The annual water charge is based on a median single family residential monthly water consumption of 9,500 gallons. This consumption amount is based on the most recent completed fiscal year (July 2011 to June 2012). It is assumed that this water consumption amount is applicable to the other cities in the comparison. As such, this consumption amount was applied to each respective city’s water rates as of May 1, 2013 to derive the annual water costs.

The wastewater charges noted above are based on the median residential winter water consumption average of 8,000 gallons. This amount is based on water consumption rates for the months of January, February and March (winter month average). It is assumed that this winter average is applicable to the other cities in the comparison and is then applied to each respective city’s billable rate of return and wastewater rates as of May 1, 2013 to derive the annual wastewater costs. For example, the City of Tempe’s billable rate of return is 90% of the median residential winter water consumption average or 7,200 gallons (8,000 gallons x 90%). 
 
     
     
City Sales Tax   
   
 
COS 2013 City Sales Tax 
 
The annual amount that the average Tempe residential household will pay in City of Tempe sales tax is estimated to be $555 for 2013.

For this analysis, we utilized the Phoenix metropolitan area median household income of $59,507 per the U.S. Census Bureau, 2011 American Community Survey. As median incomes can vary between the cities, the Phoenix metropolitan area median household income was utilized so that a direct comparison could be made between cities.

The portion of this income that was spent on taxable purchases is estimated at 47% ($28,206), as noted in the latest Consumer Expenditure Survey published by the U.S. Bureau of Labor Statistics (March 2013). We assumed that the portion of the median income spent on taxable purchases was spent within the household’s city of residence and applied to each city’s applicable sales tax rate.

Please note that many of the comparison cities in the analysis utilize different tax rates for various taxable activities. For example, the City of Glendale has an overall sales tax rate of 2.9%; however, sales at restaurants and bars are taxed at 3.9%. These variances were taken into account when calculating the annual amount of sales taxes paid. In addition, the Tempe calculation takes into account the temporary 0.2% increase in sales tax approved by the voters in May 2010, which will expire June 30, 2014. 
 
     
     
City Property Taxes   
   
 
COS 2013 City Property Tax 
 
The annual estimated City of Tempe property tax amount is $267. The property tax amounts shown above are based on each city’s FY 2012-13 primary and secondary rates and each city’s 2012 Full Cash Value (FCV) for a median single family home. The median single family FCV for each city, per the Maricopa County Assessor, is as follows:   

Phoenix
Glendale
Mesa
Peoria
Tempe
Chandler
Gilbert
Scottsdale
$78,300
$81,000
$100,700
$118,700
$124,500
$136,600
$143,300
$227,000
   

It should be noted that the City of Mesa and the City of Gilbert only levy a Secondary Property Tax.


Summary of Utility Rate Increases 

Most cities and towns in the study review rates on an annual basis to determine if there is adequate cost recovery and whether a rate increase is required. Listed below is a summary of the utility rate adjustments as of May 1, 2013 and information related to any planned future rate increases:

   Water* Wastewater* Solid Waste*
Chandler April 2011 April 2011 July 2007
No rate increases planned at this time.
Gilbert July 2009 July 2009 July 2012**
No rate increases planned at this time.
Glendale July 2010 July 2010 July 2008
No rate increases planned at this time.
Mesa  August 2012  August 2012 August 2008
Water, wastewater and solid waste rates are reviewed on an annual basis. A 2% rate increase is being proposed.
Peoria July 2012 July 2012 July 2012**
Rates were increased for water and wastewater in July 2012; however, the water rate increases did not impact a typical residential customer. Solid waste rates for residential customers were reduced.
Phoenix April 2011 March 2010 March 2009
No rate increases planned at this time.
Scottsdale July 2012 July 2009 July 2009
New water rate structure was implemented July 2012. A wastewater rate increase will take effect July 2013.
 Tempe January 2013  November 2011  November 2009 
Rate studies are currently being conducted for water, wastewater and solid waste operations.
 
 
* Indicates effective date of last rate adjustment. Rates were increased as of the effective date unless otherwise indicated.
** Rates for residential customers were reduced.
Last updated: 6/13/2013 2:20:45 PM