The Phoenix Summary Budget 2015-16 Printed on Recycled Paper 175 June 2015 ii 67TH AVE. WANDER LN. City of Phoenix Council Members and District Boundaries CIRCLE MOUNTAIN RD. NEW RIVE R CLOUD RD. 7TH AVE. JOY RANCH 19TH AVE. RIVNEW ER RD . JOY RANCH RD. 43RD AVE. ANTHEM WAY Mayor Greg Stanton 602-262-7111 mayor.stanton@phoenix.gov CAREFREE HWY. DOVE VALLEY 56TH ST. 40TH ST. 67TH AVE. P. A. C. Thelda Williams 602-262-7444 council.district.1@phoenix.gov JOMAX C. 64TH ST. 75TH AVE. JENNY LIN RD. JOMAX A. Jim Waring 602-262-7445 council.district.2 @phoenix.gov 7TH ST. P. PINNACLE PEAK BELL SCOTTSDALE RD. Bill Gates 602-262-7441 council.district.3@phoenix.gov UNION HILLS CAVE CREEK 51ST AVE. 19TH AVE. BEARDSLEY GREENWAY 56TH ST. THUNDERBIRD NORTHERN 40TH ST. 15TH AVE. McDONALD Sal DiCiccio 602-262-7491 council.district.6 @phoenix.gov OAK McDOWELL 56TH ST. 3RD ST. I-10 OSBORN 24TH ST. MCDOWELL 64TH ST. GLENROSA SR51 7TH ST. 7TH AVE. VAN BUREN BUCKEYE SALT RIVER 48TH ST. 27TH AVE. 71ST AVE. 51ST AVE. VAN BUREN MOUNTAIN VIEW MISSOURI THOMAS 19TH AVE. BROADWAY 7TH ST. Daniel Valenzuela 602-262-7446 council.district.5@phoenix.gov I-10 107TH AVE. BUCKEYE 67TH AVE. McDOWELL OSBORN 75TH AVE. THOMAS 83RD AVE. INDIAN SCHOOL CAMELBACK BUTLER BETHANY HOME 35TH AVE. 43RD AVE. BETHANY HOME 99TH AVE. EL MIRAGE NORTHERN Laura Pastor 602-262-7447 council.district.4@phoenix.gov 64TH ST. TATUM DUNLAP BUTLER CACTUS SOUTHERN N AN IO DI T IN RVA SE ESTRELLA 51ST AVE. 59TH AVE. ELLIOT Kate Gallego 602-262-7493 council.district.8@phoenix.gov RAY I-10 RE Michael Nowakowski 602-262-7492 council.district.7@phoenix.gov DOBBINS CENTRAL BASELINE BASELINE PECOS January 2015 iii City of Phoenix Mayor and City Council Management Staff Greg Stanton Mayor Ed Zuercher City Manager Daniel Valenzuela Vice Mayor District 5 Milton Dohoney Assistant City Manager Chris Hallett Neighborhood Services Director Rita Hamilton City Librarian Thelda Williams District 1 Paul Blue Deputy City Manager Acting Aviation Director Maria Hyatt Public Transit Director Jim Waring District 2 Deanna Jonovich Deputy City Manager Kara Kalkbrenner Fire Chief Bill Gates District 3 Mario Paniagua Deputy City Manager Donald Logan Equal Opportunity Director Laura Pastor District 4 Karen Peters Deputy City Manager Christine Mackay Community and Economic Development Director Sal DiCiccio District 6 Toni Maccarone Special Assistant to the City Manager Michael Nowakowski District 7 Department Heads Kate Gallego District 8 Jeff Barton Acting Budget and Research Director Mayor’s Office Cindy Bezaury Acting Human Resources Director Ruben Alonzo Co-Chief of Staff Seth Scott Co-Chief of Staff Tracee Crockett Deputy Chief of Staff City Council Office Penny Parrella Council Chief of Staff Cris Meyer City Clerk Denise Olson Acting Chief Financial Officer Tom Remes Government Relations Director Kathryn Sorensen Water Services Director Paul Blue Deputy City Manager Acting Aviation Director Alan J. Stephenson Planning and Development Director Daniel L. Brown Acting City Attorney Cindy Stotler Acting Housing Director John Chan Phoenix Convention Center Director John Trujillo Public Works Director Debbie Cotton Chief Information Officer Julie Watters Communications Director Ray Dovalina Street Transportation Director Joe Yahner Police Chief Inger Erickson Acting Parks and Recreation Director\ Chief Presiding Judge Moises Gallegos Human Services Director iv Bill Greene City Auditor B. Don Taylor City of Phoenix Organizational Chart PUBLIC Budget & Research MAYOR AND CITY COUNCIL City Auditor CITY MANAGER MUNICIPAL COURT Communications Office Finance ASSISTANT CITY MANAGER Human Resources Administration Transportation and Infrastructure Community Services Economic Development Environment and Sustainability SPECIAL ASSISTANT TO THE CITY MANAGER DEPUTY CITY MANAGER DEPUTY CITY MANAGER DEPUTY CITY MANAGER DEPUTY CITY MANAGER City Clerk Information Technology Equal Opportunity Aviation Arts & Culture Environmental Programs Emergency Management Public Safety COPERS/ Retirement Planning & Development Housing Community & Economic Development City Council Meeting Function Public Transit & Light Rail Human Services Convention Center Public Works Fire PERB Liaison Street Transportation Library ASU/ Bio-Medical Campus Water Services/ Water Strategy Law Special Projects Lean Team Neighborhood Services IDA 311 PHX Office of Government Relations Parks & Recreation Major Events Court Liaison Police Citywide Volunteer Program PCDIC Public Defender Liaison CORE Domestic Violence/ Human Trafficking State Land Sustainability Strategic Planning Education West Phoenix Revitalization v vi 2015-16 Summary Budget Table of Contents BUDGET DOCUMENT OVERVIEW ..................................................1 Retirement Systems............................................................................104 DISTINGUISHED BUDGET PRESENTATION AWARD .................3 Law .......................................................................................................105 CITY MANAGER’S BUDGET MESSAGE...........................................5 Information Technology.....................................................................106 STRATEGIC PLANNING AND COMMUNITY INVOLVEMENT...9 City Clerk and Elections....................................................................107 PHOENIX STRATEGIC PLAN...........................................................11 Finance ................................................................................................108 STRATEGIC PLAN 2014-15 MAJOR ACCOMPLISHMENTS............17 Budget and Research .........................................................................109 OUR COMMITMENT TO EXCELLENCE........................................25 Public Safety COMMUNITY PROFILE AND TRENDS .........................................33 Police....................................................................................................111 BUDGET OVERVIEW Resource and Expenditure Summary.................................................37 Financial Organization Chart – Operating Budget...........................42 Services to the Community..................................................................45 Budget Process, Council Review and Input, Public Hearings and Budget Adoption......................................................................63 General Budget and Financial Policies..............................................69 Fire .......................................................................................................113 Homeland and Security Emergency Management..........................114 Criminal Justice Municipal Court..................................................................................117 Public Defender ..................................................................................118 Transportation Street Transportation.........................................................................121 Aviation ................................................................................................123 REVENUE OVERVIEW Public Transit......................................................................................124 Revenue Estimates...............................................................................77 Community Development General Funds.......................................................................................79 Planning and Development ...............................................................127 Special Revenue Funds........................................................................89 Housing................................................................................................129 Enterprise Funds..................................................................................94 Community and Economic Development.........................................130 DEPARTMENT PROGRAM SUMMARIES Neighborhood Services.......................................................................131 General Government Phoenix Community Development and Investment Corporation Mayor......................................................................................................97 (PCDIC) ..............................................................................................133 City Council...........................................................................................98 Community Enrichment City Manager .........................................................................................99 Parks and Recreation.........................................................................135 Regional Wireless Cooperative (RWC) ..............................................99 Library..................................................................................................137 Government Relations........................................................................100 Phoenix Convention Center...............................................................138 Communications Office......................................................................100 Human Services..................................................................................139 City Auditor .........................................................................................101 Phoenix Office of Arts and Culture...................................................140 Equal Opportunity ..............................................................................102 Environmental Services Human Resources...............................................................................103 Water Services.....................................................................................143 Phoenix Employment Relations Board.............................................104 Solid Waste Management...................................................................145 Public Works........................................................................................146 Environmental Programs...................................................................147 vii Contingencies.....................................................................................149 2. Revenues by Major Source...........................................................182 Debt Service........................................................................................151 3. Expenditures by Department ......................................................184 CAPITAL IMPROVEMENT PROGRAM Overview of Capital Improvement Program Process......................155 2015-20 Capital Improvement Program Highlights ........................161 Financial Organization Chart – 2015-16 Capital Improvement Program .....................................171 Operating Costs for New Capital Facilities......................................173 4. Expenditures by Department by Source of Funds....................186 5. Debt Service Expenditures by Program, Source of Funds and Type of Expenditure.......................................................188 6. Capital Improvement Program Financed From Operating Funds.....................................................................190 7. Net Interfund Transfers to the General Fund............................191 8. Positions by Department ..............................................................193 SUMMARY SCHEDULES 1. Resources and Expenditures by Fund 2013-14 Actual........................................................................179 2014-15 Estimate ...................................................................180 2015-16 Budget.......................................................................181 viii GLOSSARY..........................................................................................195 ix it y H al l P h oe n ix C x Table of Contents Budget Document Overview This overview outlines the 2015-16 Annual Budget. This budget document can be accessed at phoenix.gov/BUDGET, or copies of the document are available by contacting the city of Phoenix Budget and Research Department at 602 262-4800. Also, this document can be made available in alternate formats (large print, Braille, audio cassette or compact disc) upon request. For information, contact the Budget and Research Department or city TTY relay at 602-534-5500. The Summary Budget contains a narrative description of Phoenix programs and services planned for the fiscal year 2015-16. Also included is a narrative description of all revenue sources and a description of major financial policies. The Detail Budget presents extensive statistical data (including multiyear comparisons) for each city department and fund. The statistical data includes staffing allocations and a detailed reporting of planned expenditures. Finally, the 2015-20 Capital Improvement Program provides Phoenix’s planned construction program by project and detailed sources of funds. A more detailed description of the 2015-16 Phoenix Summary Budget follows. CITY MANAGER’S BUDGET MESSAGE The City Manager’s Budget Message provides an executive summary of the city manager’s priorities and outlook for the upcoming fiscal year. These priorities reflect many months of working with the Mayor and City Council, the community and city staff. PHOENIX STRATEGIC PLAN 2015-16 REVENUE OVERVIEW This section provides the city’s mission statement, complete Phoenix Strategic Plan, Strategic Plan goals, and Strategic Plan major accomplishments. This section provides an extensive narrative describing the city’s revenue estimates. The section is divided into three categories: general funds, special revenue funds and enterprise funds. OUR COMMITMENT TO EXCELLENCE DEPARTMENT PROGRAM SUMMARIES This section provides an overview of the city’s various programs that contribute to our overall pursuit of excellence. Included is a description of a few of the awards and recognitions received by employees this year, results of the employee suggestion program and winners of Employee Excellence Awards. COMMUNITY PROFILE AND TRENDS The Department Program Summaries section provides total funding and positions, program goals, major performance measures and service trends, and any changes in service for each city department. Also included in this section is a discussion of the city’s debt management policies and the contingency fund. This section includes key demographic, financial and infrastructure profile measures. Estimates or projections are provided for 2014-15 and 2015-16 as well as actual results for recent and historical periods. This section provides a description of the capital improvement program process and an overview of the 2015-20 Capital Improvement Program. 2015-16 BUDGET OVERVIEW SCHEDULES The Budget Overview provides a description of the city’s budget process as well as the major assumptions included in the preparation of the 2015-16 Annual Budget. This section includes a broad overview of the resources and expenditures included in the budget. Also included is a historical look at Phoenix’s community services, an overview of significant budgetary and financial policies including general legal requirements and basis of accounting, and descriptions of city funds. The schedules provide a general statistical overview of the budget. Schedule 1 provides estimated beginning and ending balances for each major fund group. The remaining schedules summarize staffing complements and estimated resources and expenditures. CAPITAL IMPROVEMENT PROGRAM GLOSSARY Definitions of the terms used throughout the budget document are presented in the glossary. If you have questions, need further clarification of a concept or term, or desire more detailed information about this document, please contact the Budget and Research Department at 602-262-4800. 1 Table of Contents 2 Table of Contents Distinguished Budget Presentation Award The Government Finance Officers Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to the city of Phoenix, Arizona for its annual budget for the fiscal year beginning July 1, 2014. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communications device. This award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award. 3 Table of Contents 4 Table of Contents City Manager’s Budget Message Ed Zuercher City Manager TO THE HONORABLE MAYOR AND CITY COUNCIL: This letter transmits the balanced fiscal year 2015-16 City of Phoenix Budget required by City Charter. This year’s accomplishment of a balanced budget with no service reductions or increases to taxes or fees, demonstrates the strategic efforts by the Mayor, Council and city staff in advance planning, implementing shared solutions and making early, tough decisions. This year’s budget preserves existing city services, which strongly reflect the needs and desires of the community. As expressed at this year’s community budget hearings, Phoenix residents not only appreciate the services provided by Phoenix, they continue to request that city services be expanded. Phoenix residents would like to see libraries open every day, more police officers and firefighters hired, more transportation options, improved streets, additional arts grants, more park rangers, expanded recreation programming, enhanced economic development, added education support, new bike lanes and other important needs. These requests validate the leadership of the Mayor and City Council and the hard work Phoenix employees do every day to provide the services that matter to our residents. The financial realities of growing public safety pension costs and the sunset of the emergency sales tax on food limit the city’s ability to expand services broadly. In fact, with the sunset of the sales tax on food, taxes have been reduced. Further, the state's budget balancing actions to shift costs and decrease revenues to cities, towns and counties have added considerably to Phoenix’s financial challenges. Despite these obstacles, the 2015-16 budget is balanced without any community service reductions or increases to taxes or fees. In fact, the Council's actions to cut vacancies early and include a second year of employee concessions in labor contracts, coupled with staff’s continued zero-based budget reviews and aggressive savings efforts, allow increases to a few key services in the General Fund and in special revenue and enterprise funds, including: n n n n n n Hiring police officers and firefighters Operating the northwest extension of light rail transit Improving customer service in development services Opening new desert preserve trailheads Operating a new composting facility Beefing up Phoenix Sky Harbor International Airport noise programs Overview of 2015-16 Budget General Fund: The General Fund is balanced, with some service additions in spite of shifts in state costs, state revenue reductions and the sunset of the emergency sales tax on food. As part of the City’s ongoing cost management practices, the City will achieve savings totaling $1.2 million resulting from the annual zero-based budget program reviews. Examples of those savings come from closing two courtrooms to match activity levels and other departmental operational efficiencies. The proposed balanced 2015-16 General Fund budget is $1,156,540,000. This is a 0.7 percent increase from the adopted 2014-15 General Fund budget of $1,148,840,000. It is $42.8 million, or 3.6 percent, below the 2007-08 peak amount of $1,199,298,000 for the General Fund. General Fund Additions: The 2015-16 budget includes the following necessary General Fund changes that help improve critical community services, including: n n POLICE TRAINING: Additional funding of $2.2 million for a new 40-hour officer training module, including community and cultural consciousness, situational/tactical analysis, mental health response, and other important topics that help improve public trust and enhance safety. INNOVATION: Investment in new innovation projects like a centralized City Information Center (311 PHX) with the potential to bring long-term savings, along with enhanced services, through a business analyst position at a cost of about $150,000. 5 Table of Contents n RECREATION: Additional recreation programming at a new multipurpose facility built by the Maricopa County Housing Authority for the CoffeltLamoreaux Community Recreation Program, located near 19th Avenue and Pima Street (April 2016). Contingency Growth: In continuance of the long-term goal to reach 5 percent of operating costs, the Contingency fund will increase slightly from $45.3 million to $46.4 million. This takes the Contingency fund’s operating cost percentage from 3.95 percent to 4.0 percent. Revenue and Resources: Projected General Fund (GF) revenue in 2015-16 is estimated to be $1.061 billion, an annual increase of 1 percent over the revised current year estimate. This accounts for the state’s $2 million reduction to Phoenix revenue due to decreased reimbursement rates for emergency transport of patients covered by the Arizona Health Care Cost Containment System (AHCCCS), and the sunset of the sales tax on food. Including revenue along with the estimated beginning fund balance of approximately $75 million, recoveries, and necessary net fund transfers estimated at $21 million, total 2015-16 General Fund resources are estimated to be $1.157 billion, just slightly more than General Fund expenses. The excess of $314,000 is recommended to be placed in reserve to address known public safety pension increases in the 2016-17 budget. Other Funds: State-Shared Revenues Significant services to the community are provided through non-General Fund resources. There are Special Revenue funds like voter-approved Public Safety and Transit taxes, and Enterprise Funds like Aviation and Solid Waste. For all funds, which include General, Enterprise and Special Revenue funds such as grants, and all debt service and pay-as-you-go capital costs, the proposed 2015-16 budget amount is $3,702,298,000. This is a 4.8 percent increase from the adopted 2014-15 budget of $3,532,061,000 for all funds. The 2015-16 All Funds budget is below the 2008-09 budget of $3,735,754,000 for all funds by $33.5 million, or -0.9 percent. As part of state 2015-16 budget balancing actions, the Arizona Legislature added new costs to cities and towns for state revenue collections. Phoenix costs will increase by $4.2 million. Additionally, beginning in 2015-16, the state reduced the reimbursement rate for emergency ambulance transports of patients who rely on the state’s health care system, which will decrease Phoenix revenue by an estimated $2 million annually. So, although the state did not directly change state-shared revenue formulas to cities and towns, the state’s recent fiscal actions have affected Phoenix negatively. Non-General Fund Additions: Known expenses for fiscal year 2016-17, particularly increased public safety pension costs, cast a long shadow as demonstrated in the five-year forecast presented in February 2015. As in recent years, the five-year forecast improves the city’s ability to conduct long-term budget planning. The multi-year forecast was presented well in advance of the community budget process and hearings so that it could also be considered during the budget-setting process involving residents. As shown in the forecast, dramatically increasing costs in the state-run Public Safety Personnel Retirement System (PSPRS) for sworn officers and firefighters are a difficult challenge. The 2015-16 budget reflects a three-year phase-in option allowed by the state to smooth our The 2015-16 Budget also includes the following critical non-General Fund service additions, including: n n n n n 6 AVIATION: Adding a team at Sky Harbor to review airspace evaluations and potential impacts, respond to noise complaints and provide community outreach. PLANNING AND DEVELOPMENT SERVICES: Enhancing the customer service experience in Planning and Development through additional oversight, technology improvements, training and enhanced opportunities for customer feedback. PHOENIX PARKS AND PRESERVES: Maintaining three new preserve trailheads at Apache Wash, Desert Vista, and Desert Hills. TRANSIT 2000: Operating expanded light rail service to 19th Avenue and Dunlap. SOLID WASTE: Operating a new composting facility at the 27th Avenue Transfer Station. Five-Year Forecast Table of Contents transition to these extraordinary costs. However, costs are scheduled to increase by over $25 million in the General Fund in 2016-17. Also, fiscal year 2016-17 will be the first year of new, two-year labor agreements that will be negotiated beginning in late 2015. This is why the additional $314,000 in additional General Fund resources was set aside to begin an accumulation of savings that will help offset costs in 2016-17. In order to be able to withstand the pressures ahead, the city will continue accumulating further cash reserves, assessing additional efficiency actions, and reviewing significant cost drivers like health care and pharmacy benefits costs. Conclusion I want to thank the Mayor and City Council for their leadership in making difficult decisions and taking early action that led to a balanced budget this year without cutting services or raising fees or taxes. I also want to recognize the outstanding work of city staff to carefully contain costs while providing high quality services desired by Phoenix residents. Finally, I commend City employees for their continued sacrifices and dedication in providing outstanding services at an affordable cost to Phoenix residents. Ed Zuercher City Manager 7 Table of Contents 8 Table of Contents Strategic Planning and Community Involvement The Phoenix Strategic Plan was adopted in the spring of 2011 and was included in the Summary Budget Book for Fiscal Year 2011-12. The plan was developed by a team of 50 people working in 10 study-area committees. The team consisted of city staff and members of the private sector. The new Phoenix Strategic Plan guides decision-making within the organization and focuses the city’s efforts to deliver core services that meet the city’s mission: “To improve the quality of life in Phoenix through efficient delivery of outstanding public services.” The Plan includes 10 study areas: • • • • • • • • • • Economic Development and Education Financial Excellence Infrastructure Innovation and Efficiency Neighborhoods and Livability Phoenix Team Public Safety Social Services Delivery Sustainability Technology Starting in fiscal year 2013-14, the city’s Zero-based Inventory of Programs Budget has been organized and presented by the 10 Strategic Plan study areas. The Strategic Plan continues to evolve and the study areas consistently develop new priorities and strategies to fulfill their own study objectives. One example of an evolving plan, for Sustainability, can be seen in the Commitment to Excellence section of this budget document. Documents included in this section: • Revised Phoenix Strategic Plan (April 2015) • Strategic Plan 2014 Accomplishments 9 Table of Contents 10 Table of Contents Phoenix Strategic Plan Mission Statement "To improve the quality of life in Phoenix through efficient delivery of outstanding public services." About the Strategic Plan The city of Phoenix developed a strategic plan to help guide decision-making at all levels of the organization and focus the city’s efforts on its core businesses. Throughout the budget cycle, a strategic plan proves beneficial in communicating and setting budget priorities. The priorities in the Phoenix Strategic Plan will assist in allocating limited resources. The plan will be updated annually as part of the budget cycle. The Phoenix Strategic Plan was coordinated by a team in the City Manager’s Office. For more information about the Strategic Plan, visit phoenix.gov/strategicplan. ECONOMIC DEVELOPMENT AND EDUCATION A diverse, vibrant economy that provides economic opportunity for residents is essential to achieving the city’s aspirations for a high quality of life. Creating and preserving jobs and enhancing our revenue base are key objectives. Businesses, neighborhoods and individual residents benefit from the improved quality of life that the city’s economic development efforts create. The most important building block of a strong economy is an educated and productive workforce. Priorities 1. Create and retain high-quality jobs focusing on key domestic and international business sectors. To a great extent, the quality of life for Phoenix residents will be dependent on the number and quality of jobs created and retained that are convenient and appropriate for residents of the city of Phoenix. 2. Foster an environment for entrepreneurial growth. Entrepreneurs make critical contributions to the economy, including the generation of new jobs. Energized, educated entrepreneurs create economic opportunity for others and enhance a culture of innovation. 4. Expand the city’s revenue base. Sales taxes provide the largest source of local government funding. Phoenix needs to attract and retain a fair share of retail activity to sustain quality public services for residents. 5. Develop and retain qualified talent to meet the needs of business and the community. A skilled workforce is essential for an economy to sustain and enhance its competitiveness. A workforce development strategy that allows employers to grow and residents to enhance their income is critical to maintaining a high quality of life for Phoenix residents. 6. Promote early literacy and prepare young children for academic success. Early childhood development is critical in preparing youth for success in school and developing a foundation of knowledge, skills and life-long learning in families and the community. 7. Commit to achieving educational excellence for all Phoenix residents through sponsored facilities and programs. The future success of the region depends on ensuring that residents are prepared to meet the challenges of the 21st Century as educated, productive and engaged residents. 3. Targeted Neighborhood Revitalization. Thriving urban cores are critical to the economic health and well being of the entire metropolitan area. Strong urban centers enhance Phoenix’s image and should be reflective of the city’s collective social and economic aspirations as a region. 11 Table of Contents FINANCIAL EXCELLENCE Financial excellence ensures the effective and efficient allocation of city resources for the delivery of quality services to residents. It creates trust and confidence that city resources are used appropriately. At the core of financial excellence is integrity and innovation. The city strives to maintain fiscally sound and sustainable financial plans and budgets that reflect community values and residents’ priorities. Priorities 1. Maintain high bond ratings. A bond rating is a measure of the credit quality of the city. Factors considered in a rating are the health of the local economy, stability and volatility of revenues, level of reserves for liquidity during unexpected financial conditions, as well as sound financial practices, polices and structures or systems that allow flexibility to address challenges. An entity with a long-term outlook and plans to address unexpected changes is positively considered. In essence, a bond rating reflects an independent view of financial excellence. A higher bond rating will usually result in lower borrowing costs. 2. Prioritize capital and funding plans for critical infrastructure. With continuing challenges in the recovery of the state, local and national economy and the associated impact on revenues, the financial capacity to fund and finance additional capital projects remains significantly reduced. As a result, a focus on maintaining existing infrastructure must be balanced with the need for new infrastructure. This includes prioritizing the use of the remaining 2006 general obligation (GO) bond capacity and other resources and investigating alternative methods to finance priority capital needs. 12 3. Provide accurate and reliable revenue and expenditure forecasting. To ensure available resources are allocated to the highest priority needs, accurate and reliable forecasts of both revenues and expenditures are needed. This requires access to the necessary resources and expertise to ensure all critical factors are considered in revenue forecasts and all factors that impact expenditures are considered and modeled. Accuracy of expenditure forecasts also requires discipline of all city departments to ensure expenditures are monitored and managed. Without accurate forecasts and management of expenditures, reserve levels may be tapped below critical levels and services may be unnecessarily reduced. 4. Maintain a transparent financial environment, free of fraud, waste and abuse. One of the most important aspects of financial excellence is the ability to assure the public, business community, investors and the rating agencies that systems and processes are in place to prevent fraud, waste and abuse of public funds. An important element of preventing fraud, waste and abuse, is regular financial reports that are easy to access, accurate and understandable. Financial excellence requires the implementation of quality financial systems, staff training, internal controls and regular internal and external audits to prevent fraud, waste and abuse. INFRASTRUCTURE Infrastructure is the basic physical and organizational structure needed for the operation of a society or enterprise and the services and facilities necessary to function, such as roads, pedestrian and bicycle systems, water supply, sanitary and storm sewers, public transit, airports, railroads, public buildings and facilities, solid waste collection, power supply and telecommunications. Priorities 1. Create and maintain intra-city transportation. Provide safe, clean, efficient, sustainable, multi-modal surface transportation systems consistent with Complete Streets policies to support mobility needs of present and future residents, businesses, and visitors within the city of Phoenix. 2. Create and maintain inter-city transportation. Provide safe, efficient, sustainable, cost-effective multi-modal transportation systems to support economic growth, population growth, and competitiveness through connectivity to regional, national, and global destinations. 3. Develop and operate public utilities. Protect the public health and environment by providing reliable, efficient and affordable water, wastewater, storm water, and garbage and diversion (recycling, reducing, reusing) services. 4. Construct and manage public facilities. Provide safe, efficient, sustainable, cost-effective, wellmaintained and aesthetically pleasing public facilities for delivery of municipal services to residents and visitors; build, maintain, and manage capital assets to preserve long-term investment and ensure uninterrupted support services. Table of Contents INNOVATION AND EFFICIENCY The city of Phoenix must further enhance its commitment to developing new and creative service delivery methods to provide services to residents. The recent economic climate challenges the city to do more with less, while maintaining highquality public services. The city also must remain dedicated to developing and seeking continuous improvements in business processes, and maintaining a culture of innovation and efficiency. The continuing work of the Innovation and Efficiency Task Force has helped the city formalize its approach. Priorities 1. Infuse a mindset focused on innovation and efficiency into the city of Phoenix organizational culture. An “innovation and efficiency” way of thinking has become a much more prevalent part of the organization’s core value system and continues to integrate into the way every day business is conducted. Executives, managers, supervisors and frontline staff must embrace an attitude that questions existing business processes and practices throughout the organization, with the goal of fostering innovation through the creation and implementation of new ideas. 2. Establish and support city programs and mechanisms focused on developing and implementing tangible innovations throughout the organization. The city’s innovation and efficiency efforts must permeate all levels, be results oriented, and demonstrate investment of available means. A proven approach involves assignment of resources dedicated to producing substantial innovative changes that enhance customer service, increase productivity, reduce costs and engage employees. 3. Work continually toward elimination of barriers to innovation and efficiency. Several obstacles can stand in the way of creating an environment of innovation and pathways to efficiency. The organization must continue to identify these real or perceived hindrances and, when appropriate, actively remove or facilitate working through them. 4. Engage the Phoenix community in the city’s innovation and efficiency methodologies to facilitate citizen involvement, input and awareness. Involvement by Phoenix residents in the accomplishment of the city’s innovation and efficiency goals will boost the meaningfulness and connectedness of the achievements to the community. It is important for the city to enhance public awareness about innovation and efficiency achievements and make strong efforts to request relevant input. NEIGHBORHOODS AND LIVABILITY To preserve healthy, vibrant, diverse and safe neighborhoods that enhance the quality of life for all Phoenix residents through neighborhood vitality, by providing a range of housing opportunities and choices, supporting quality parks and open space, and enriching its populace with a strong art and culture infrastructure, and an accessible and quality library system. 2. Provide a diverse range of housing opportunities and choices to Phoenix residents. Promoting diversified housing opportunities enriches the quality of life for all Phoenix residents, including low- to moderate-income families, seniors, persons with disabilities and the homeless. Providing a range of housing opportunities allows the city to continue to preserve healthy, vibrant, diverse and safe neighborhoods. 3. Ensure Phoenix residents have quality parks and open space. Partner with the community to provide a parks and recreation system that meets the needs of Phoenix residents and visitors that is convenient, accessible and diverse in programs, locations, and facilities. 4. Promote a strong arts and culture infrastructure. Continue to partner with the community to provide strong arts and culture facilities and programs to create a more beautiful and vibrant city which contributes to a better quality of life. 5. Provide accessible and quality library services to Phoenix residents. Partner with the community to provide a Library system that meets the needs of residents and visitors and is accessible, convenient and diverse in locations, programs and facilities. PHOENIX TEAM Priorities 1. Support neighborhood vitality through strong partnerships, collaborations and by leveraging resources. In order to preserve healthy, vibrant, diverse and safe neighborhoods, the city must support neighborhood self-reliance and enhance the quality of life for all residents through community-based problem solving, neighborhood-oriented services and public/private cooperation. As the organization becomes leaner and continues to face increasing pressures for improved results, it becomes even more critical for a heightened connection between employees and their work, their organization, and the people they work for and with. Methods for motivating employees must be updated to keep employees engaged and retained within the organization. Additionally, traditional means of communication may no longer be adequate to convey critical information to both employees and the public. 13 Table of Contents Priorities 1. Establish pay and benefits and a workplace culture that attracts, retains and motivates a highly qualified workforce. Given continuing economic challenges, the community remains interested in salary, benefits and overall compensation packages for government employees. 2. Provide a workplace culture that supports the health, productivity and efficiency of employees. The city of Phoenix understands that organizational success depends on a healthy, productive and efficient workplace and workforce. Employees also recognize that they can improve their lives by taking charge of their own health and making greater use of technology to ease ever increasing work demands. 3. Establish Communications Plans to engage and inform employees and the community. The city’s continuing budget challenges have made evident the necessity of providing clear, timely and accurate information to employees and the public to garner continued support for and achievement of organizational goals and continued quality services. 4. Create development opportunities that enhance the city’s standing as a high-performing organization. The city continues to reduce unnecessary hierarchy to improve efficiencies and speed communication and decision making. This has resulted in a flatter organization, increases in span of control and consequently fewer promotional opportunities. Further, an increasing number of employees are leaving the city as they reach retirement eligibility. As a result, it remains critical to manage and coordinate the available human resources effectively to provide leadership and ongoing quality services to the community. 14 5. Mobilize and leverage community partnerships and volunteer programs to enhance programs and services. The city continues to make difficult choices regarding programs and services to our customers in light of revenue stream uncertainty. Additionally, the community has expressed interest in assisting the city in continuing to provide quality services to residents in a variety of areas. PUBLIC SAFETY The city of Phoenix is committed to a high level of public safety and working in partnership with the community to maintain a safe and secure city. The Police Department, Fire Department, Municipal Court, Prosecutor’s Office and Office of Emergency Management work together to provide Phoenix with an environment of safety and security. Priorities 1. Prevent crimes and accidents by enhancing community awareness of public safety systems and partnering with other crime prevention programs. The city provides the community with information about a variety of public safety issues including crime and accident prevention, information on the operation of the judicial system, and education on police and fire department services. 2. Provide public safety workers with the tools necessary to professionally meet city and regional public safety needs. Ensure that public safety workers have the training, education, equipment, facilities and other resources needed to provide a high level of service to the community. 3. Ensure timely and appropriate response. The city of Phoenix deploys public safety workers in a manner that provides a timely and appropriate response to emergencies. Response resources include those needed for routine incidents as well as the capacity to respond to and manage natural and human-caused incidents of regional significance. 4. Provide strong customer service internally and externally. Every member of the community and every organization working in Phoenix is a public safety customer. Firefighters, police officers and officers of the court swear an oath to protect the people they serve. Every public safety worker should serve their customers with dignity and honor to develop mutual trust and respect. 5. Ensure fiscal responsibility in all public safety efforts. Public safety managers and public safety workers must be responsible stewards of the funds provided by the customers to support public safety efforts. SOCIAL SERVICES DELIVERY The city of Phoenix has a long history of responding to community needs and providing services to those most in need. Building upon this foundation, the city is committed to continue seeking innovative and effective methods for delivering social services. The city will serve as a catalyst to support a full continuum of high quality services for Phoenix residents. Though the city of Phoenix has, and will continue to respond to specific social services needs directly where appropriate, the framework of this plan defines and coordinates the greater scope of needs and services required by Phoenix residents. By providing a clear vision and continued leadership, city services will be provided in tandem with other resources provided by community and faith-based organizations, as well as, other levels of government. Priorities 1. Strengthen the safety net of social services available to protect those who are most vulnerable or in crisis. The city of Phoenix will assure those most in need have access to basic needs such as shelter and food. The city will connect the homeless, working poor, elderly, disabled and victims of violent crimes to core services needed to stabilize their lives. Table of Contents 2. Enhance the quality of life for lowincome or at-risk individuals and families. The city of Phoenix will empower all residents to live in safe, affordable housing and achieve economic self-sufficiency through access to social, employment and other economic resources needed to maximize their quality of life. 3. Build healthy, caring communities. The city of Phoenix will promote rich, diverse, and innovative networks of public, community, and faith-based programs, services, and facilities to maximize the potential of every community. The city will serve as a resource and a catalyst in strengthening neighborhoods and building community capacity. 2. Enable opportunities for environmental stewardship. Environmental sustainability is best achieved by encouraging shared responsibilities, protecting natural systems, and promoting the efficient use of natural resources. It is also important to implement policies, programs and practices that have a farreaching effect on the environment. 3. Enhance sustainable land use and mobility practices. The success in sustainable land use and mobility lies in adopting policies that encourage the use of green infrastructure and buildings, brownfield redevelopment, creating connectivity within road networks and ensuring connectivity between pedestrian, bike, transit and road facilities. SUSTAINABILITY The city of Phoenix is committed to securing environmental and economic livability for future generations in the region, with an emphasis on solar energy production. Phoenix has long used sustainability as a guiding principle, believing that sustainable living is critical to ensuring that the actions we take today do not compromise the ability of future generations to meet their needs. Phoenix’s sustainability motto, “Living Like it Matters!” reaffirms the sustainability creed that guides its current programs and future plans. Priorities 1. Accelerate renewable energy development. The city has a longstanding commitment to resource conservation and continues to be an active participant in energy conservation, efficiency and environmental preservation. Pursuing renewable energy development guides the city towards energy independence. 4. Foster collaboration and communication. Empowering employees at all levels through collaborative workgroups will galvanize them to realize the city’s sustainability goals. Employees become an example of the city’s efforts and progress to the community they serve. Communicating and celebrating the city’s accomplishments is essential to motivating employees, customers, stakeholders and the public in achieving sustainability goals. TECHNOLOGY Information technology is a vital part of a vibrant city government. Information technology, utilized appropriately, enables enhanced services to the community, increases efficiency of operations, delivers useful information, and supports innovation. This plan leverages technology to drive key actions that fundamentally enhance the way Phoenix connects to information. 2. Increase operational efficiency through constant innovation. Constant product and service innovation nurtures ideas and focuses on customer satisfaction, combines process and technology to enhance productivity and value, drives down operational costs, and supports other city strategies. 3. Turn data into information through a web-enabled city. When business data is stored in easily accessible, organization-wide repositories, the City can create opportunities to use this data to make better decisions. Internet-based information delivery and collection efforts empower the community to interact with and receive City services 24 hours a day, giving them the opportunity to conduct their business online versus waiting in line. 4. Create a shared common infrastructure. Consolidating technological infrastructure around common Information Technology (IT) components allows improved investments on behalf of the entire city. Strategic use of technology will result in tangible cost savings and results in the efficient and effective allocation of resources. 5. Enhance information security and privacy. In today’s business environment, information security and privacy form the foundation of technology projects. The city continues to develop a comprehensive program to protect data and technology infrastructures, secure systems and assets, mitigate threats and provide a mechanism for business continuity in emergencies. Priorities 1. Provide seamless customer service. A seamless customer experience is achieved when a customer interacts with both internal and external city service providers without experiencing service interruptions during the service delivery process. 15 Table of Contents 16 Table of Contents Strategic Plan 2014-15 Headline Major Accomplishments Mission Statement “To improve the quality of life in Phoenix through efficient delivery of outstanding public services.” ECONOMIC DEVELOPMENT AND EDUCATION 1. Assistance for Entrepreneurs: In January of 2014, the Library Department partnered with Community and Economic Development Department and Arizona State University and opened a business services center called hive @ central, located at Burton Barr Central Library. This service helps entrepreneurs and small business owners and has served more than 6,500 visitors with more than 1,000 individuals attending one of the 337 businessrelated programs or mentoring sessions. Staff has also worked with local business groups such as SCORE and local business leaders to provide programming for aspiring business owners. Twenty individuals have selfreported that they started their own business as a result of services hive @ central provided. In addition, the library secured a $40,000 Library Services and Technology Act grant to hire a consultant to offer business development services in both English and Spanish. 2. ReEngage Phoenix: In August of 2014, the Library Department created a new program, ReEngage Phoenix, connecting adults and youth who have not completed high school with special educational opportunities. It’s operated through College Depot and provides information and referrals to alternative high school and GED preparation programs. ReEngage Phoenix has connected almost 1,000 people with GED preparation programs and alternative high schools since its launch. It is now providing adults 21 and older with the opportunity to earn an accredited high school diploma and a career certificate through Career Online High School. 3. Literacy Tutoring: Experience Corps Phoenix is an award-winning literacy tutoring program in five school districts and ten elementary schools. Ninety volunteers were recruited and trained to deliver one-on-one sustained tutoring to 300 students from October 2014 through April 2015. Ninety percent of the students showed an improvement in reading fluency, an increase of 43 percent. Using grant funds, Experience Corps Phoenix purchased more than 6,000 new books and distributed them to 2,000 students in the Fowler, Phoenix Elementary, Riverside, Tolleson, and Wilson school districts. 4. Reinvent PHX: This project creates plans for five districts along the light rail system which establish a new, transit-oriented model for urban planning and development along the city’s light rail system. Partnering with the U.S. Department of Housing and Urban Development, Arizona State University, St. Luke’s Health Initiatives and other organizations, each plan establishes a community-based vision for the future, articulating the community’s long-range vision. The plans includes creating the policy basis for rezoning property along the light rail system, identifies business, infrastructure and other investment opportunities to advance the vision in each district. It also recommends associated implementation strategies, policies, action tools, and partners to achieve the vision. 5. General Plan Update (PlanPHX) and Leadership Committee: The Phoenix General Plan was last adopted by the Phoenix City Council and approved by voters in 2002. In August 2013, under the leadership of the Phoenix City Council, staff initiated an effort to update the General Plan. PlanPHX was a concerted effort to collaborate with Phoenix residents about the future of the city. The Planning and Development Department used the results of this collaboration to update the Phoenix General Plan – the policy document that provides comprehensive direction for the growth, redevelopment, conservation and infrastructure investment of all physical aspects of the city. The project’s launch included the appointment of a Leadership Committee by the City Council. A major emphasis of the project was to solicit as much feedback from the community as possible regarding their ideas for the future of Phoenix. Staff conducted more than 200 presentations on the General Plan at a variety of community organizations, events and committee meetings throughout the city. In addition, more than 2,000 residents registered on myplanphx.com and provided thousands of ideas and comments. Staff used all of the feedback received during the course of the project to develop the 2015 General Plan. The General Plan Update developed as result of the PlanPHX process was resoundingly supported by all of the village planning committees and the Phoenix Planning Commission. In March of 2015 the Phoenix City Council adopted the General Plan and placed it on the August 2015 citywide ballot for ratification by the voters. 6. Phoenix Afterschool Center: The Phoenix Afterschool Center (PAC), under the auspices of Mayor Stanton’s “Read On Phoenix Initiative,” partnered with the Youth and Education Office, the Library Department and Diamondback Charities to implement Baxter’s Clubhouse. This after school tutoring program is operated at four Phoenix schools; Griffith Elementary, Osborn Elementary, Cartwright Elementary and Riverside Elementary. With $50,000 in support from the Diamondbacks, the program provided students with free books, incentives, and weekly small group tutoring sessions by trained city staff. Fluency scores improved from 23 to 93 percent, and nearly half of the students originally targeted for the tutoring program have improved enough that they are no longer considered atrisk in reading. 7. Early Head Start: The city of Phoenix Human Services Department was awarded federal grant monies through the U.S. Department of Health and Human Services (DHHS) for Early Head Start expansion in 2009. This grant was part of the American Recovery and Reinvestment Act, and only guaranteed 17 Table of Contents for two years. In 2011, Early Head Start became a regularly grant funded program. 8. Continued Downtown Investment: The city’s work to continue to promote downtown development and mixed-use infill and redevelopment projects resulted in more than $500 million in actual/proposed capital investment. Some of these projects include Portland Place (Phase II/III), Central Station, Barrister Building, The Oscar, Union @ Roosevelt, Broadstone Arts District, Ballpark Lofts, Hotel Monroe, Arizona State University Center for Law and Society and new buildings on the Phoenix Biomedical Campus. These projects will add thousands of jobs, thousands of units of new housing downtown, continue to revitalize historic buildings, vacant lots and other underutilized properties. 9. Convention Center: The Phoenix Convention Center and Venues hosted several high-profile Super Bowl XLIX events including NFL Experience, Super Bowl Media Center, nationally broadcast productions of NFL Honors, Feherty Live and The Tonight Show. Over nine days of Super Bowl activities, the Convention Center, Symphony Hall and Orpheum Theater hosted more than 177,000 guests – the most ever for any event in the department’s history. Overall, downtown Phoenix hosted over one million visitors in that same time frame. In 2014, the Phoenix Convention Center was rated as the number two destination in the United States to hold trade shows and events by Expo Magazine. Destinations were rated on ease of access, numbers of flights in and out of the city, venue size, cost and reasonable hotel accommodations for attendees. FINANCIAL EXCELLENCE 1. Financial Ratings: In the past fiscal year, seven bond ratings have been affirmed, two bond ratings were affirmed with a positive outlook and two ratings were upgraded. The bonds rated in the past fiscal year represent a wide range of city functions, from airport and hotel bonds to water and excise tax bonds. Of the nation’s six largest cities, Phoenix has the highest general obligation bond rating. 18 2. Pension Reform: In late 2014, Mayor Greg Stanton appointed members to the Civilian Retirement Security Ad Hoc Committee, including City Council members Thelda Williams and Daniel Valenzuela, who served as co-chairs, along with five community and business leaders. After reviewing extensive actuarial analyses and receiving advice from consultants and outside legal counsel, the Committee made a unanimous recommendation for additional pension reform. The plan creates additional savings of $38.8 million over 20 years, improves the recruitment and retention of employees and implements best practices in pension administration for future hires. The plan is expected to avoid costly litigation because benefits are reduced only for future new hires and current employees' retirement benefits are not impacted by these changes. 3. Key Phoenix Economic Indicators Report: In 2015 the Budget and Research Department began issuing a report on 19 key Phoenix economic indicators that reveals an overall picture of recent economic activity trends specifically within Phoenix. The measures include Sky Harbor airport passenger totals, development permits issued, household income levels, employment data and other important economic measures. 4. Monthly Financial Report: In May 2014, the city launched a revised monthly financial report with navigation tools to make it easier for online users to view information that is important to them. It also provides more historical data, additional charts and more analysis than the old version. The changes were designed to provide, not only more transparency, but more context, and therefore a greater understanding of the financial position of the city. The reports are available on phoenix.gov. 5. eProcurement: In May 2015, the Finance Department, in coordination with Information Technology Services, launched eProcurement, which automated purchasing citywide. The new system will result in process efficiencies, transparency, better decision-making, strategic buying, enhanced controls, reduced purchasing costs and consistency in doing business with the city. 6. Enhanced Econometric Forecasting Model: In the fall of 2014, Budget and Research consulted with University of Arizona Economic Business Research Center to enhance the City’s sales tax revenue forecasting process. The partnership resulted in development of an enhanced econometric forecasting model for sales tax. The city and state sales tax projections are based on estimates developed using the enhanced econometric forecasting model. INFRASTRUCTURE 1. Volaris and Spirit Airlines: Two new air carriers launched service from Phoenix Sky Harbor International Airport in the fall of 2013. Volaris, the largest low-cost carrier in Mexico, and Spirit Airlines, a growing low-cost domestic carrier, added daily flights to destinations in Mexico and the United States. On October 19, 2013, elected officials joined business and tourism leaders to welcome the inaugural Volaris flight from Guadalajara. Volaris started service with three weekly flights between the airport and Guadalajara. The airport currently serves 20 international cities with nonstop service on five airlines. Spirit airlines began service from the airport on October 25, 2013 with a nonstop daily flight to Dallas/Fort Worth. On November 7, 2013, Spirit added seasonal non-stop daily service from the airport to Chicago O’Hare, Denver International Airport and Minneapolis-St. Paul. 2. Comprehensive Transportation Plan: The Phoenix City Council approved a proposed 35-year, $33 billion transportation plan to go to voters in August 2015. Recommended by a diverse citizen committee and an extensive public participation process, the plan calls for extending the current 0.4-cent transportation sales tax through 2050 and increasing it by 0.3 cents for a total of 0.7 cents. The 0.7 cent sales tax will fund the citywide transportation plan, including roads, street infrastructure, bus service, and light rail. 3. Complete Streets: The Phoenix City Council amended the City Code to establish a Complete Streets Advisory Board and adopted an ordinance that outlines the guiding principles to Table of Contents support a strong multi-modal transportation system, making the city of Phoenix more walkable, bikeable, and livable. Staff collaborated with the Phoenix Complete Streets Working Group and other stakeholders to formulate the contents of the ordinances. The guiding principles underwent refinement through public input and were reviewed and endorsed by each Village Planning Committee, the West Phoenix Revitalization Community Advisory Board, the Planning Commission, and the Development Advisory Board. Future phases of the initiative will include the creation of a policy and a set of guidelines and standards that direct infrastructure projects in addressing Complete Streets concepts for projects initiated by both the city and private developers. 4. Bike Master Plan: Developed from data from public meetings, social media, and in-person interviews, the Bicycle Master Plan is a blueprint for extending bicycle facilities throughout the city. The Mayor’s Pedestrian and Biking Ad Hoc Task Force and a Technical Advisory Committee, including representatives from each council district and four atlarge members, assisted staff in the development of the plan, which includes a total of 385 potential projects to complete gaps along 37 corridors throughout the city. The projects range in complexity from simple, inexpensive lane striping adjustments to bike bridge construction. Total estimated costs of the improvements recommended in the 20-year plan are approximately $52.6 million. Funding for all the improvements has not yet been identified, but the city will continue to build new bike infrastructure and make other enhancements as funding allows. 5. Colorado River Storage, Recovery and Exchange: The City Council approved intergovernmental agreements (IGAs) with the city of Tucson and the Metropolitan Domestic Water Improvement District (Metro Water) to implement a pilot program for the storage, recovery and exchange of Colorado River water. Under the program, the city of Phoenix will store a portion of its unused Colorado River water in Tucson-area aquifers. In the future, Tucson and Metro Water will recover the stored water and use it in exchange for ordering an equivalent amount of their Colorado River water for delivery through the Central Arizona Project to Phoenix’s water treatment plants. The partnerships optimize the use of resources and infrastructure, resulting in benefits to all three entities. A successful pilot program would lead to a large-scale program that increases the resiliency of Phoenix’s Colorado River supplies in a cost-effective manner. 6. Terminal 4’s Food and Beverage Program: The upgrade of Terminal 4’s Food and Beverage Program was completed in November 2014 with the opening of the final restaurants. A wide variety of local and regional restaurants and national chains are included in the program. The new restaurants have been very well received by the traveling public and have been mentioned in both the local and national media. 7. PHX Sky Train Stage 1A: The PHX Sky Train Stage 1A, which connects Terminal 4 to Terminal 3, was completed and opened in time to accommodate the Super Bowl, NFL Pro Bowl, college bowl games and the holiday travel season. In addition, the project achieved LEED (Leadership in Energy and Environmental Design) Silver Accreditation. INNOVATION AND EFFICIENCY 1. Innovative and Efficient Organizational Culture: By stimulating new ideas, spurring a more innovative and efficient organizational culture, and seeking ways to achieve savings while maintaining or enhancing services, the Innovation & Efficiency Task Force has reached $102 million in total savings. In May 2015, the Task Force surpassed its savings goal of $100 million more than six months ahead of schedule. The City has implemented innovation and efficiency savings of $51.0 million for the General Fund and $51.0 million for non-General funds. The Task Force was established in December 2009 with the charge to develop and implement innovative solutions that would result in the most effective delivery of services at the most efficient cost. The changes have reduced costs substantially while maintaining or enhancing the City’s delivery of services. 2. Comprehensive Organizational Review Evaluation (CORE): City Manager Ed Zuercher initiated the CORE in 2014 to identify and implement process and operational improvements, enhance efficiency and aggressively pursue savings. Following detailed reviews by City departments to identify several proposed changes, an implementation team was formed to advance high impact ideas. Improvements included identifying 181 vacant positions for elimination to align authorized positions with currently-provided service levels, optimizing space usage to reduce building maintenance costs and dispose of excess facilities, proposing a City Charter change to voters that would allow electronic payments to vendors, developing a pilot to test the “P-Card” to achieve vendor discounts and speed payment processing, establishing a citywide standard for digital signatures to streamline approval processes, and pursuing other enhancements that eliminate unnecessary administrative burdens. 3. Innovation and Efficiency Task Force: Phoenix's Innovation and Efficiency Task Force consists of several private sectors members that have helped save more than $102 million by implementing nearly 150 creative ideas. Through this unique and highly effective approach, the private sector, policy makers and city employees worked together to come up with innovations and efficiencies that changed the way Phoenix delivers services to our customers. The city of Phoenix also received a national Innovation Award from the Alliance for Innovation for its outstanding success engaging the community and delivering results through the efforts of the task force. NEIGHBORHOODS AND LIVABILITY 1. Blight Lien Ad Hoc Committee: The Mayor appointed an ad hoc committee to recommend strategies to improve the city's procedure for collecting blight liens. The committee, chaired by Councilwoman Kate Gallego and cochaired by Mark Manoil, recommended the following: 19 Table of Contents •Modify the Neighborhood Preservation Ordinance board-up standards to reduce the temporary board-up time frame from 180 to 90 days, require polycarbonate material after 90 days and require the use of polycarbonate on all openings visible from the street, creating a more attractive option than plywood. •Post abatement notification on properties before and during abatement, and remove notifications after abatement. •The Neighborhood Services Department created a pilot program to foreclose on unpaid blight liens. The goal is to reduce the time it takes to put blighted properties back into productive uses. 2. Maryvale Golf Course: The Parks and Recreation Department successfully negotiated an operating agreement with Grand Canyon University for the renovation and operation of the Maryvale Golf Course. The 30-year agreement calls for GCU to completely renovate the 52 year-old golf course. When the golf course re-opens, it will be operated as a municipal golf course with resident rates and tee time availability. GCU will not pay rent to the city until the university recoups its initial capital investment, estimated to be $8 million. 3. FitPHX: WalkPHX raised $45,000 to support a new citywide walking program, aimed at attracting residents to walk at their neighborhood parks. WalkPHX includes signage that maps a park’s walking path and lets walkers know the distance around the loop, along with mileage markers, so participants can track their movement. In 2014, FitPHX established 15 WalkPHX park sites throughout the city. Business partners fund the sites, including CocaCola of Arizona, Phoenix Children's Hospital/Kohl's Fit, the University of Arizona College of Medicine-Phoenix, the Phoenix Parks Foundation, World Fit/United Healthcare, Knight Transportation, Berry Realty and the Desert Ridge Community Association. Additional grant funds have been awarded for additional WalkPHX sites in early 2015. 4. New Disability Icon: In April 2015, the Equal Opportunity Department presented a new disability icon to the 20 Phoenix City Council. The Phoenix City Council adopted the new logo for use in lieu of the traditional accessibility icon. The new icon was created by the Accessibility Icon Project and represents the disabled person as a more active image that appears to be engaged and in motion. Phoenix has become one of only a handful of cities nationwide to adopt this new icon. The city will be engaging in significant outreach activities related to this icon with other city departments, governmental entities and private builders. 5. Maricopa County Food Systems Coalition: The Office of Environmental Programs staff led the effort with St. Luke’s Health Initiatives to create the Maricopa County Food Systems Coalition. The purpose of the coalition is to create an equitable, healthy, sustainable and resilient food system through facilitation, partnership building, and the completion of specific, tangible projects. The coalition is made up of approximately 60 members from all areas of the food system in Maricopa County. Issues the coalition may address include obesity and diet-related illnesses, food insecurity and hunger, limited access to healthy and affordable food, the local food economy, agriculture and the natural resources necessary to produce food. PHOENIX TEAM 1. Healthiest Employer Recognition: The city of Phoenix has been recognized as one of the healthiest large employers in the Valley of the Sun in 2012, 2013, 2014 and again in 2015. 2. City Manager's Future Leaders Forum: The City Manager's Future Leaders Forums were presented as a Brown Bag series for current and next generation city leaders. Employees from all levels of the organization attended these series to learn from top managers in the city about their careers, experiences, and lessons learned. Leaders shared their advice on how to navigate and thrive in change, focus on innovation and develop various approaches to organization challenges. The topics included City Manager/Council Government, Power of Recommendation, Breaking Through Silos, Reality of Supervising, Working with Community Organizations and Activists, Interacting with Elected Officials, Professionalism and Policy making and Labor Management/Relations. 3. Doing What Matters: The City Manager created a new television segment on PHXTV, “Doing What Matters,” that provides a weekly view into the wide range of jobs that city employees do, from Emergency Dispatch Operator to Park Rangers to Solid Waste Equipment Operators. This show is taped on location and demonstrates what city employees do each day really matters. Approximately 50 videos were produced in FY 2014-15, and another 50 are expected to be produced in FY 2015-16. 4. Walk4You: After one year, the “Walk4You” employee walking incentive program has more than 2,600 participants who have recorded more than 1.45 billion steps. Three remote access points were added in in the last year, including Burton Barr Central Library, Aviation Terminal 3, Aviation Operations, and the 23rd Ave. Wastewater Treatment Plant. PUBLIC SAFETY 1. Precinct Efficiency: The Police Department successfully transitioned from an eight precinct configuration to a more efficient seven precinct design on October 20, 2014. Planning for this effort began a year prior after an internal assessment revealed the eight-precinct model would be difficult to support going forward given the impact attrition has had on staffing levels. Development of the new configuration involved redrawing all of the precinct, squad, and beat boundaries, reprogramming the new boundaries in police computer systems, re-bidding nearly 1,500 sworn positions within the Patrol Division, and hosting numerous meetings with internal and external stakeholders. The new configuration is expected to support a more efficient delivery of police services by improving the alignment of precinct boundaries with natural boundaries, eliminating the half precinct model (which had inadvertently created supervisory challenges), reducing the Table of Contents number of patrol squads and redistributing those officers within patrol, which will result in larger squad sizes. 2. Phoenix Fire Department Intervention in Commercial Location Fires: The L. William Seidman Research Institute, in collaboration with the W.P. Carey School of Business at Arizona State University, reviewed 42 fires affecting commercial businesses and organizations from June 2012 through May 2013. The findings were that approximately 6,951 jobs were saved in Arizona (3,023 in Maricopa County) that would have been lost had there not been successful intervention by the Phoenix Fire Department. Gross state product of $650 million and real disposable income of $295.6 million were saved, as well as $35 million in state tax revenues. The study was funded by Underwriter Laboratories at no cost to the city. 3. Recovery Information Center (RIC): The United States Small Business Administration (SBA) declared a SBA Physical Disaster Declaration for Maricopa County and the respective contiguous counties as a result of flooding that occurred August 12-19, 2014. Laveen received 3.97 inches of rain and New River received 6.85 inches of rain during this time period. A first-ofits-kind Recovery Information Center (RIC) was established to provide a onestop shop for information to residents impacted by storm and flood damage. The location of the Recovery Information Center was at Phoenix Fire Station 57 and it received 138 households seeking assistance. Heavy rain and flooding occurred again September 8, 2014, and Mayor Stanton and Governor Brewer declared a state of emergency for areas affected with damage. Following this newly established protocol for the RIC, three RICs were established to assist as a result of September storm. The three RICs were established to connect residents with city staff, city resources, volunteers and community organizations. Two “walk-in” centers operated for four days at Travis L. Williams Family Services Center and Pecos Community Center and assisted approximately 156 households. Also, a “phone-in and email” virtual center operated for 11 days and staff answered 366 calls and 54 emails. 4. Phoenix Veterans Court: Veterans Court received a City Livability Award for Outstanding Achievement from the U.S. Conference of Mayors in 2014. Veterans Court also received the 2014 Strategic Agenda Award for Improving Court Processes to Better Serve the Public from the Arizona Supreme Court and was presented as a case study "Finding Redemption and Hope - Creating a Veterans Court" at the national Transforming Local Government Conference. As of January 31, 2014, more than 600 veterans sought treatment through the Phoenix Veterans Court. During that same time frame, more than 200 veterans successfully completed their assigned programs. Approximately 30 veterans went through in-patient treatment, more than 120 have addressed post-traumatic stress, 230 have participated in substance abuse treatment, and 100 have engaged in mental health treatment. More than 700 veterans have participated in the program since August 2012 and recidivism rates are currently only two percent. SOCIAL SERVICE DELIVERY 1. Human Trafficking: On December 6, 2013, Mayor Greg Stanton established the City of Phoenix Human Trafficking Task Force. Co-chaired by Sarah Suggs of O’Connor House, the seventeenmember Task Force developed a fiveyear strategic plan to establish Phoenix as a leader in combating human trafficking for the 2015 Super Bowl and beyond. Human Services Department staff coordinates and supports the four areas of the plan: community awareness and outreach, training, law enforcement, and victim services. 2. Ending Chronic Homelessness Among Veterans: City of Phoenix, Maricopa Association of Government’s Continuum of Care, Valley of the Sun United Way, and a variety of other community-based organizations provided and leveraged resources as part of a coordinated regional response, enabling the City to lead the way in ending chronic homelessness for all veterans in Phoenix. 3. Earned Income Tax Credit (EITC) and Volunteer Income Tax Assistance (VITA): Since 2003, the City of Phoenix Human Services Department (HSD) has partnered with numerous community and faith based organizations, educational and financial institutions and the Internal Revenue Service (IRS) on the EITC campaign. There are approximately 250 VITA volunteers each tax season who prepare free tax returns for low to moderate income taxpayers. For the 2014-15 tax season, the City of Phoenix had 16 VITA sites and 258 volunteers who prepared 4,493 tax returns which generated over 6.2 million in federal refunds. Since 2003, 557,668 households have received more than $74,750,461 in federal tax refunds. SUSTAINABILITY 1. Waste Characterization Study: The City recently concluded the first phase of a study of single-family residential contained garbage and recycling streams to identify opportunities to increase diversion and for business development. Findings from the study showed nearly two-thirds or 65 percent of the garbage sampled could be diverted from the landfill, including 118,000 tons of compostable yard waste, 57,500 tons of curbside recyclable materials, and 56,500 tons of food waste. The 57,500 tons of curbside recyclable materials translates to more than $5 million in potential revenue, if properly recycled. 2. Reimagine Phoenix: The City has implemented several measures to increase diversion of the waste stream from the landfill, including the launch of two new programs and increased community outreach: the Curbside Green Organics Program and the “SaveAs-You Reduce and Recycle” (SAY R&R) Program for single-family customers. Green Organics offers residents a weekly curbside collection of containerized compostable yard waste on a voluntary, subscription basis for a monthly fee of $5. The SAY R&R Program encourages curbside-service residents to downsize from a large trash container to a medium-sized trash container with the 21 Table of Contents incentive of a $3 fee savings per month. Since launch, 3,605 residents are participating in the Green Organics Program and 5,916 residents are participating in the SAY R&R program. Of all compostable yard waste currently collected, 10 percent is being diverted through the new Green Organics program. 3. 27th Avenue Composting Facility: The City is designing and constructing a composting facility with the capacity to process 110,000 tons of organic material per year. It is expected to be operational by July 2016 to process green organics from transfer station customers and residents as well as food waste from businesses, non-profits, special events and City facilities. The facility promotes higher diversion rates, future cost savings and economic benefits, reduces greenhouse gas emissions of methane and leachate produced at the landfill, and extends the municipal landfill life by diverting organic materials from the landfill. 4. Resource Innovation Campus (RIC): The City is fostering public and private partnerships centered on transforming trash into resources through the development of the Resource Innovation Campus that encompasses the area of 27th Avenue to 35th Avenue, Lower Buckeye Road south to the Rio Salado. The vision of RIC is to be a worldleading, vibrant, physical manifestation of the values of Reimagine Phoenix, and a circular economy in action. A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them while in use, then recover and regenerate products and materials at the end. 5. Resource Innovation and Solutions Network (RISN): Through a partnership with Arizona State University’s Walton Sustainability Solutions Initiatives, the city is creating RISN as part of the City’s Reimagine Phoenix initiative. RISN is a global network of public and private partners to create economic value and drive a sustainable circular economy, cultivating cutting-edge research opportunities to advance the diversion of waste and 22 create economic value through the development of new technologies. RISN headquarters will be housed at the Resource Innovation Campus and RISN will manage the on-site Technology Solutions Incubator space for innovators, developing emerging products and technologies from the City’s waste resources. Current RISN projects include the waste diversion program with Paradise Valley School District, working with students and teachers on waste reduction at nine valley schools, Food Scraps Conversion Program with Sprouts Markets, Resource Valuation Assessment Tool to identify processing costs, Waste Reduction in Multi-Family Housing, Living Building Challenge for Design of RISN Headquarters, and a Regional Green Organics System Design. 6. Call for Innovators (CFI) and Transforming Trash into Resources Request for Proposals (RFP): The City recently issued a Reimagine Phoenix CFI to request information from private sector innovators with technologies and manufacturing processes that transform trash into energy and new products. Through this CFI, the City seeks to identify specific business opportunities for future competitive processes. Categories include market-ready manufacturing processes, market-ready waste-to-energy technologies, start-up emerging technologies and manufacturing processes, and a special category for “everything else.” The City also issued a Transforming Trash into Resources RFP for innovators willing to recycle or repurpose some of the most challenging trash the City currently collects in transfer stations, including non-rechargeable dry cell batteries, carpeting, furniture, latex paint, mattresses, palm fronds, and residential food waste. 7. General Plan Update (PlanPHX): PlanPHX was a concerted effort to collaborate with Phoenix residents about the future of the city. The Planning and Development Department used the results of this collaboration to update the Phoenix General Plan – the policy document that provides comprehensive direction for the growth, redevelopment, conservation and infrastructure investment of all physical aspects of the city. PlanPHX began in August of 2013 and included more than 200 presentations on the General Plan at a variety of community organizations, events and committee meetings. In addition, more than 2,000 residents registered on the project’s interactive website, www.myplanphx.com, and provided thousands of ideas and comments. The General Plan Update was developed as a result of the PlanPHX process and was resoundingly supported by all of the village planning committees and the Phoenix Planning Commission. In March of 2015 the Phoenix City Council adopted the General Plan and placed it on the August 2015 citywide ballot for ratification by the voters. TECHNOLOGY 1. Technology Summit: The Task Force on Technology Advancement led the planning and follow-up of the Technology Summit, which was held on November 12, 2014. Over 125 individuals attended, representing local businesses, technology companies, other public sector organizations, and members of the public. The implementation of recommendations from the Summit is on-going. 2. phoenix.gov: In 2014, staff across the City revamped the City’s website, phoenix.gov. Input on the design was gathered from departments, the Mayor and City Council, and the community. The website now provides mobile responsive design, allowing optimal viewing on any mobile device. Table of Contents 23 Table of Contents AA+ it ra ti n g at st ro n g cred it ra ti n g ’s ty ci e ’s cred fi rm ed th k . P h oe n ix M oo d y’s af P oo r’s an d ab le ou tl oo st & a d h ar it d n w S ta y’s) , . ci ti es . A a1 (M oo d la rg es t U .S (S & P ) an d of th e si x t es h ig h e re m ai n s th 24 Table of Contents Our Commitment Headline To Excellence Phoenix continues the pursuit of excellence throughout the organization. Delivering quality, efficient, and costeffective services to Phoenix residents is the cornerstone of the organization’s commitment to public service. One of our most important achievements is the efficiency improvements achieved through the guidance of the City’s Innovation and Efficiency Task Force. The Innovation and Efficiency Task Force was developed in December 2009 to implement innovative processes that would result in more efficient delivery of services to the community, while at the same time, maximizing the use of limited taxpayer dollars. The task force is made up of private-sector members and city management; and was charged with examining alternative service delivery methods, identifying organizational structure efficiencies, evaluating right sourcing opportunities, implementing process improvements, and ensuring the city’s continued focus on customer service. To accomplish its goals, the task force established work groups to collaborate with every city department to identify specific improvements and cost-saving initiatives. More than 1,100 ideas have been proposed by employees through a website suggestion program. By May 2015, the city had achieved approximately $102 million in savings, exceeding its goal of $100 million by the end of 2015 which was well ahead of schedule. Highlights of recent savings include: • Achieving approximately $4 million in savings by refurbishing existing ambulance units onto existing chassis. The new and innovative best practice extends the functional life cycle of an ambulance by about 15 years. • Savings resulting from the rebidding of the city’s life insurance provider, recommended by the Finance, Efficiency, Economy, and Sustainability (FEES) Subcommittee and approved by the City Council. The new contract will save the city approximately $355,000 annually. • Administrative efficiency actions by the Police and Fire Departments implemented in July 2014 that achieve savings totaling about $1.7 million. • A collaborative effort by the Municipal Court, the Prosecutor’s Office, and the Police Department to develop a process enhancement that assists in prosecuting domestic violence cases while also reducing Police overtime costs for an estimated net savings of $500,000 annually. • Enhanced water irrigation technology in the Parks and Recreation Department which reduces water usage and saves approximately $500,000 annually. • A multidepartment effort including the City Manager’s Office and the Public Works, Finance and Budget and Research departments, resulted in the sale of underutilized vehicles in various departments and a savings of approximately $400,000 annually. • Operating savings from the sale of the 22nd Avenue and Greenway Road property, reducing costs for security services totaling approximately $116,000 annually. This savings adds to the more than $1.6 million in one-time revenue from the property sale. The city of Phoenix is committed to helping residents understand how their tax dollars are being spent and making processes accessible and easy to understand. As part of efforts to advance transparency and further engage citizens in helping shape the city’s budget, the city provides one of the most open and accessible budget input and adoption processes in the country. The Zero-Based Inventory of Programs budget document, implemented in 2012 in response to the Mayor and City Council’s request for a more transparent, relevant, and detailed presentation of the city’s budget, provides important context for evaluating the costs of city programs. The document is online, searchable, and has links to allow for easy navigation. The Inventory of Programs document answers many questions for residents, including the following: n n n n n n n n n Does city spending reflect my priorities? How much of the costs to provide city services come from staff, contractual services or supplies? Have the costs of staffing levels to provide services been changing and by how much? What amount of staffing costs is related to wages and benefits? What programs and services are provided by the city? How much do these programs cost? How many city staff are involved in delivering these programs? What sources of funding are used to pay for these programs? What services are provided by these programs and how are they being measured? In February, staff provided the preliminary budget status for the 2015-16 budget, and a Five-Year General Fund Forecast. Also In February, staff presented an updated Public Safety Funds Forecast to City Council. These presentations 25 Table of Contents provided a strategic and long-term view of the city budget and provided necessary context and considerations for wellinformed budget discussions and decisions. In April, the Trial Budget was presented at twelve community budget hearings where city staff was present to answer the public’s questions and record public commentary for review by the City Council. Environmental Excellence: The city of Phoenix recognizes that to endure, the city must focus on the well-being of residents, a strong economy and a healthy environment, while embracing the full approach to sustainability. It is the city’s responsibility to provide leadership and demonstrate strong commitment through innovative and efficient policies that result in clean land, air and water, and improve working and living environments. The city’s leadership in providing a healthy environment has been recognized through the following recent awards: Valley Forward Crescordia Award – Arizona Forward: The city of Phoenix won four first-place Crescordias and six Awards of Merit at the 34th annual Arizona Forward Environmental Excellence Awards. The following city projects each received a Crescordia, a Greek term that means “to grow in harmony”: n n 26 Faye Gray Recreation Center (Holly Street Studio Architects/Parks and Recreation Department) – The center’s environmental features include passive solar design, local construction materials, catchment areas for rainwater runoff and roof overhangs for shade. Complete Streets Ordinances (Street Transportation Department) – The City Council-approved policy encourages people to walk, bike or use mass transit whenever possible. Complete Streets principles are integrated into all community planning. n n Transit 2000: The Phoenix Transit Plan (Public Transit Department) – The plan has moved Phoenix from the 34th largest transit system in the nation to 28th, and has paved the way for an influx of sustainable public and private transit-oriented development. Ground Cover Public Art Project (Phoenix Office of Arts and Culture) – The project involved hundreds of craftspeople and artists who donated their time and talent to produce 300 individual handmade blankets that were assembled into a monumental art installation. The individual blankets were later distributed to the homeless. Arizona Forward, Award of Merit: The Energize Phoenix Program was recognized at the Arizona Forward 34th Annual Environmental Excellence Awards Event. The Program, along with partners Arizona Public Service (APS) and Arizona State University (ASU), received the Award of Merit for their contributions to energy conservation, reduction of greenhouse gas emissions, creation of green employment and over $31 million of economic impact to the local economy. National Association of Clean Water Agencies Platinum Peak Performance Award: The National Association of Clean Water Agencies (NACWA) recently recognized the city of Phoenix for continued environmental excellence at its 23rd Avenue Wastewater Treatment Plant. The plant earned NACWA’s Platinum Peak Performance Award for five consecutive years of perfect National Pollutant Discharge Elimination System (NPDES) permit compliance. Phoenix treats 250 million gallons of wastewater each day after receiving it through 5,000 miles of sewer lines. The city treats wastewater from 2.5 million people in Phoenix, Glendale, Mesa, Scottsdale, and Tempe. The city of Phoenix is committed to securing environmental and economic livability for future generations in the region, with an emphasis on solar energy production. Phoenix has long used sustainability as a guiding principle, believing that sustainable living is critical to ensuring that the actions residents take today do not compromise the ability of future generations to meet their needs. Phoenix’s sustainability motto, “Living Like it Matters!” reaffirms the sustainability creed that guides its current programs and future plans. The city’s sustainability priorities are: 1. Accelerate renewable energy development: The city has a long-standing commitment to resource conservation and continues to be an active participant in energy conservation, efficiency and environmental preservation. Pursuing renewable energy development guides the city towards energy independence. 2. Enable opportunities for environmental stewardship: Environmental sustainability is best achieved by encouraging shared responsibilities, protecting natural systems, and promoting the efficient use of natural resources. It is also important to implement policies, programs and practices that have a far-reaching effect on the environment. 3. Enhance sustainable land use and mobility practices: The success in sustainable land use and mobility lies in adopting policies that encourage the use of green infrastructure and buildings, brownfield redevelopment, creating connectivity within road networks and ensuring connectivity between pedestrian, bike, transit and road facilities. 4. Foster collaboration and communication: Empowering employees at all levels through collaborative workgroups will galvanize them to realize the city’s sustainability goals. They, in turn, become an example of the city’s efforts and progress to the community they serve. Communicating and celebrating the city’s accomplishments is essential to motivating employees, customers, stakeholders and the public in achieving sustainability goals. Some examples of sustainability programs already implemented or planned for the future include: Table of Contents n n n n In February 2015, Cities of Service selected Phoenix as one of seven U.S. cities to receive a $30,000 grant and two dedicated full-time AmeriCorps VISTA members to launch Love Your Block, a neighborhood revitalization initiative. Led by Mayor Greg Stanton, the initiative is a collaboration between the City Manager's Office Citywide Volunteer Program and the Neighborhood Services Department. The initiative engages citizen volunteers in co-creating solutions to urban blight. Support for Love Your Block is provided by Cities of Service and the Corporation for National and Community Service, with generous support from St. Luke's Health Initiatives. Beginning in July 2015, the Green Organics Curbside Collection Program provides a new large, tan container for yard waste, such as grass clippings, twigs, branches and shrubs. This program is perfect for households that have weekly landscaping maintenance and/or own large properties. The additional monthly fee for the Green Organics Collection program is $5 a month per tan container requested. Beginning in July 2015, the Save-AsYou-Reduce-and-Recycle (SAY R&R) program offers residents that currently have curbside trash pick-up service the option to downsize their current large trash container to a medium trash container for a monthly savings of $3 on their solid waste services bill. A medium trash container has the capacity to hold four full, 13-gallon kitchen trash bags, versus a large trash container that can hold five full kitchen trash bags. Meet Me Downtown Phoenix (MMDT) is a fun, free, social, weekly walk/run launched in November 2014. Through the first 25 weeks, more than 5,000 walkers and runners had participated with over 100 participants walking/running ten or more times. A program of Parks and Recreation's FitPHX healthy-living initiative, MMDT aims to bring people of all ages to downtown Phoenix, engaging individuals and businesses, while showcasing downtown Phoenix as a prime location for healthy activities. Title Sponsor is Blue Cross Blue Shield of Arizona; operating partners are Downtown Phoenix Inc., Phoenix Parks Foundation, CityScape Phoenix, the Corner Restaurant, and Sole Sports Running Zone. n Night @ Verde Park was launched through a partnership between Parks and Recreation's FitPHX program and the University of Arizona College of Medicine-Phoenix in fall 2014, with 229 youth participating in six sessions. Medical students visited the park, just two blocks from campus, to teach topics related to health and nutrition. Youth from Verde Park walked to the campus on two occasions for tours of the Medical School's "Simulation Center." Additionally, medical students are visiting Verde Park every week to play soccer and teach health topics like chest compression only CPR. The city’s philosophy and commitment of maintaining a highly trained and well educated workforce is imperative to achieve the maximum contribution a workforce can provide to the customers they serve. In addition to the community’s recognition of a job well done, the city and its employees have been recognized by a variety of professional organizations for their continuous pursuit of excellence. The following is a list of just a few awards and recognitions received by the city during the course of this fiscal year. n n Mayor Greg Stanton was honored by the Greater Phoenix Economic Council in October 2014 with the Outstanding Regional Contribution award for his continuing efforts to promote regional economic development. Mayor Stanton’s key regional efforts include: Opening a New Trade Office in Mexico, the Arizona Mayors Education Roundtable, and the Phoenix-Tucson Water Agreements. Valerie Churchwell, Small Business Outreach Manager in the Aviation Department, received the Advocate of the Year award from the Associated Minority Contractors of America in recognition of her work developing and implementing education programs and services to increase competitiveness, awareness, and procurement opportunities at the city's three airports. The annual award is presented to an individual whose In D ec em be r 20 14 , P h S k y Tra in ® oe n ix S p as se n ge rs w it h a st at io n at k y H ar bo r op en ed th Ter m in al p e n ew es t st er d ay, th ai rp or t te rm 3. in al s, E as e P H X S k y Tra in ® S er vi n g m ore th an ag e of th e P H X p ro vi d es qu t p 10 ,0 00 ro E co vi d es a n om y ic k ac ce ss to d ow n to P ar k in g, an d Va ll ey se am le ss co n n ec ti on to w n P h oe n M et ro R ai ix , Tem p e an d M es a. l w h ic h 27 Table of Contents outreach to minority subcontractors have made a direct impact on the minority, women and disadvantaged business community. n n The Honorable Roxanne Song Ong, past presiding judge of the Phoenix Municipal Court (1991-2014), earned the 2014 Judge Bob Jones Memorial award from the American Judges Association for significant contributions to judicial education. Denise Archibald, City Clerk Department, was awarded a 2014 40 Hispanic Leaders Under 40 Award from Univision Radio and Valle del Sol. Recipients were chosen based on their impact on community, their strong commitment to the issues they champion, their hardworking nature, and their excellent leadership skills. The city’s mission and vision statements continue to serve as common sources of motivation for city of Phoenix employees to do all that they can to make Phoenix better. City of Phoenix Mission Statement To improve the quality of life in Phoenix through efficient delivery of outstanding public services. City of Phoenix Vision Statement We will make Phoenix a great place to live, work and visit by fostering a dynamic and sustainable environment with exceptional public services. City of Phoenix Values Statements We are committed to excellence through: 1. Exceptional Customer Service We exist to provide responsive and consistent customer service to the community and to city employees. We exhibit empathy by listening to each other and to the public in our efforts to deliver services that improve people's lives. 2. Integrity and Transparency We safeguard the public trust through honest business practices and open communication. Our credibility with the public depends on our strong ethical stewardship of all resources. 3. Respect for Diversity We recognize and respect the differences that make us unique. We embrace diversity in everything we do to create a healthy and productive community and workplace. 4. Personal Empowerment We trust our employees to always own the problem and solution in addressing business challenges. We value and invest in the growth and development of our employees. 5. Engaged Teamwork We engage employees and the public in productive and respectful dialogue. Our success hinges on dynamic and interdependent partnerships. We achieve our highest performance by working together. 6. Consistent Professionalism We work to the highest standards of proficiency and expertise. We are accountable to ourselves, to the City and to the public. 7. Creativity and Innovation for Excellent Results We promote an environment of inventive thinking and imaginative solutions to community needs. We encourage a spirit of continuous improvement in all our activities to exceed community expectations. ti on it ie s C oa li u n C le an C gi on S e re e th th of th e Va ll ey tr ib u ti on to n by co 60 ed d iz an an gn th as re co ad er sh ip ce m ore P h oe n ix w gy fo r it s le gi on d is p la er re n e E th of g t T h e ci ty of en el p in .S . D ep ar tm r on e ra n k in g an d h an d th e U u m be n is th g n . el in ac h ie vi ro le u m fu ll on s of p et m il li on ga 28 Table of Contents Not only do city of Phoenix employees follow these guiding principles in their workplace, they show they care about the community they serve by contributing financially to the Valley of the Sun United Way through the city of Phoenix Community Service Fund Drive. In 2014, the city raised more than $860,000 during the swashbuckling themed campaign, “Arrr you ready to give?” n n City of Phoenix employee organizations and departments coordinate various fund raising events to assist communities in need both locally and globally. In addition, city employees volunteer in the community with many organizations serving youth, homeless, disadvantaged, marginalized and other areas of need. The following are more examples of how city employees have demonstrated their commitment to the city’s mission and vision statements by going above and beyond to improve the quality of life for Phoenix residents. n 2014, which measures how supportive U.S. communities are of the gay and lesbian community. Last year, Phoenix was one of the most improved cities in the nation and became the first Arizona city to earn a perfect score. This year, Phoenix was joined by both Tucson and Tempe. Phoenix doubled housing grants awarded to the non-profit organization one-n-ten to provide housing for LGBT youth, and the City Council called on Governor Jan Brewer to veto S.B. 1062, the so-called “right to discriminate” bill, with an 8-to-1 vote. Johnmark Bradley, Building Maintenance Foreman in the Housing Department, won Employee of the Year in the Housing Modernization Division from the National Association of Housing and Redevelopment Officials for his leadership in renovating and improving the public housing stock owned by the city. Dawn Marsolais, Housing Program Representative in the Housing Department, won Employee of the Year in the Section 8 Housing Category from the National Association of Housing and Redevelopment Officials for serving homeless veterans in the Veterans Affairs Supportive Housing (VASH) program with excellence and customer service. For the second straight year, the city of Phoenix earned a perfect score of 100 on the Human Rights Campaign’s municipal equality index (MEI) in n The Center for Digital Government (CDG), a national research and advisory institute on information technology policies and best practices in state and local government, ranked Phoenix as a top ten digital city in its 2014 Digital Cities Survey for its technology initiatives and projects. The CDG asked participants to submit the ten technology initiatives of which they are most proud across four categories: citizen engagement, policy, operations, and technology and data. Phoenix was awarded the top ten ranking based on the following: MobileResponsive Web Design, Online Government Transparency, Economic Development and Education/Youth Engagement and Entrepreneurial Support through the Phoenix Public Library, and Streamline Development Process / Online Development Tools. C it y em p lo ye es ca re ab ou t th e th e Va ll ey co m m u n it of th e S u n y th ey se rv U n it ed Way F u n d D ri ve e by co n tr th ro u gh th . E m p lo ye ib u ti n g fi n e ci ty of P es ra is ed m or G iv e” ca m an ci al ly to h oe n ix C om p ai gn . e th an $8 60 m u n it y S er ,0 00 d u ri n vi ce g th e “A rr r Yo u R ea d y to 29 Table of Contents City of Phoenix Excellence Awards Each year, the city honors city employees and employee teams for excellence. Their efforts help to make Phoenix a more livable city. n 30 The Cyber Security Incident Response Team (CSIRT), comprised of 19 employees representing 13 City departments, was formed by Information Technology Services (ITS) department to combat Internet service hackers, reduce the impact of cyber attacks to city services, and protect private information. The city of Phoenix has been under cyber attack since mid-October as part of a large attack against governments nationwide by hacktivist groups. The hacktivists’ goals are to take internet services down and breach information services to steal data, impact public safety, and degrade public trust. Several other cities have been breached and information was stolen, websites were defaced, and citizen-facing services were impacted. To combat this threat, ITS formed a multi-departmental Cyber Security Incident Response Team (CSIRT) led by Vauda Jordan. The individuals nominated went above and beyond their normal job duties. Most team members did not have any previous experience with cyber defense technologies and methods and had to quickly learn new skills, and those team members with experience served as mentors. Staff willingly cancelled or postponed vacations and gave up nights, weekends, and Thanksgiving and Christmas holidays with their families to work 24x7 shifts. Team members worked an average of 60 to 80 hours a week actively combating the hackers and strengthening the city’s security posture to reduce risk before Super Bowl XLIX activities were held in Phoenix on a national stage. The CSIRT coordinated with the state, county, other cities, as well as the FBI and Department of Homeland Security to share valuable intelligence. The FBI credited the city for helping to increase resources are the result of Zona’s strengths in building and sustaining partnerships and relationships, her compassion and tenacity in helping our vulnerable population, and her desire to leverage resources for the city. As a result of Pacheco’s excellent relationship and reputation with ASU and the nonprofit community, Pacheco fostered these long-term sustainable models of providing needed social services during difficult budget times which will continue to be utilized by the Housing Department in the future. cyber security defense capabilities valleywide. The CSIRT set Phoenix apart from other cities that had been compromised. By rapidly forming the 24x7 team, working with law enforcement and addressing vulnerabilities, the effort was highly successful. n Zona Pacheco, a Casework Services Coordinator with the Housing Department, established an internship program with Arizona State University (ASU) School of Social Work over 10 years ago. Each semester, 10-15 bachelor and master level student interns report to Zona to provide case management to over 450 HOPEVI public housing residents; conduct life skills, health, nutrition, and social workshops; and perform community engagement activities. Following a structured work plan, the students are mentored by Zona, and provide free social services to low income residents in need of assistance that would otherwise not be available due to limited government resources. Zona does this while juggling the duties and responsibilities of her regular job. The students benefit from real world experience, and Zona has hired former interns into positions. An advocate for vulnerable people, Zona built a coalition of non-profit service providers from 30 to 55 organizations to enrich service levels, free of charge, to residents living in HOPE VI communities and surrounding neighborhoods. This includes providing programming at the HOPE VI Community Center at Henson Village, serving over 6,000 residents per year. Examples include: Goodwill Industries providing job readiness programs; Phoenix Revitalization Corporation providing leadership and community engagement academies; and Friendly House providing GED and ESL classes. Each year, 4-5 new partners join the coalition. Zona actively engages existing and new providers to promote and improve services. These valuable Employee Suggestion Awards The Employee Suggestion Program (ESP), which began in the mid-1950s, has saved millions of dollars through direct cost savings and other productivity and costavoidance improvements. Employees can make improvement suggestions for any city operation, not just for their own department. Below are some examples of this year’s ESP awards: n Elizabeth Hendel with the Fire Department suggested a major change to the Mandatory Live Fire Training required by the Federal Aviation Administration (FAA). All Aircraft Rescue Fire Fighters (ARFF) are required to attend this live fire training annually in order to maintain their certification. Over the years, city ARFF staff have traveled out of state to attend this live training, as Arizona does not have a certified ARFF training facility. Hendel suggested that the city save money by bringing a mobile ARFF prop airplane to the city. Implementation of this suggestion resulted in a significant cost savings in reduced overtime and travel related expenses. The estimated savings resulting from this suggestion is approximately $244,000 annually. In addition to the cost savings, having the on-site mobile ARFF prop airplane added significant value to the training by allowing firefighters to train using their own gear and fire apparatus equipment. Table of Contents n n Heather Finden with the Water Services Department identified an innovative approach to collecting samples as required by Arizona Department of Environmental Quality (ADEQ) permits. One of the permits required staff to collect samples from the middle of a canal 500 meters downstream from a discharge point. In order to meet the permit requirements, staff needed to launch a boat down a very steep bank into the canal. The collection presented an ongoing safety risk. Finden located an alternative point for collection which removed the risk to personnel in collecting a sample and proposed the change to ADEQ. The changes were accepted by the state and are now in effect. Robert Swanson with the Public Works Department suggested changes that reduced the likelihood and incidences of vault and light pole vandalism and copper theft. Swanson’s suggestions included installing re-bar reinforced concrete vaults with a footer that prevents the complete vault from being lifted out of the ground; installing heavy duty steel vault lid with a propriety security fastener; and replacing current light pole hand hole cover screws with security fastener and pole lock assemblies over the hand holes. The suggestions were initially implemented at the request of the Human Services Department at the Helen Drake Senior Center and are now a part of devices and services that can be requested from the Facilities Management Division. T h e P h oe n ix P ol ic e D ep ar tm en t p ro gr am d h as a vo lu es ig n ed to n te er P ol ic ed u ca te an be tw ee n th e E xp lo re r d in vo lv e e ag es of 14 yo u n g m en -2 1 in p ol ic jo in in g th an d w om en e D ep ar tm e w or k . A ls en t as an o, fo r th os of fi ce r, vi si e in te re st ed in t p h oe n ix .g ov /p ol ic e. Remaining Committed to Excellence, city staff works very hard to earn Phoenix’s reputation as a well-run city. Phoenix employees strive to be leaders in their professions, recognizing and living the city’s mission and value statements each day. 31 Table of Contents PHOENIX GROWTH 1881 Area - .5 Sq Mi Population - 1,708 2000 Area - 477.6 Sq Mi Population - 1,321,045 1990 Area - 424.6 Sq Mi Population - 983,403 32 1920 Area - 5.0 Sq Mi Population - 29,053 2010 Area - 519.1 Sq Mi Population - 1,447,128 1980 Area - 325.1 Sq Mi Population - 789,704 1930 Area - 6.3 Sq Mi Population - 48,118 2015 Area - 519.4 Sq Mi Population - 1,520,000 1970 Area - 248 Sq Mi Population - 584,303 1940 Area - 9.5 Sq Mi Population - 65,414 1950 Area - 17.1 Sq Mi Population - 106,818 1960 Area - 187.6 Sq Mi Population - 439,170 Table of Contents CommunityHeadline Profile and Trends Phoenix was founded in 1870 as an agricultural community and was incorporated as a city in 1881. The original City Charter was adopted in 1913 and has been amended by Phoenix voters from time to time since then. The charter allows Phoenix to determine its governmental structure and levy revenue and privilege license taxes. A council-manager form of government was also adopted in 1913. Under this organizational structure, the Mayor and Council appoint a City Manager to act as the chief operating officer. The City Council sets policy direction, and the City Manager is responsible for implementing those policies in an efficient and effective manner. In 1982, a group of residents initiated an effort to move to a district system for electing council members. These residents were concerned that at-large elections resulted in an organization that was less responsive to neighborhoods. The initiative was passed by the voters of Phoenix, and the number of Council seats was increased from six to eight. The Mayor continued to be elected at-large. Economic Diversity Phoenix has grown steadily, especially since 1950. The 1900 Census recorded Phoenix population at 5,544. In 1950, the city occupied 17 square miles with a population of almost 107,000, ranking it 99th among American cities. The recent 2010 Census recorded Phoenix population at 1,447,128. The city currently encompasses 519.4 square miles. Today, Phoenix is the sixth most populous city in the United States, is the state capital of Arizona and the center of the metropolitan area encompassed by Maricopa County. This metropolitan area also includes the cities of Mesa, Glendale, Tempe, Scottsdale, Chandler, Peoria, Surprise, Goodyear, Avondale, El Mirage, Tolleson and the towns of Gilbert and Buckeye. It is situated 1,117 feet above sea level in the semi-arid Salt River Valley. The area is widely known for its mild, sunny winters and hot summers. It also receives an average rainfall of seven inches per year. Employment within the Phoenix metropolitan area is diverse and fairly similar to that of the United States as a whole. Construction and financial industries are an exception, and comprise more of Phoenix’s employment mix than the United States average due to historical rapid population and employment growth. Additionally, the Phoenix area’s manufacturing mix is much more concentrated in high technology compared with the United States. The high technology manufacturing sectors are cyclical in nature and may be more impacted during periods of economic slowing than other manufacturing sectors. The primary employment sectors and their share of total employment in the Phoenix metropolitan area consist of service industry (46%); trade (16%); government (13%); financial activities (9%); manufacturing (6%); and construction (5%). Major employers of the Phoenix metropolitan area include the state of Arizona, Wal-Mart Stores, Inc., Banner Health Systems, city of Phoenix, Wells Fargo and Co., Maricopa County, Arizona State University, Intel Corp., Scottsdale Lincoln Health Network, and Honeywell. The top ten property taxpayers, based on secondary assessed valuation, are Arizona Public Service Company, Southwest Gas Corporation, CenturyLink (Qwest Communications), AT&T Corporation, Host Kierland LP, Metropolitan Life Insurance Company, Target Corporation, Hub Properties Trust, Cole of Phoenix AZ II LLC and Phoenix Plaza PT LLC. These taxpayers make up just over seven percent of total assessed valuation. Demographics and Economic Statistics The following statistics are presented to provide an overview of Phoenix residents, the city’s financial condition and infrastructure... 33 Table of Contents 1980-81 1990-91 2000-01 2010-11 Actual 2013-14 Estimated 2014-15 Projected 2015-16 789,704 995,896 1,350,435 1,453,462 1,506,439 1,520,000 1,533,000 7.8 25.0 39.3 18.6 9.3 8.5 21.6 42.9 17.3 9.7 8.5 21.5 42.8 17.3 9.8 8.3 23.0 37.2 23.1 8.4 78.1 4.7 1.1 0.9 71.9 4.9 1.6 1.5 55.8 4.8 1.6 1.9 65.9 6.5 2.2 3.2 N/A 15.2 N/A 20.1 0.1 35.8 .2 22.0 14.8 20.0 34.1 40.8 85.2 80.0 65.9 59.2 $29,706 $30,797 $40,856 $42,260 $46,601 $47,300 $48,000 14.8% 4.6% 6.7% 3.0% 3.1% 4.1% 4.8% N/A N/A N/A N/A $5,700,825 N/A (3.0)% 4.9% $7,573,211 N/A 3.7% 2.7% $16,092,308 $144.772 (2.1)% 9.1% $9,974,713 $98.193 2.4% 6.4% $10,818,634 $106.487 2.5% 5.9% $12,783,575 $127.280 2.6% 5.9% N/A $0.42 $1.16 $0.28 $0.50 $0.42 $0.45 N/A $0.46 $1.33 $2.60 $2.30 $2.30 $2.50 Demographic Profile Population1 Percent of Population by Age Under 5 5-19 20-44 45-64 65+ Percent of Population by Race 1 Caucasian Black/African American American Indian/Alaska Native Asian Native Hawaiian/ Other Pacific Islander2 Other Hispanic/Latino (of Any Race)3 Not Hispanic or Latino (of Any Race)3 City Economic Profile Median Household Income4 Personal Income Growth (Metro Phoenix)5 Secondary Net Assessed Valuation (‘000s)6 Full Cash Value (Millions)7 Employment Growth Rate8 Unemployment Rate9 Value of Residential10 Construction (Billions) Value of Commercial10 Construction (Billions) 34 Table of Contents 1980-81 1990-91 2000-01 2010-11 Actual 2013-14 Estimated 2014-15 Projected 2015-16 Total Budget (‘000s) $392,780 Total GF Budget (‘000s)11 $221,106 Total Employees 9,435 Total Employees per 1,000 population12 11.9 Non-Enterprise Employees per 1,000 population N/A Enterprise Employees per 1,000 population13 N/A Property Tax Rate 1.75 G.O. Bond Rating (Moody’s/Standard and Poor’s) Aa/AA Number of PLT Licenses14 37,943 City Retail Sales Tax Rate15 1% $1,026,545 $591,021 11,388 11.4 $1,946,013 $953,324 14,352.0 10.6 $3,020,690 $954,795 15,002.8 10.3 $3,009,043 $1,042,102 14,664.1 9.7 $3,134,889 $1,074,247 14,397.6 9.5 $3,702,298 $1,156,540 14,421.2 9.4 N/A 8.6 8.0 7.6 7.4 7.4 N/A 1.79 2.0 1.82 2.3 1.82 2.1 1.82 2.1 1.82 2.0 1.82 Aa/AA+ 43,756 1.2% Aa1/AA+ 51,000 1.8% Aa1/AAA 56,460 2.0% Aa1/AA+ 55,459 2.0% Aa1/AA+ 56,000 2.0% Aa1/AA+ 56,000 2.0% 427.1 483.5 519.1 519.4 519.4 519.4 110,961 895,117 2,047 97,666 862,769 2,810 70,108 620,969 3,281 67,623 609,446 3,266 66,500 619,000 3,268 65,200 619,000 3,268 45 26,281 75,112 1,042 45 28,369 101,396 1,315 57 19,335 136,163 1,661 58 20,611 152,454 1,668 58 21,000 156,000 1,667 58 21,000 156,000 1,667 176,909 261,184 131,600 164,904 163,000 165,000 3,800 250 250 4,299 220 472 4,825 127 615 4,855 123 685 4,865 150 700 4,876 150 755 761 50,825 28,414 906 70,750 36,500 1,092 89,826 22,742 1,105 90,635 23,883 1,110 91,100 25,200 1,116 93,000 26,500 22,175,000 35,900,000 40,500,000 41,100,000 41,400,000 42,200,000 281,392 513,643 327,953 1,051,935 392,825 1,002,346 399,456 805,453 401,600 820,000 404,000 840,000 City Financial Profile Infrastructure Profile Area (Square Miles) 329.1 Police Major Crimes 86,287 Dispatched Calls for Service 452,350 Authorized Sworn Police Officers 1,694 Fire Fire Stations 35 Fires and All Other Calls 25,162 Emergency Medical Calls 46,122 Authorized Sworn Firefighters 838 Building Inspections Total Number of Inspections16 196,356 Streets Total Miles 3,084 Miles Resurfaced and Sealed 216 Total Miles of Bikeway17 N/A Traffic Control and Lighting Signalized Intersections 555 Street Lights 39,097 Traffic Accidents18 28,129 Aviation Passengers Arriving and Departing 6,500,000 Solid Waste Collection Residences Served 281,900 Tons Disposed at City Landfills19 379,000 35 Table of Contents 1980-81 Municipal Parks Number of Municipal Parks20 137 Developed Park Acres 1,303 Number of municipally operated golf courses 5 Libraries Material Circulation21 3,691,745 Total Material Stock 1,182,606 Number of library branches 9 Equipment Management Number of Equipment Units in Fleet22 4,497 Water Connections 282,048 Production (billions of gallons)23 88.5 Wastewater Connections 250,199 Miles of Line 3,040 2000-01 2010-11 Actual 2013-14 Estimated 2014-15 Projected 2015-16 181 2,206 199 3,332 225 5,071 226 5,679 226 5,679 226 5,679 5 7 6 6 6 5 5,962,411 1,732,410 11 9,151,000 2,016,000 13 13,839,543 1,643,977 16 10,428,000 1,647,868 17 10,400,000 1,650,000 17 10,400,000 1,650,000 17 4,776 6,080 7,612 7,374 7,325 7,252 321,996 84.7 350,967 109.4 397,390 98.6 416,623 97.6 421,000 99.1 426,000 101.1 311,980 3,661 327,051 4,174 389,978 4,980 402,624 4,829 407,000 4,841 412,000 4,853 Population by age and race is only available in census years. Also, racial categories were modified by the Census Bureau in the 2000 Census. The Census 2010 number was increased from the original total due to the city appealing the result through the official Count Question Resolution (CQR). There was an area in far west Phoenix which was not attributed to the city, when in fact it was inside the city’s boundaries. Thus, the U.S. Census Bureau officially changed the city’s 2010 census population count which in turn affected the preceding years’ population estimates. The preceding years also include additional population estimate adjustments approved by Maricopa Association of Governments. 2 Prior to the 2000 Census, Native Hawaiian/Other Pacific Islander data was combined under the same category. In pre-2000 Census counts this race category was included in the Asian category. 3 Hispanic/Latino of any race is included in the Census’ “Other” race category for fiscal year 1980-81, fiscal year 1990-91, fiscal year 2000-01 and fiscal year 2010-11. 4 Median Household Income is based on U.S. Census Bureau data for city of Phoenix geographic area. For the estimate and projection years, the Calendar Year 2014 greater Phoenix Consumer Price Index (CPI) (+1.5%) was applied to the U.S. Census Bureau’s (FactFinder) 2013 American Community Survey 1-year Estimates for city of Phoenix for Median Household income. This reflects a change from the method used in previous budget documents, which calculated median household income using personal income growth rates from the U.S. Bureau of Economic Analysis. 5 Personal income growth percentage is from University of Arizona’s “Economic Outlook” quarterly publication (University of Arizona Economic and Business Research Center). 6 Following the 2012 voter approval of the Arizona Property Tax Assessed Valuation Amendment (Proposition 117), and A.Z. Const. art. IX, § 18(3), Secondary Net Assessed Valuation is no longer used for purposes of calculating Secondary Property Taxes. The City continues to report Secondary Net Assessed Valuation here for continuity with previous reports. 7 Full Cash Value represents market value of properties as determined by the Maricopa County Assessor's Office, prior to the application of Limited Property Value formulas, assessment ratios and exemptions. Prior to 2015-16, trends in Full Cash Value correlated to trends in the City's Secondary Property Tax Base; however, this correlation no longer applies. Reported values lag market conditions by approximately 18 to 24 months. 8 Employment growth rate figures (total non-farm employment) are calendar year and not fiscal year. Calendar 2013 is shown under fiscal year 2013-14, and calendar 2014 is shown under fiscal year 2014-15, and projected calendar 2015 is shown under fiscal year 2015-16. Estimates are for the Phoenix metro area and are obtained from the Arizona Workforce Informer-Arizona Department of Economic Security. 9 Unemployment rate is reported on monthly by the Arizona Department of Commerce Research Administration’s website: workforce.az.gov and converted to fiscal year by the city of Phoenix Budget and Research Department. Seasonally adjusted unemployment data from 2001-14 is currently unavailable for the PhoenixGlendale-Mesa MSA due to data revisions. Revisions for the MSA, counties and cities are currently in process, however no released due has been announced. 10 Beginning with fiscal year 2006-07, multi-family projects are included in the commercial valuation total. Prior to fiscal year 2006-07, multi-family projects were included in the residential valuation total. These measures represent the annual estimated value of projects permitted by the city of Phoenix (new construction). 11 As of fiscal year 1998-99, Arizona Highway User Revenue funds are no longer included in the General Fund total. 12 A correction was made to the calculation of city employees per 1,000 population for fiscal year 1980-81 and fiscal year 1990-91. Previous budget books did not adjust for Census data that was published at least a year after the statistic was recorded in budget documents. 13 Enterprise departments include Water, Wastewater, Aviation, Phoenix Convention Center and Solid Waste Management. 14 The city of Phoenix will no longer have administrative and collection duties over the management of PLT accounts in fiscal year 2014-15. Although the Arizona Department of Revenue will assume these duties 2014, it is expected that the State will remit the same approximate amount of annual license fee revenues for the same approximate number of PLT accounts that have privilege tax liability within the city of Phoenix limits. 15 Voters approved a 0.1 percent increase in most city sales tax categories effective Dec. 1, 1993, for increased fire and police protection services. Voters approved a 0.1 percent increase in most city sales tax categories effective Nov. 1, 1999, for 10 years and reapproved it on May 30, 2008, for 30 years to provide funds for parks enhancements and improvements, and to acquire land for a Sonoran preserve. Voters approved a 0.4 percent increase in most city sales tax categories effective June 1, 2000, for 20 years to provide funding for public transit improvements and light rail. Voters approved a 0.2 percent increase in most city sales tax categories to provide funds for additional police officers and firefighters effective Dec. 1, 2007. 16 Includes building, electrical, mechanical, plumbing and general inspections. 17 The bikeway program was approved by the City Council in 1987. Figures include on-street bike lanes, bike routes and paved and unpaved paths. 18 Due to the implementation of a new Arizona Department of Transportation (ADOT) collision system in 2009 and associated delays in data entry and processing, full collision data for Phoenix for the years 2009-14 is not yet available. The figures presented are projections based on historical trending. Traffic accident data comes from the city of Phoenix Police Department’s TADS database and estimates are based on an average over the previous three years. 19 Residential tonnage has reduced from 2010-11 actuals due to department’s efforts to increase recycling and tonnage sent to private contractors. The projected increase in 2015-16 reflects an upward trend in the number of residents served and an increase in consumption. 20 This number includes all parks and areas maintained by the Parks and Recreation Department. For example, retention basins, canal projects, developed and undeveloped parks. 21 Measure has changed from Book Circulation to cover all media including: audio books, ebooks, CDs, DVDs, databases, soft and hardcover books. The projected decrease reflects a downward trend that libraries across the country are also experiencing. 22 Reduction in vehicles is due to programmed reductions and turn in of underutilized vehicles. 23 Includes water produced for city of Phoenix only. 1 36 1990-91 Table of Contents 2015-16 ResourceHeadline and Expenditure Summary This section provides a broad overview of the resources and expenditures included in the 2015-16 budget. Information is presented for General, Special Revenue and Enterprise funds. General funds, which receive special attention by the community, are highlighted throughout this section. General funds are of particular importance to our residents as they provide for most basic services, such as police, fire, parks and streets. Enterprise funds are supported by fees charged for the services provided with the exception of the Convention Center which has earmarked sales taxes as its primary funding source. Special Revenue funds are restricted to statutory and/or voterapproved uses. The 2015-16 budget, financed by operating funds, totals $3,702,298,000. As shown in the accompanying pie chart, the General Fund portion of $1,156,540,000 is approximately 31 percent of the total. The Enterprise funds, which include Aviation, Water, Wastewater, Solid Waste and Convention Center, make up another 36 percent of the total. Special Revenue funds such as Arizona Highway User Revenues, grant funds such as Community Development Block Grants, Human Services grants and Housing grants represent the remaining 33 percent of the total budget. In addition to presenting the budget by funding source, the budget also is described in terms of the major types of activities or expenditures funded. Included in the operating budget are operating and maintenance expenses that provide for ongoing costs of delivering city services; capital expenditures for pay-as-you-go projects for major additions, improvements or renovations to city facilities; and debt service payments to retire outstanding debt. The following pie chart shows the distribution of the total operating budget into these three types of expenditures. Bonds and other capital funds used for capital improvement projects are included in a separate capital improvement program. The 2015-16 General Fund budget includes ongoing operating and maintenance and pay-as-you-go capital expenses. No debt service is paid from the General Fund. Instead, debt service associated with General-funded activities is paid for with earmarked property taxes or with the City Improvement Fund. Due to the restrictions on using these funds both are appropriately included in the Special Revenue funds portion of the budget. Finally, budgeted expenditures are provided on a departmental basis. Detailed explanations of each department’s budget are provided in the Department Program Summary section of this document. The following bar chart presents the General Fund budget on a department-bydepartment basis. Citywide operating and maintenance expenditures are expected to increase primarily due to increased contractual costs and contingency funds. Contractual cost increases are primarily attributable to state imposed payments to the Arizona Department of Revenue and expanding light rail operations. The contingency in the Transit 2000 fund includes an additional $45 million in 2015-16 due to a potential increase in the transportation tax that will be presented to voters on August 25, 2015. These citywide expenditure increases will be partially offset by reduced personal services costs and commodities purchases. While costs for pension and healthcare are increasing, those costs will be more than offset by other reductions from employee concessions as well as savings from elimination of civilian positions. Commodities are expected to decrease due to reductions in the cost of fuel and one-time project expenses associated with the replacement of the citywide email system budgeted in 2014-15, which will not occur in 2015-16. Pay-as-you-go capital is expected to increase due primarily to an increase in pay-as-you-go funding in the Aviation Capital Improvement Program, which is largely attributable to the Terminal 3 Modernization Project. Additional new projects in other program areas include: Information Technology Plan projects transitioning from the Operating Budget to the Capital Improvement Program, Sonoran Preserve land acquisition; and Compressed Natural Gas fleet servicing upgrades to the Union Hills Service Center. Increases are partially offset by decreases to pay-as-you-go funding in 2015-16 Budget Compared to 2014-15 Adopted Budget (In Millions of Dollars) 2015-16 Operating and Maintenance Expenditures 2013-14 Actual Expenditures 2014-15 Adopted Budget Budget Amount Change Percent Change $2,255.3 $2,518.0 $2,571.4 $ 53.4 2.1% Capital Expenditures 339.4 574.4 605.0 30.6 5.3% Debt Service 414.3 439.7 525.9 86.2 19.6% $3,009.0 $3,532.1 $3,702.3 $170.2 4.8% Total 37 Table of Contents programs such as Public Transit, Solid Waste, Street Transportation and Wastewater as projects including the South Transit Facility Upgrade Project approach completion. 2015-16 GENERAL FUND BUDGET OVERVIEW The operating and maintenance expenditures for 2015-16 are expected to increase by 0.3 percent overall compared to the 2014-15 adopted budget. This increase is primarily the result of state imposed payments to the Arizona Department of Revenue. The increase is also attributable to additional funding for necessary police training and a planned increase in contingency funds. Projected increases in pension and healthcare costs in the 2015-16 are more than offset by other savings and reductions in personnel related costs including additional employee compensation concessions. Pay-as-you-go capital expenditure increases from 2014-15 to 2015-16 primarily correspond to the transition of Information Technology Plan projects from the Operating Budget to the Capital Improvement Program. Information Technology projects for 2015-16 funded by the General Fund include cybersecurity access management enhancements, Customer Relationship Management system replacement, business intelligence upgrades and implementation of business continuity enhancements. General Fund expenditures are additionally expected to increase for the Phoenix Convention Center to support Heritage Garage upgrades including interior painting, switch gear replacement, fire sprinkler system upgrades and landscaping, partially offset by completion of garage caulking replacement. RESOURCES Resources include beginning fund balances, fund transfers, revenues and recoveries. In the Enterprise funds, fund balances provide a financial cushion against unanticipated changes. The contingency allocation serves this same purpose for the General Fund. While minor changes in fund balances occur from year to year, maintaining proper fund balances over the long term and providing for a contingency fund in the General Fund are important components of sound financial management and a significant factor in bond ratings. 2015-16 Estimated Beginning Fund Balances As explained in a later section, a General Fund ending balance may not be budgeted. However, a contingency fund is used to provide a means to address any emergencies and unanticipated one-time costs that may occur after the budget is adopted. Each year, all or almost all of the contingency allocation remains unused and, therefore, falls to the ending fund balance along with any changes in estimated revenues and expenditures. The estimated 2015-16 beginning fund balances totaling $1,150.2 million include $75.4 million in General funds, $450.6 million in Special Revenue funds and $624.2 million in Enterprise funds. The estimated beginning fund balance for Special Revenue and Enterprise funds include: Transit 2000 - $260.9 million; Aviation - $341.1 million; Wastewater - $104.0 million; Water - $110.6 million; Convention Center - $29.8 million; Solid Waste - $38.7 million; Parks and Preserves - $37.0 million; Sports Facilities - $15.2 million; Grant funds - $7.6 million; Arizona Highway User Revenue - $36.0 million; Development Services - $27.7 million; Community Reinvestment - $12.8 million; Regional Transit - $4.2 million and $49.2 million in various other restricted funds. other restricted funds. 2014-15 General Fund Estimated Ending Balance As shown in the following table, the 201415 ending General Fund balance is estimated to be $75.4 million. The estimated balance results from a $18.3 million higher beginning balance, a $74.6 million decrease in operating expenditures including unspent contingency, a small increase in pay-as-you-go capital expenditures, a $19.6 million decrease in operating revenues, a small increase of $1.1 million in transfers, and a $1.0 million increase in recoveries. The variance in estimated 2014-15 General Fund expenditures from the 2014-15 budget is largely due to unused contingency funds. Costs for personal services are also expected to be lower due to the elimination of vacant civilian positions. General Fund pay-as-you-go capital expenditures are anticipated to exceed the original appropriation due to Burton Barr Library Elevator Renovation project cost increases. The increase was largely offset by reduced costs for the Heritage Garage Caulking Replacement project. The decrease in 2014-15 projected General Fund revenues is largely due to reductions in estimated city and state sales tax collections. revenues. 2015-16 General Fund Budget Compared to 2014-15 Adopted Budget (In Millions of Dollars) 2015-16 Operating and Maintenance Expenditures Capital Expenditures Total 38 2013-14 Actual Expenditures 2014-15 Adopted Budget Proposed Budget Amount Change $1,040.2 $1,146.0 $1,149.7 $3.7 0.3% 1.9 2.8 6.8 4.0 142.9% $1,042.1 $1,148.8 $1,156.5 $7.7 0.7% Percent Change Table of Contents ALL SOURCES OF FUNDS ALL SOURCES OF FUNDS Total Resources – $3.70 Billion Total Expenditures – $3.70 Billion Enterprise Funds 36% Operation & Maintenance 70% Debt Service 14% General Funds 31% Special Revenue Funds 33% Capital 16% GENERAL FUNDS GENERAL FUNDS Total Resources – $1.16 Billion Total Expenditures – $1.16 Billion Public Safety and Criminal Justice2 68% Property Tax 12% Local Taxes & Related Fees 38% Other Resources 8% User Fees/ Other Revenue 10% Community Development and Enrichment1 15% General Government 8% Environmental Services and Other 6% State-Shared Revenues 32% Transportation 3% Includes Parks, Library, Human Services, Neighborhood Services, Planning and Economic Development When contingency is excluded, Public Safety and Criminal Justice account for approximately 71% of budgeted General Fund expenditures. 1 2 Expenditures by Department 2015-16 General Fund Budget Millions of Dollars $500 450 400 350 300 250 200 150 100 50 Mayor Parking Garages City Manager **Communications Office City Auditor Equal Opportunity City Council Budget & Research Economic Development Planning and Development Law City Clerk Functions* Human Resources Public Works Neighborhood Services Public Transit Streets Human Services Finance Prosecutor & Defender Municipal Court Library Information Technology Fire Parks and Recreation Police 0 *Functions include several small offices such as the Office of Arts and Culture and Environmental Programs. **Formerly known as the Public Information Office. 39 Table of Contents 40 2015-16 Estimated Revenues 2015-16 Transfers to the General Fund Revenues from taxes, fees, interest, grants and other sources provide resources to fund programs and services delivered by the city. Total revenues for 2015-16 are estimated at $3,161,889,000. This is $50,923,000, or 1.6 percent more than the 2014-15 estimate of $3,110,966,000. General Fund revenues are estimated at $1,060,521,000 which is $10,392,000 or 1.0 percent more than the 2014-15 estimates. The increase is due to anticipated increases in city and state sales taxes, state shared vehicle license tax revenues and primary property tax revenues. The following table provides a comparison of the 2015-16 estimated revenues to 2014-15 estimates and 2013-14 actual collections. Detailed explanations by category are provided in the 2015-16 Revenue Estimates section of this document. State and local economic growth increased in 2013-14 as the economy slowly continued to recover from the recession. However, growth was hindered by a lack of strong growth in the construction and real estate markets, which historically has fueled Arizona’s economy. Other economic factors which prevented a robust recovery include slow job creation and low levels of net migration. Many of the jobs lost in Phoenix during the great recession still have not been replaced, and population is growing but at a slower than historical pace. Economists do predict the state and local economy to continue to improve, however the same factors will continue to depress strong growth rates into 2015-16. Local and state sales tax collections are expected to grow modestly in 2015-16, and state shared vehicle license tax collections are expected to increase by 2.5 percent from 2014-15. The 2015-16 estimate for Special Revenue funds includes a $5.8 million increase in Transit 2000 funds, a $1.4 million increase in Development Services funds, and a $26.9 million increase in various grant funds including public transit grants, community development grants and other grant revenues. Special Revenue funds also include a $7.8 million decrease for regional transit revenues and a $2.6 million decrease for court award revenues. Transfers are used to allocate resources between funds for purposes of matching costs with benefits received through a central service cost allocation or to assess in lieu property taxes. Central service cost allocation and other transfers to the General Fund for 2015-16 total $61.2 million. This amount reflects $55.4 million from Enterprise and other funds to recoup central service costs and/or payments for in lieu property taxes from the Aviation, Water and Wastewater, Solid Waste, Convention Center and Development Services funds. Central service provides a repayment to the General Fund for services provided by departments such as Human Resources, Information Technology, Finance, Law and other administrative support areas that are General funded. This transfer is calculated by the Finance Department in accordance with generally accepted full-cost accounting principles and is in accordance with long-established City Councilapproved policy. Approximately $5.8 million in miscellaneous transfers from other funds also is included. As a result, total transfers to the General Fund exclusive of excise tax-related items are $61.2 million. A transfer of $749.1 million from the Excise Tax Fund represents the General Fund share of local and state-shared sales taxes and fees and state-shared income taxes. However, this amount is reflected in revenues, rather than a transfer, throughout this section. 2015-16 ESTIMATED ENDING BALANCES Arizona budget law requires a balanced General Fund budget. No General Fund balances may be accumulated in reserve for subsequent fiscal years. Arizona law does, however, provide for a contingency each year. For 2015-16, $46.4 million is included for the General Fund contingency and is discussed in more detail in the Contingency section of this document. As a result, budgeted General Fund resources equal expenditures. However, any unused contingency amounts at year-end fall to a General Fund ending balance. Generally, at least 95 percent of the General Fund contingency remains unused each year and in the last five years, the contingency fund has remained 100 percent unused. Year-end balances are planned in the Enterprise funds and other self-supporting funds primarily to provide for adequate funds at the beginning of the following fiscal year. Such funds are used to stabilize rate increases associated with fluctuations in service demand, insure bondholders of future debt service payments and to accumulate funds for annual pay-as-you-go capital improvements. In addition, Enterprise Fund balances are intentionally permitted to grow over time in order to fund large capital projects. The estimated 2015-16 ending balance of $674.5 million includes: Transit 2000 $169.9 million; Aviation - $273.8 million; Wastewater - $63.4 million; Water - $27.3 million; Convention Center - $21.8 million; Development Services - $22.3 million; Solid Waste - $10.0 million; Arizona Highway User Revenue - $34.1 million and a combined $51.9 million in various other Special Revenue funds. Beginning and ending fund balances are provided in more detail in Schedule 1 located in the Summary Schedules section. In 2015-16, the Enterprise funds ending balances in the aggregate are programmed to decline from $624.2 million at the beginning of 2015-16 to $396.3 million at year end. The Aviation balance is declining due to increasing operating expenditures to operate the Sky Train and one-time capital technology enhancements as well as increases in pay-as-you-go capital expenditures for the Terminal 3 Modernization project. Solid Waste funds are decreasing due to an increase in operating expenditures for the 27th Avenue Composting Facility and replacement of several side loader garbage vehicles. Water funds are decreasing primarily due to increased pay-as-you-go capital expenditures for demolition and restoration of the Verde Water Treatment Plant area, the rehabilitation project at the Val Vista Water Treatment Plant, additional operating expenses for chemicals, raw water and vehicle replacements. Wastewater funds are decreasing due to increases in various pay-as-you-go capital projects such as the Small Diameter Sewer Rehabilitation project, various odor control studies and facility improvements. The Convention Center fund balance is decreasing due to increased pay-as-you-go capital projects such as replacement of the Table of Contents climate control system at the Orpheum Theatre and carpet replacement for several event spaces. Special Revenue Fund balances in the aggregate are expected to decrease from $450.6 million to $278.3 million. The Transit 2000 balance is decreasing due to increased operating costs of transit services. The Sports Facility Fund balance is decreasing due to transfers to make debt service payments on Subordinate Hotel Revenue Bonds. The City pledged Sports Facilities Taxes to the payment of debt service on these bonds in the event hotel revenues were not sufficient to make the payments. The Parks and Preserves fund balance is decreasing primarily due to payas-you-go capital expenditures for the purchase and development of land for the Sonoran Preserve and needed improvements at various City parks. Development Services Funds are decreasing due to increased personal services costs. Other Special Revenue Fund balances are beginning to increase, such as the Public Safety Neighborhood Protection and Enhancement Funds. These funds are increasing (although the Police Enhancement Fund is still negative) due to anticipated increases in total resources, including higher beginning fund balances. Negative Fund Balances Public Safety personnel. In November 2010, the Mayor and City Council adopted a Public Safety Specialty Funds Balancing plan to balance these funds as soon as possible using an attrition based approach to prevent layoffs to sworn police and fire personnel. This plan was modified in February 2015 to account for changes in attrition and revised revenue forecasts. The negative fund balance in the Regional Transit Fund will be resolved in 2016-17 upon receipt of a $60 million reimbursement from Valley Metro Rail for the North West Light Rail Extension project. The Public Safety Police Enhancement and 2007 Public Safety Expansion funds, have been severely impacted by declines in sales tax revenues and increased costs of General Fund Balance Analysis (In Thousands of Dollars) 2013-14 2014-15 Actuals Budget Estimate Over (Under) Budget Estimate Amount Percent Resources Beginning Balances $ 62,741 $ 60,238 $ 78,579 $ 18,341 30.4% Revenue 1,026,197 1,069,776 1,050,129 (19,647) (1.8)% Recoveries 2,981 1,000 2,000 1,000 100% Transfers 28,762 17,826 18,960 1,134 6.4% $1,120,681 $1,148,840 $1,149,668 $ 828 0.07% 1,040,191 1,145,995 1,071,388 (74,607) (6.5)% 1,911 2,845 2,859 14 Total Expenditures $ 1,042,102 $1,148,840 $1,074,247 $ (74,593) (6.5)% Ending Fund Balance $ $ $ $ 75,421 100.0+% Total Resources Expenditures Operating Expenditures Capital 78,579 --- 75,421 0.5% 2015-16 Estimated Revenues Compared to 2014-15 Estimates (In Thousands of Dollars) 2015-16 Fund Types General Special Revenue Funds Enterprise Funds Total 2013-14 Actuals $1,026,197 2014-15 Estimate $1,050,129 Estimate $1,060,521 Amount Change $10,392 Percent Change 1.0% 858,274 905,541 927,021 21,480 2.4% 1,147,781 1,155,296 1,174,347 19,051 1.6% $3,032,252 $3,110,966 $3,161,889 $50,923 1.6% 41 Table of Contents City of Phoenix Financial Organizational Chart 2015-16 Operating Budget $3,702,298,000 Operating Expenditures $2,571,374,000 Special Revenue Funds $716,420,000 General Funds $1,149,761,000 42 Enterprise Funds $705,193,000 General $1,019,784,000 Neighborhood Protection $27,223,000 2007 Public Safety Expansion $57,789,000 Public Safety Enhancement $21,286,000 Aviation $251,527,000 Parks & Recreation $90,558,000 Transit 2000 $208,164,000 Parks & Preserves $4,098,000 Court Awards $5,638,000 Water $185,759,000 Library $35,281,000 Capital Construction $199,000 Development Services $45,520,000 Sports Facilities $2,142,000 Wastewater $95,385,000 Cable $4,138,000 Arizona Highway User Revenue $49,653,000 Regional Transit $28,510,000 Community Reinvestment $487,000 Solid Waste $125,421,000 Impact Fee Program Administration $237,000 Other Restricted $33,855,000 Grants $220,789,000 Convention Center $47,101,000 Regional Wireless Cooperative $5,004,000 Golf $5,826,000 Table of Contents City of Phoenix Financial Organizational Chart Pay As You Go Capital $604,996,000 Debt Service $525,928,000 Sports Facilities $22,542,000 Secondary Property Tax $126,024,000 General Fund $6,579,000 Parks and Preserves $52,883,000 City Improvement $92,234,000 Aviation $62,778,000 Library $200,000 Capital Construction $13,901,000 Wastewater $76,006,000 Water $113,286,000 Arizona Highway User Revenue $57,136,000 Regional Transit $26,498,000 Convention Center $18,590,000 Solid Waste $14,468,000 Community Reinvestment $4,586,000 Other Restricted $14,590,000 Grants $68,778,000 Development Services $448,000 Court Awards $1,692,000 Transit 2000 $7,398,000 Water $175,298,000 Wastewater $73,534,000 Aviation $68,744,000 Convention Center $4,169,000 Solid Waste $28,562,000 43 Table of Contents 44 Table of Contents Services to Headline the Community P hoenix is the core of Maricopa County and the state’s population and economic center. With its attractive climate, recreational opportunities, and affordable costs of living and doing business, the city has experienced sustained growth. The city’s area, just under 520 square miles, increases periodically with annexations. The local economy continues to make slow progress out of the severe recession and city revenue collections reflect modest growth from the downturn in the economy a few years ago. Population in Phoenix has consistently outpaced the U.S. growth over the last 18 years, and according to the 2010 census, is more than 1.4 million making Phoenix the nation’s sixth-largest city. The city’s employment base is the foundation of a deep and diverse metropolitan area economy. The primary employment sectors in the Phoenix area consist of education and health services, professional and business services, retail trade, leisure and hospitality services, financial activities, construction and manufacturing, and government. While the economists expect further increases in the number of jobs, the improvement in the economy is still expected to be slower than historic recoveries. The 2015-16 budget provides a balanced General Fund with several key service additions reflecting the feedback received from the community, the mayor and City Council regarding the importance of maintaining current city services and a strong City organization. These additions reflect enhancements to several critical areas such as Public Safety, Innovation, Training, Recreation, Planning, Sustainability, and Transportation. The budget reflects Phoenix’s commitment to keeping Public Safety its highest priority with the hiring of 110 new police officers and more than 90 new firefighters planned in 2015-16. Other significant General Fund changes that help improve critical community services include: added funding for police training of $2.2 million for a new 40-hour police officer training module, including community and cultural consciousness, situational/tactical analysis, mental health response, and other important topics that help improve public trust and enhance safety; investment in new innovation projects like a centralized City Information Center (311 PHX) with the potential to bring long-term savings along with enhanced services; and additional recreation programming at a new multipurpose facility built by the Maricopa County Housing Authority for the CoffeltLamoreaux Community Recreation Program. Important Non-General Fund changes include the following service additions: adding a team at Sky Harbor to review airspace evaluations and potential impacts, responding to noise complaints and providing community outreach; enhancing the customer service experience in Planning and Development through additional oversight, technology improvements, training and enhanced opportunities for customer feedback; maintaining three new preserve trailheads at Apache Wash, Desert Vista, and Desert Hills; operating expanded light rail service to 19th Avenue and Dunlap; and operating a new composting facility at 27th Avenue Transfer Station. The chart that follows indicates how major services provided to Phoenix residents have been adjusted in response to local economic and financial conditions. Because benchmarking is an important measure of the efficiency and effectiveness of services provided, we have also included multi-city comparisons of performance in several areas. Much of the data for these comparisons is taken from the 2013 International City/County Management Association's Center for Performance Measurement report. 45 Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 The 2014-15 budget included employee concessions, organizational efficiencies and the elimination of unfunded vacant positions. These organizational efficiencies included the elimination of 24.9 vacant civilian support positions, a change to the department’s vehicle takehome policy and reduced vehicle maintenance costs. In addition, the budget reflected the elimination of 35 unfunded General Fund, and 35 Proposition 1, vacant civilian positions. The 2015-16 budget includes funds to implement a new 40 hour training module for all law enforcement personnel. This course is designed to enhance knowledge regarding mental health, cultural awareness, and situational and tactical analysis. PUBLIC SAFETY POLICE Personnel Resources: In 2004-05, the Police Department had 2,952 sworn officers and 1,002 civilian employees. The 2014-15 budget also included three new Police Assistant positions and vehicles for enhanced parking meter enforcement. These costs were anticipated to be offset by increased parking meter revenue and fines. Additionally, the 2014-15 budget reflected the impact of a process improvement between Police, Municipal Court and Law. This improvement allowed Police to reduce overtime by $670,000 and a portion of the savings was used to add two new positions in Law to assist victims of domestic violence. Due to the fiscal year 2014-15 employee concessions, limited police officer hiring began in the Spring 2015. 46 The 2015-16 budget also reflects the full year savings of 34 vacant civilian positions that were eliminated in December 2014. With the anticipated balancing of the Police Public Safety Specialty Funds at the end of the budget year 2015-16, continued limited police officer hiring will occur throughout the year. In the 2015-16 budget, it is anticipated that the department will have 3,268 authorized sworn positions or 2.1 for every 1,000 residents, and 1,061.5 civilian employees. Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 With slower population growth and a continued decrease in overall crime rates, budgeted response times for Priority 1 emergency calls have been consistently maintained and currently 5 minutes and 54 seconds. During this same time period, the department has attempted to maintain the percentage of 911 calls answered within 10 seconds in the high 90th percentile; however hiring and staffing challenges have reduced the percentage to 91% for the budget year 201415. The 2015-16 budget provides for an estimated 5 minute and 54 seconds average response time for Priority 1 calls. PUBLIC SAFETY POLICE Response Time Average: Response time for 2004-05 Priority 1 emergency calls was an average of five minutes and 30 seconds. Based on 2013 ICMA data, city of Phoenix actual response times compare favorably to those of the benchmark cites as noted below: Other Cities Average Response Times to Top Priority Calls: PHOENIX – 5 min 42 sec Oklahoma City – 6 min 14 sec San Antonio – 7 min 10 sec Austin – 7 min 29 sec Dallas – 7 min 41 sec Portland – 7 min 48 sec 47 Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 PUBLIC SAFETY FIRE Response Time Average: In 2004-05, the Fire Department maintained an average response time of 4 minutes and 59 seconds for all fire and medical emergency calls. Since 2004-05, response times have decreased four percent to 4 minutes 48 seconds for all fire and medical emergency calls. This 11 second decrease is at least partly attributed to staffing and deployment changes for paramedic engine companies and ambulances. The overall incident activity level has increased 26 percent between 2004-05 and 2014-15. The 2010-11 budget included a $9.0 million reduction. The budget cuts resulted in the elimination of 21.3 General-Funded civilian positions, including the fire marshal, whose duties were reassigned. The budget reductions also included the elimination of two deputy chiefs, six battalion chiefs, seven fire captains and 13 firefighters for a total of 28 sworn positions. The department reorganized operations in response to staff reductions and significant cuts were made in overtime. In addition, program reductions were made in contractual services, commodities and capital outlay. The department eliminated three positions and reclassed two positions down in pay class as part of the City Manager’s Reorganization. In addition, four positions from the New Construction section were eliminated and one position from this section, as well as, the Site Planning section (three positions) was moved to the Planning and Development Services Department. The fiscal year 2011-12 budget included a $678,000 reduction and reflects the elimination of 4.7 General Funded civilian positions as well as the reduction of sworn and civilian overtime. In addition, program reductions were in contractual services, commodities and capital outlay. The 2012-13 budget included additions for staff coverage in the Alarm Room (four civilian positions) and Operating costs for the new Dispatch and Emergency Operations Center. Reductions reflected in the 2013-14 budget included the elimination of 8.3 General Funded civilian positions as well as a reduction of the Banner contract for the Health Center. In addition, seven positions from the New Construction section were moved to the Planning and Development Services Department. The 2013-14 budget included savings in contractual and commodity expenditures and moving the Ambulance Billing office from leased space to cityowned space. The 2014-15 budget includes normal inflationary increases in personnel costs and other operational necessities such as fuel, vehicle maintenance and facility maintenance and administrative efficiencies that include a reduction in the inventory of MCTs, reduced administrative support for the Department and employee concessions. 48 The 2015-16 budget recommends retaining current emergency response staffing levels to preserve less than five minute average response time for all fire and medical emergency calls. Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 PUBLIC SAFETY FIRE Emergency Transportation: In 2004-05, the city of Phoenix had a total of 22 full-time and 11 parttime ambulances in service. The 2006-07 budget included funding one additional ambulance. The 2015-16 budget includes no changes in service for Emergency Transportation. The 2008-09 budget added two part-time ambulances funded by Proposition 1. The 2009-10 budget included the elimination of two part-time ambulances. The 2010-11 budget included the elimination of two full-time ambulances and the reduction of part-time ambulance operational times. In-service hours for part-time ambulances were reduced from 12 hours to 10.8 hours per day. These changes decreased the Emergency Transportation System to 21 full-time and 11 part-time ambulances. The 2012-13 budget included adding staff for an additional One and One Rescue (seven sworn positions) to meet state -mandated response times. The 2013-14 budget included adding staff for an additional One and One Rescue (seven sworn positions) to meet state -mandated response times. The 2014-15 budget includes no changes in service for Emergency Transportation. 49 Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 Annual 2014-15 bus miles are estimated at 16,458,353 and Dial-a-Ride service hours are estimated at 322,760. Annual 2015-16 bus miles are estimated at 16,500,000 and Dial-a-Ride service hours are estimated at 322,760. TRANSPORTATION PUBLIC TRANSIT Service Miles/Hours: In 2004-05, 17,240,000 annual bus service miles were provided on weekdays and weekends in the city of Phoenix. City Council approved bus service modifications implemented on October 27, 2014. Public Transit implemented several new bus routes and increased route frequency on some existing routes in order to meet increased ridership demand. The costs of these improvements were offset by eliminating inefficient or duplicative bus service in some areas. The service changes have a total net annual savings of $90,500. The City of Phoenix Aviation Department is expanding the Sky Train from its current terminus at Terminal 4 to between Terminal 2 and Terminal 3. Route 13, which currently serves Terminals 3 and 4, now ends at Terminal 2 and the new Sky Train connection. Average Weekday Bus Ridership: In 2004-05 the average weekday bus ridership was 143,262. 50 In the 2014-15 budget, average weekday ridership is estimated at 129,790. Proposed changes are due to the ahead-of-schedule progress on the construction of the Northwest Extension light rail project on 19th Avenue between Montebello and Dunlap. Routes 19 Connector, 19 (19th Avenue), and 60 (Bethany Home Road) will be changed due to progress on the Northwest Extension of light rail. In the 2015-16 budget, average weekday ridership is estimated at 131,737. Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 Dust proofing of dirt alleys continued to see reduced funding in 2005-06. The 2015-16 budget includes no changes in service for major and collector sweeping and maintenance. TRANSPORTATION STREET TRANSPORTATION Major and Collector Street Sweeping and Maintenance: In 2004-05, continued budget constraints reduced funding for paving dirt alleys and retrofitting sidewalk ramps. In addition, funding for neighborhood concrete repair was reduced. The 2007-08 budget added funding to improve the general maintenance of streets. The 2009-2010 budget reduced funding for coordination of maintenance projects, eliminated all heater panel crews responsible for repairing failed street cuts and shifted this work to asphalt crews. It reduced by 25 percent the downtown hand crews that pick up trash, sweep sidewalks, and hand sweep portions of the street that cannot be reached by motor broom equipment within the boundaries of Third Avenue to Seventh Street and Van Buren to Jefferson streets. In addition, the budget eliminated one of three equipment operator positions responsible for operating equipment used on large paving repairs, resulting in a 33 percent reduction in repairs. The 2010-11 budget eliminated one of six equipment operators who were responsible for supporting the Street Cleaning Section. This reduced the section’s ability to provide special street sweeping requests and event support. Reductions did not impact routine street sweeping which continued to be scheduled every 14 days. The budget also reduced the number of employees responsible for repairs of small maintenance equipment, eliminated two of four miscellaneous crews responsible for installation and maintenance of 1,000 permanent barricades throughout the city, eliminated a position responsible for placing sand on spills in the street, and reduced the downtown hand crew by an additional 50 percent. There were no changes in service for major and collector sweeping and maintenance from fiscal year 2011-12 through 2014-15. Residential Street Sweeping: In 2004-05, the city of Phoenix provided street sweeping service four times a year. No changes were included in the 2014-15 budget. No changes are included in the 2015-16 budget for residential street sweeping. 51 Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 Increased material costs and continued budget reductions in fiscal year 2005-06 further reduced the number of annual miles to be sealcoated to 49. The 2015-16 budget includes 37 miles of streets to be sealcoated. It also includes 15 miles of the FAST program. TRANSPORTATION STREET TRANSPORTATION Sealcoat: In 2004-05, the city of Phoenix provided an estimated 76 miles of sealcoat. In 2006-07, 35 miles of city streets were sealcoated. This decrease was due to continued increases in material costs. In 2009-10, funding was diverted to pilot the Fractured Aggregate Surface Treatment (FAST) program. The FAST application was used to sealcoat 12 miles of city streets. The 2010-11 budget included funding for 41 miles of city streets to be sealcoated. The FAST pilot program was put on hold until 2011-12. The 2011-12 budget included funding for 39 miles of city streets to be sealcoated. The 2012-13 budget included 45 miles of streets to be sealcoated. It also included 20 miles of the FAST program. No changes were included in the 2013-14 budget. The 2014-15 budget provided no changes to service levels. However, the two September 2014 storms diverted attention from sealcoat to repairs. City of Phoenix paved road rehabilitation expenditures per capita were unavailable for the 2013 ICMA data. Below are average response times for other benchmark cities. Paved Road Rehabilitation Expenditures per Capita: Dallas – $10.91 Portland – $20.57 San Antonio – $29.16 Oklahoma City – $34.43 Asphalt Overlay: In 2004-05, 124 miles of overlay were performed. In 2005-06, 89 miles were overlaid and in 2006-07, 76 miles overlaid. These decreases were primarily due to continued increases in cost of materials. In 2007-08, due to continued increases in cost, 62 miles of asphalt overlay were completed. For 2008-09, due to continued cost increases and budget reductions impacting the installation of ADA sidewalk ramps, which also impact street overlay projects, 60 miles of asphalt overlay were completed. In 2009-10, 97 miles of city streets were overlaid with rubberized asphalt. This increase was due to a diversion of $1 million in Capital Improvement Project (CIP) funds from other CIP projects to the overlay and sidewalk ramp contracts. The 2010-11 budget provided for 85 miles of overlay, including 65 miles that were funded by the American Recovery and Reinvestment Act (ARRA). The 2011-12 budget provided 153 miles of overlay. The increase in the number of miles of overlay is due to a carryover of Arizona Highway User Revenue Funds from the prior year. The 2013-14 budget provided for 106 miles of overlay. The projected amount is the result of a decrease in the elimination of the ARRA funding and the addition of $5 million in AHUR. The 2014-15 budget provided no changes to service levels. However, the two September 2014 storms diverted attention from overlay to repairs. 52 The 2015-16 budget provides for 100 miles of overlay. Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 This homeownership program allows eligible tenants the opportunity to purchase their home. Between 1998-99 and 2007-08, the program’s total inventory expanded to 480 units. In the 2015-16 budget, the program is expected to reduce its inventory by 12 Scattered Sites homes. COMMUNITY DEVELOPMENT HOUSING Scattered Sites Housing Program: In 2004-05, the Housing Department had 430 units. At the end of 2014-15, the inventory of 405 units reflects the sale of 71 homes to eligible tenants over the past decade and the transfer of 4 units to a local nonprofit agency. Affordable Housing Program: In 2004-05, this program had 1,359 units for families and individuals. By the end of 2011-12, the Affordable Housing Program was expanded to a total of 3,115 city-owned units for families and individuals with the addition of the 483 units from the newly renovated units at Park Lee and the Symphony. In the 2015-16 budget, the program is expected to maintain at the level of 2,716 units. At the end of 2014-2015, the Affordable Housing Program consists of 2,716 units for families. Conventional Housing Program: At the end of 2014-15, the Conventional Public Housing Program consists of 2,204 units for families and individuals. In the 2015-16 budget, the program is expected to maintain at the level of 2,204 units. At the end of 2015, the rental assistance program will provide 6,740 units of vouchers for the low income residents in the private housing market. In the 2015-16 budget, the program is expected to maintain 6,740 units of vouchers for the low income resident in the private housing market. In 2004-05, this program had 1,495 units. The program’s beginning inventory before the Matthew Henson HOPE VI project was initiated was 1,776 units. Due to the reconstruction activities funded by the HOPE VI grant, 280 units became unavailable at the Matthew Henson housing site. One (1) additional unit was transferred to the St. Vincent de Paul organization. Housing Payment Assistance Program: In the 2004-05 budget, the rental assistance program provided 5,313 units of vouchers for the low income residents in the private housing market. 53 Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 Case cycle times increased to 61 days in 2005-06 due to the complexity of dealing with different multi-unit properties and funding reductions. Cycle times reduced to 51 days at the close of 2007-08 with the continued application of technology, training and quality control. Neighborhood Preservation continues to achieve excellent results in many areas for maximum efficiency to save time, reduce costs and/or increase productivity. In 201516, Preservation will continue its commitment to the code enforcement case cycle time to be less than 45 days. COMMUNITY DEVELOPMENT NEIGHBORHOOD SERVICES Neighborhood Preservation Case Cycle Time (Days) In 2004-05, cases were resolved in an average of 53 days. Significant staffing and resource reductions in March 2009 occurred. The impact was minimized by the implementation of an enhanced quality control program, supplemented by supervisory access to more detailed performance indicator reports. Average cycle time for 2009-10 was 51 days. The overall average case cycle time increased to 52 days in fiscal year 2010-11. The increase was due in part to the ongoing complexity of resolving violations at properties in the foreclosure process which caused delays in both administrative (abatement) and adjudication (court) cases. In fiscal year 2011-12, additional performance standard and quality control measures were initiated along with ongoing process improvements and some division reorganization. These measures assisted in reducing overall average case cycle time back down to 45 days in 2013-14. In 2014-15, it is anticipated the case cycle time will remain at 45 days. Based on 2013 ICMA data, city of Phoenix code enforcement expenditures per capita are lower than those of other benchmark cities as noted below: Code Enforcement Expenditures per Capita: Dallas - $13.26 San Antonio – $5.27 Portland - $3.58 PHOENIX – $.81 54 Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 The current issues inhibiting more robust growth in the economy are expected to continue slightly through 2015. These include high levels of unemployment, large consumer debt loads, reduced income and wealth, weak housing and commercial real estate markets, rising health care costs and budget deficits. Based on data from the Bureau of Labor Statistics, the Phoenix Metro employment level is expected to increase by 45,500 jobs in 2015. Phoenix’s employment growth rate was higher by 1.1% in 2014 than in 2013 and moved up from 5th to 4th ranked cities. It is anticipated employment will continue to grow in 2015-16. COMMUNITY DEVELOPMENT ECONOMIC DEVELOPMENT Employment Growth Rate Compared to Other Cities In 2004, Phoenix’s employment growth rate was better than all of the following benchmark cities: PHOENIX – 4.0% Fort Worth/Arlington – 3.7% Denver – 3.7% Austin/San Marcos – 3.6% Dallas – 2.4% San Antonio – 2.3% San Diego – 2.3% Los Angeles/Long Beach – 2.2% San Jose – 0.9% Kansas City – (0.1)% Based on data from the Bureau of Labor Statistics, Phoenix ranked 4th in the Employment Growth Rate in 2014 compared to the following benchmark cities: Kansas City – 4.5% Dallas – 4.4% San Jose – 4.2% PHOENIX – 4.0% Ft. Worth-Arlington – 3.7% San Diego – 3.6% Denver – 3.4% San Antonio – 3.0% Los Angeles/Long Beach – 2.9% Austin – 2.6% COMMUNITY ENRICHMENT HUMAN SERVICES Head Start Program: In 2004-05, the Human Services Department served 3,194 children. Senior Nutrition Program: In 2004-05, the Human Services Department served 598,000 meals. The program is expected to serve 3,390 children during 2014-15, of which, 300 are included in the Early Head Start Program. The program is expected to serve 3,595 children in 2015-16. The increase from 2014-15 is a result of the Early Head Start Child Care funding. For 2014-15, the program is expected to serve 581,462 meals. In the 2015-16 budget, it is anticipated that the number of meals served will be 581,462. 55 Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 In the 2009-10 budget eight pools were closed for infrastructure repairs on a rotating basis for three years beginning in May 2009. The 2015-16 budget includes no changes in service. COMMUNITY ENRICHMENT PARKS AND RECREATION Swimming Pools: In 2004-05, there were 29 public swimming pools. In the 2010-11 budget, Cortez Pool was closed indefinitely due to the need for significant structural repairs. In the 2011-12 budget, eight pools previously closed for infrastructure repairs were re-opened. This increased the number of open pools to 28 out of 29. In 2014-15 the number of open pools increased to 29 with the re-opening of Cortez Pool. Swimming Pool Season: In 2004-05, swimming pools were open for 10 weeks during the summer months. The 2005-06 budget reduced the swim season by closing pools one week earlier, resulting in a nine-week season. Changes included in the 2007-08 budget added funding to increase the pool season at all 29 pools. These funds added weekend hours beginning in August and continuing through Labor Day. No changes are included in the fiscal year 2015-16 budget for swimming pool season. The 2008-09 budget eliminated weekend pool hours in May and August except for the Memorial Day weekend. The 2009-10 budget reduced the swimming season by eliminating open swim hours during the last week in July. The 2009-10 budget also reduced daily open swim hours, and closed all city pools on Friday. Pool hours open to the public were changed from 1 to 7 p.m. instead of noon to 8 p.m. Also, fees were increased for general swim lessons and recreational teams. The 2012-13 budget added open swim hours at nine pools, representing all Council districts and city regions, from 1 to 7 p.m. each day in August through the Labor Day holiday. No changes are included in the fiscal year 2014-15 budget for swimming pool season. Children’s Summer Recreation Programs: In 2004-05, the city of Phoenix provided recreation programs at 127 program sites. In 2007, the Parks and Recreation Department conducted a comprehensive evaluation of Phoenix After-school Center (PAC) programming. Changes were implemented including re-defining what constituted an after-school program versus an after-school site. Based on this new definition, the 2007-08 summer program had 32 sites and 50 program units (some sites have more than one program). No changes were included in the 2008-09 budget. The 2009-10 budget reduced summer PAC to 16 sites and increased fees. Beginning June 2010, all summer PAC sites were eliminated. 56 No changes are included in the 2015-16 budget for children’s summer recreation PAC programs. Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 In 2007-08, additional funding was provided to improve after-school programming. No changes are included in the 2015-16 budget for during school year recreation programs. COMMUNITY ENRICHMENT PARKS AND RECREATION School Recreation Program During School Year: In 2004-05, funding was provided for school recreation programs at a total of 166 sites. In 2007, the Parks and Recreation Department conducted a comprehensive evaluation of Phoenix Afterschool Center (PAC) programming. Changes were implemented including re-defining what constituted an after-school program versus an after-school site. Based on this new definition, the 2007-08 school year had 83 sites and 166 program units (some sites have more than one program). Budget reductions in 2008-09 reduced the number of after-school program units to 104, which included reducing the number of sites to 81. The 2009-10 budget reduced the number of after school program sites to 42 (the department no longer uses program units in their definition of program sites). After the budget was approved, fees were increased and an additional 13 sites were added. Total sites operated were 55. The 2010-11 budget further reduced after-school sites to 25 General Fundsupported sites and five full cost recovery sites effective June 2010. In 2012-13 nine Phoenix Afterschool Program sites (PAC) sites were restored. In the 2013-14 budget, eight Phoenix Afterschool Centers were restored, which brings the total number of sites to 47. 57 Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 The 2007-08 budget included opening the Central Library at 9 a.m. Monday through Saturday, increasing hours of service from 66 to 72 hours per week. The 2015-16 budget includes no changes in service. COMMUNITY ENRICHMENT LIBRARY Central Library: The new Burton Barr Central Library opened in May 1995. Central Library hours were 66 hours per week. In 2008-09, the budget for books and other circulating materials for Central Library was reduced, and the printed version of the calendar of events was eliminated. In March 2009, the hours of operation were reduced from 72 to 52 hours per week at Central Library. Programming for children, teens and adults was also reduced; and facilities maintenance projects were delayed. In April 2010, customer service and Accessibility Center services at the Central Library were reduced. In December 2010, the hours at Central Library were expanded by six hours per week, from 52 to 58 hours per week. In July 2012, Burton Barr Central Library expanded morning hours by six hours, from 58 to 64 hours per week, opening at 9 a.m. instead of 11 a.m. on Tuesdays, Wednesdays and Thursdays. In 2013-14, the number of e-materials was increased by over 13,000 items. In July 2013, MACH1 opened. MACH1 is a space for coding classes, robotics, science cafes, and STEM programming for all ages. It is only open for scheduled classes and programs. In January 2014, hive @ central opened. The hive @ central is a collaborative space designed to bring together inventors, problem-solvers, entrepreneurs, and small businesses. In January 2015, we partnered with St. Mary’s Food Bank to provide Kids Café, a meal service program designed to provide a free, healthy meal along with educational programs. In January 2015, College Depot launched the Career Online High School, which allows adults living in Phoenix to earn an accredited high school diploma online. Beginning March 2015, materials that do not have holds placed are automatically renewed, enhancing the customer experience. Branch Libraries: In the 2004-05 budget, the new 15,000-square-foot Desert Broom Library serving the Desert View Village area opened in February 2005 for 66 hours per week, increasing total branch library service hours to 858 per week. The new Palo Verde Library opened in January 2006, replacing the existing 10,000-square-foot library with a new 16,000 square-foot facility. The new 25,000-square-foot Cesar Chavez Library, serving the western South Mountain Village, opened in January 2007 for 66 hours per week, increasing total branch library service hours to 924 per week. The 2007-08 budget included opening all branch libraries at 9 a.m. Monday through Saturday, increasing total branch library service hours to 1,008 per week. The renovation of Saguaro Library was completed during spring 2008 and opened to the public on June 6, 2008. Due to budget reductions in 2008-09, staffing was reorganized to create regional managers and reduce a supervisory layer at the branches; facilities maintenance projects were deferred; the opening of the new Agave Library was delayed; the printed calendar of events was eliminated, and the budget for books and other circulating material was reduced by 18.9 percent. In March 2009, the hours of operation were reduced from 72 hours per week to 52 hours per week at seven locations and to 48 hours per week at eight locations. The budget for circulating materials and programming for children, teens and adults was also reduced; and facilities maintenance projects were delayed. 58 The 2015-16 budget includes no changes in service. Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 COMMUNITY ENRICHMENT LIBRARY Branch Libraries: (continued) The new Agave Library, at 33rd Avenue and Pinnacle Peak Road, opened in June 2009. The new 12,300 square foot replacement for Harmon Library opened in September 2009. In April 2010, the hours of operation per week were reduced from 52 to 44 at seven branches and 48 to 40 at the remaining branches. Additionally in April 2010, the staff and library materials at Century, Acacia, and Ocotillo branch libraries were reduced resulting in decreased direct customer service and increased time to access library materials. Administrative and support staff were also reduced resulting in slower processing and re-shelving of materials system-wide and less timely maintenance of facilities. In December 2010, the hours at Mesquite Library were increased by six hours per week. A new South Mountain Community Library, jointly operated by Maricopa County Community College District and the city of Phoenix, opened August 2011 on the campus of South Mountain Community College – open 72 hours per week. In July 2012, evening hours were expanded at eight branches: Ironwood, Cholla, Cesar Chavez, Palo Verde, Juniper, Agave, Yucca and Saguaro. They opened an additional six hours per week, from 7 to 9 p.m. on Tuesdays, Wednesdays and Thursdays, bringing total branch service hours to 759 per week. College Depot also expanded its programming to four branch libraries: Cesar Chavez, Cholla, Palo Verde and South Mountain Community College. In January and October 2014, we began partnering with St. Mary’s Food Bank at six branches to provide Kids Café, a meal service program designed to provide a free, healthy meal along with a learning component. Based on 2013 ICMA data, the Phoenix library system compared to other benchmark cities as noted below: Cost per Item Circulated: San Antonio – $4.81 Austin – $4.77 PHOENIX – $2.65 Dallas – $2.35 59 Table of Contents PROGRAM SERVICE LEVEL IN 2004-05 SERVICE CHANGES THROUGH 2014-15 SERVICE CHANGES FOR 2015-16 In a March 2015 survey, Phoenix’s average monthly water bill compared favorably to the following benchmark cities: It is anticipated Phoenix water rates will continue this trend during 2015-16. ENVIRONMENTAL SERVICES WATER SERVICES Water Bill Comparison for Single-Family Homes In a March 2004 survey, Phoenix’s average monthly water bill compared favorably to the following benchmark cities: San Jose – $42.18 Austin – $32.05 Kansas City – $31.96 Dallas – $28.42 Tucson – $26.12 Albuquerque – $24.32 PHOENIX – $21.88 San Antonio – $17.85 Wastewater Bill Comparison for Single-Family Homes In a March 2004 survey, Phoenix’s average monthly wastewater bill compared favorably to the following benchmark cities: Austin – $43.14 Dallas – $28.38 Kansas City – $22.46 San Antonio – $20.36 San Jose – $19.81 Albuquerque – $16.24 PHOENIX – $15.97 Tucson – $14.47 60 San Diego – $88.21 Austin – $76.88 San Jose – $69.69 Tucson – $58.52 Dallas – $53.04 PHOENIX – $37.75 Albuquerque – $34.06 San Antonio – $22.63 In a March 2015 survey, Phoenix’s average monthly wastewater bill compared favorably to the following benchmark cities: Austin – $63.42 San Diego – $48.19 Tucson – $45.06 Dallas – $38.05 San Jose – $33.83 San Antonio – $31.20 PHOENIX – $22.01 Alburquerque – $19.95 It is anticipated Phoenix wastewater rates will continue this trend during 2015-16. Table of Contents 61 Table of Contents 62 Table of Contents Budget Process, Council Review and Input, Headline Public Hearings and Budget Adoption Each year, the city of Phoenix budget is developed in conjunction with the Mayor and City Council, residents, city employees, the City Manager’s Office and all city departments. Budgeting Process Enhancements made over the last several years demonstrate the city’s commitment to continuously improve transparency, better communicate detailed budget information, and further engage the community in the budget process. At the direction of the City Council, several new steps were added to the city’s budget process, making it a year-round, flexible process. • In September 2014, staff presented a very early budget status resulting in the adjustment of estimated revenue and expenditures based on early budget results. Also, for the first time, detailed economic analysis was provided. • In the fall of 2014, Budget and Research consulted with the University of Arizona Economic Business Research Center to enhance the city’s sales tax revenue forecasting process. The partnership resulted in development of an enhanced econometric forecasting model of sales tax. The city and state sales tax projections are based on estimates that are developed using the enhanced econometric forecasting model. • Staff continued to conduct the financial best practice of providing a Five-Year General Fund Forecast to facilitate long-term fiscal planning and strategic decision making by policymakers. Each fall, city departments start from zero and submit an estimate of the costs associated with providing their current levels of service for the following year (called the “base budget”). Budget and Research staff review these base budget estimates to ensure that only the funding needed to continue current service levels is included in the department’s base budget for the following year. A department’s base budget funding may differ from its current year funding for a variety of reasons. For example, an increase or decrease in electricity or postage rates would be reflected in the base budget. After these base budget requests are reviewed, departments typically are asked to identify 5 to 10 percent of their budget for potential elimination. These proposals are potential base reductions and represent the department’s lowest-priority activities. Departments also are asked to provide any requests for new or expanded programs. These are called supplemental budget requests. Departments can propose reducing or eliminating an existing program in order to fund the expansion of an existing program or adding a new program. Base reductions and supplemental requests include all operating and maintenance costs associated with a specific program or service. For example, costs for a swimming pool would include personnel costs for a lifeguard and other staff, chemicals for the pool, building maintenance and utilities. When base reductions and supplemental requests are proposed, they are ranked together according to the department’s priorities. These rankings are used by city management to assist in the development of the City Manager’s Trial Budget. The Trial Budget is reviewed with the City Council early each spring. The purpose of the Trial Budget is to enable the community and the City Council to comment on a balanced budget proposal well before the city manager is required to submit a proposed budget in May. Public hearings are conducted throughout the community during day and evening hours, at which residents are encouraged to provide their feedback. The Trial Budget is also available online and residents can send comments by email, letters, phone, and through the city’s website and social media. The City Manager’s Proposed Budget provided in May reflects the input received from the community and City Council. The City Council makes final budget decisions after the city manager’s recommended budget is reviewed. 2015-16 BUDGET PROCESS Initial Budget Status In September 2014, staff presented an indepth budget review to allow an early assessment of revenue conditions and take early action to adjust estimates. Also provided, for the first time, was a published report detailing analysis of economic forecasting conditions in the fall of 2014. The fiscal year 2013-14 General Fund ending fund balance was estimated to be $60.2 million. However, as a result of the reduced expenditures that came in below the revised estimate primarily due to keeping vacant positions unfilled, the actual ending balance was $78.6 million. This means that the 2014-15 resources began the year with $18.4 million more than budgeted. In September 2014, staff revised the fiscal year 2014-15 General Fund revenue estimate downward by $15.5 million based on a trend since May 2014 of slower growth in sales tax and other revenue. No service cuts were required in 2014-15 to keep the budget in balance because of the additional $18.4 million in the beginning year fund balance which more than offsets the reduction to the 2014-15 revenue estimate. The remaining $3 million was held in the fund balance as resources for the General Fund Budget for fiscal year 2015-16. On December 9, 2014, the City Council approved an early expenditure reduction that would save about $12.3 million 63 Table of Contents annually, $11.3 million of which is General Fund savings. As part of efforts to address the 2015-16 General Fund deficit projected in the January 2014 five-year forecast, the City Council asked staff to conduct a thorough review of vacant civilian positions to reduce costs while minimizing the impact to services. No sworn police or fire positions were included. The action included the elimination of 181 vacant civilian positions, 162 of which are in the General Fund. The positions were identified as part of the CORE process. For the fourth consecutive year, Budget and Research provided detailed preliminary estimates with multiple yearto-year comparisons in the Zero-Based Budget Inventory of Programs document, which was presented to the CityCouncil on February 10, 2015. The city’s budget is presented by program, the key component of a Zero-Based budget approach. The document was put in place in response to the City Council’s request for a more transparent, relevant and detailed presentation of the city’s budget. The Inventory of Programs outlines costs, revenue, staffing levels, funding source, and other key budget detail for the more than 400 programs citywide. Last year, additional information was added regarding employee costs that provides detail on each type of cost for all employees. Preliminary Status of 2015-16 General Fund Budget and Five-Year Forecast On February 24, 2015, Budget and Research provided the preliminary General Fund budget status for 2015-16, and the five-year General Fund forecast. Based on strong fiscal planning and early actions taken by the Mayor and Council throughout fiscal year 2014-15, staff explained a balanced 2015-16 City Manager’s Trial Budget would be presented in March 2015 without any proposed reductions to services. Staff noted at the time that a balanced 2015-16 budget was based on existing 64 state-shared revenue models and statutory obligations. The Governor’s Proposed 201516 State Budget would decrease Phoenix revenue and increase city costs, resulting in a net deficit of about -$4 million the city would need to solve, if adopted by the State. Five-Year Forecast Development and presentation of the fiveyear forecast is an important step in the city’s budget process. Evaluating projected available resources and identifying potential ongoing budget surpluses or funding gaps allow city management and Council to develop strategic plans to ensure the continuation of city operations and optimize services to the community. An updated five-year forecast showed that significant continued increases to Public Safety pension costs, along with lower State projections for state-shared income tax and other revenue decreases, would result in further General Fund pressure in fiscal year 2016-17. Public Safety Funds Forecast and Hiring Plan On February 24, 2015, the City Council received its fifth update since October 2010 on the Council-adopted balancing plan for the Public Safety Dedicated Funds without sworn position layoffs, which include Proposition 1 and 301 (0.3% sales tax increment) and the utility tax from 2005. The City Council-adopted balancing plan is working as projected and there have been no layoffs of sworn personnel. Hiring of new Police Officers was scheduled to resume in 2014-15 and hiring of new Firefighters had begun in 2014-15. Careful monitoring of the funds will allow for accelerated hiring of 50 Police Officers in late 2015-16 and early 2016-17, above the 90 Officers already planned for fiscal year 2015-16. Also, approximately 90 Firefighters are planned to be hired in fiscal year 2015-16 after hiring approximately 75 in fiscal year 2014-15. City Manager’s 2015-16 Trial Budget On March 24, 2015, the Mayor and Council were presented with the 2015-16 City Manager’s Trial Budget that included a balanced General Fund budget with no service reductions. The total proposed 2015-16 General Fund budget totaled $1.156 billion, an increase of 0.7 percent over the 2014-15 General Fund budget of $1.149 billion. The Trial Budget’s proposed changes included $2 million in less ambulance transport revenue and $4.3 million in new state-imposed payments to the Arizona Department of Revenue as part of the state’s budget balancing action, $2.2 million for additional police training, approximately $2.9 million in General Fund pay-as-you-go capital to address critical information technology needs; replacement of high priority vehicles and heavy equipment, such as Fire pumper and ladder trucks and Police vehicles; and a proposed $1 million increase to the Contingency Fund. Increases to pension, health insurance and other costs were more than offset by decreases to compensation and reduced positions. Additionally, reductions identified in the city’s annual Zero-Based Budget Program Review process will decrease 2015-16 costs by $1.2 million. Although a $4.3 million surplus would have been available to address high priority community needs, the 2015-16 state budget negatively impacted the city by $6.3 million. The state’s action created a $2 million General Fund deficit, which was proposed to be closed by reducing replacement of aging vehicles and decreasing the proposed Contingency Fund growth. Several high priority needs were identified as remaining: • Hiring of additional police officers and firefighters above the increased hiring levels adopted by the Council in February 2015 Table of Contents • Police body cameras • Homeless emergency shelter and rehousing programs • Stormwater drainage infrastructure • Street maintenance • Additional branch library hours • Phoenix Afterschool Center sites • Arts grants and support • Park maintenance • Street landscaping maintenance; and, • Recreation programming The Trial Budget included important program improvements in areas funded by non-General Fund sources, such as the following: • Aviation Fund- Adding a dedicated team at Sky Harbor to review airspace evaluations and potential impacts, respond to noise complaints, and provide community outreach • Development Fund- Enhancing the customer service experience in Planning and Development through additional oversight, technology improvements, training and enhanced opportunities for customer feedback • Phoenix Parks and Preserves Initiative Fund- Maintaining three new preserve trailheads at Apache Wash, Desert Vista, and Desert Hills • Transit 2000 Fund- Providing funds to operate expanded light rail service to 19th Avenue & Dunlap; and • Solid Waste Fund- Operating a new composting facility at the 27th Avenue Transfer Station Community Input The proposed budget was presented at 12 budget hearings conducted throughout the community in April. Following a presentation describing the proposed budget, residents were invited to comment. In addition to the budget hearings, the budget was shared with the community on the city’s website and through a summary entitled “Phoenix Budget for Community Review” that outlined the proposed budget as well as a calendar of budget hearing dates. This information was made available electronically in addition to hard copies provided at senior centers, libraries, community centers and at budget hearings. The city also published where to find the electronic version in “The Arizona Republic,” “Arizona Informant,” “Asian American Times” and “La Voz.” Residents also were invited to send comments and questions through the city’s website. The publicity of the Trial Budget allows the City Council and the community to comment on proposed measures for balancing the budget. Approximately 350 comments were received from the community. Public comments focused primarily on the following topics: • Daily library access • Hiring of Police Officers and Firefighters • Increasing youth recreation services • Funding for arts and culture programs • Expanding bicycle infrastructure • Unified City Services Card • Restoring park rangers at desert preserves and flatland parks • Covering expenses for Police/Fire responses involving animal abuse or neglect • Continuing the use of city funds for portable 15 MPH school zone signs • Addressing potential future year budget challenges. Comments overwhelmingly supported existing city services, with most indicating a desire to increase service levels in many areas as resources become available. City Manager’s Proposed Budget and Council Action On May 5, 2015,a revised budget package that reflected feedback from the community was presented to the Mayor and City Council for information and discussion. The balanced 2015-16 City Manager’s Proposed Budget included: 1. No service reductions and some General Fund additions for critical Police training, recreation and innovation investment, as well as nonGeneral Fund additions for important community services in Transit, Parks, Sanitation, Aviation and Development Services. 2. Hiring of 110 police officers and 93 firefighters, increasing the city’s sworn Police and Fire forces, even while balancing the Public Safety Funds in 2015-16 as called for in the Counciladopted multi-year plan. 3. Strategies to begin addressing the known significant public safety pension cost increases for fiscal year 2016-17. The proposed balanced 2015-16 General Fund budget is $1,156,540,000. This is a 0.7 percent increase from the adopted 2014-15 General Fund budget of $1,148,840,000. It is $42.8 million, or 3.6 percent, below the 2007-08 peak amount of $1,199,298,000 for the General Fund. For all funds, which include General, Enterprise and Special Revenue Funds such as grants, all debt service, and pay-asyou-go capital costs, the proposed 2015-16 budget amount is $3,702,298,000. This is a 4.8 percent increase from the adopted 2014-15 budget of $3,532,061,000 for all funds. The 2015-16 All Funds budget is below the 2008-09 budget of $3,735,754,000 for all funds by $33.5 million, or -0.9 percent. The 2015-16 City Manager’s Proposed Budget reflected many of the community’s priorities expressed at budget hearings. The budget includes significant Police and Fire hiring, additional programming for youth recreation at the Coffelt-Lamoreaux Recreation Center, multiple capital bicycle infrastructure projects, and the continued General Fund allocation for arts grants and rental support grants for performing arts organizations. In response to community and Council input, the city will continue to purchase and maintain 15 MPH school zone signs for Phoenix schools 65 Table of Contents using recently identified Street Transportation budget savings related to a delayed project. An additional $314,000 in savings was identified since the Trial Budget in March. The city manager recommended these funds be applied toward the known increases to public safety pension costs in the 2016-17 budget. As presented in late February, 2016-17 budgeting will be strained by substantial increases in public safety pension costs and by state revenue reductions. Although other community needs were not able to be addressed due to lack of available funding, the city will continue to examine how these requests from residents may be addressed in future budgets. On May 19, the City Council approved the 2015-16 City Manager’s Proposed Budget, which provides a balanced budget as required by City Charter, improves city services, and brings the Public Safety Funds into balance allowing hiring of police officers and firefighters. The 201516 budget did not increase taxes or fees for service. The May 19 City Council action provided the time needed to meet legal deadlines and comply with City Code, Charter and State Law. Requirements include advance public notification, publication of detailed budget information, advertising, hearings and final legal adoption actions. 66 Additionally, staff provided responses to several City Council requests for follow-up information arising at the May 5, 2015 budget presentation on the following topics: 1. Arizona Humane Society Funding 2. Public Safety Pension Phase-In of Fields Case Impact 3. Further Library Service Options 4. Sheraton Hotel Debt Refunding 5. Air Quality Position 6. Percent for Arts in Proposed Comprehensive Transportation Plan 7. Park Ranger Staffing and Police Response at Parks Tentative Budget Adoption A public hearing and adoption of the tentative budget ordinances was completed on June 3, 2015, in compliance with the City Charter requirement that the budget be adopted no later than June 30. Upon adoption of tentative budget ordinances, the budget becomes the City Council’s program of services for the ensuing fiscal year. At that point, the City Council may later decrease the budget, but only in certain instances may the budget be increased. Generally, the ability to increase the budget applies to expenditures exempted from the state expenditure limitation. Transfers between department appropriations are still permissible before the final budget is adopted. Table of Contents Final Budget Adoption A public hearing and adoption of the final budget ordinances was completed on June 17, 2015. Adoption of the property tax levy ordinance was completed no less than 14 days later on July 1, 2015, in accordance with state law. The following chart is an overview of the 2015-16 budget calendar. 2015-16 Budget Calendar Date Budget Item February 10, 2015 Zero-Based Budget Inventory of Programs February 24, 2015 Preliminary Status of fiscal year 2015-16 General Fund Budget and Five-Year Forecast Public Safety Funds Balancing Plan Update March 24, 2015 City Manager’s Trial Budget April 7, 2015 Preliminary Five-Year Capital Improvement Program April 2015 Community Budget Hearings May 5, 2015 City Manager’s Proposed Budget May 19, 2015 Council Action on 2015-16 Budget June 3, 2015 Adopt Tentative Budget Ordinance June 17, 2015 Adopt Final Budget Ordinance July 1, 2015 Adopt Property Tax Levy Ordinance 67 Table of Contents an 35 0 ty. M ore th ou t th e ci th ei r gh u ed ro ar th sh gs so si d en ts al ge t h ea ri n d re bu d an 12 y, d m m u n it e ci ty h el al m ed ia . fr om th e co In A p ri l, th ll s an d so ci e re ce iv ed ca er e w on ts h p en co m m , le tt er s, u gh em ai ls in p u t th ro 68 Table of Contents General BudgetHeadline and Financial Policies C ity of Phoenix budget and financial policies are governed by Arizona state law, the City Charter and Code and generally accepted accounting standards. These laws and standards set budget calendar dates, provide for budget control, describe ways to amend the budget after adoption, and identify appropriate methods for budgeting, accounting and reporting. The Arizona Constitution establishes the property tax system and sets tax levy and assessed valuation limits. The City Charter and Code also provide restrictions on property tax. The constitution also provides annual expenditure limits and sets total bonded debt limits. The city’s budget policies are extensions of these basic laws and follow generally accepted governmental budgeting and accounting practices and standards. A BALANCED BUDGET IS REQUIRED Arizona law (Title 42 Arizona Revised Statutes) requires the City Council to annually adopt a balanced budget by purpose of public expense. State law defines this balanced budget as “the primary property tax levy, when added together with all other available resources, must equal these expenditures.” Therefore, no General Fund balances can be budgeted in reserve for subsequent fiscal years. Instead, an amount for contingencies (also commonly referred to as a “rainy day fund”) can be included in the budget each year. The City Charter also requires an annual balanced budget. The Charter further requires that “the total of proposed expenditures shall not exceed the total of estimated income and fund balances.” Annual Budget Adoption Requirements The City Charter and Code and state statutes contain legal deadlines and actions that must be followed in adopting the budget. In cases where the deadlines conflict, the city meets the earlier of the two dates. The deadlines and formal actions prescribed by both, as well as the actual or planned dates for the 2015-16 budget development process are as follows: 2015-16 Budget Dates City Charter Prescribed Deadline Arizona State Statute Prescribed Deadline City manager’s recommended fiveyear Capital Improvement Program submitted to the City Council. At least three months prior to final date for submitting the budget or a date designated by the City Council. Capital Improvement Program not required. April 7, 2015 Post notice on the official city website if there will be an increase in either the primary or the secondary property levy, even if the combined levy is a decrease. No requirement. 60 days prior to Tax Levy Adoption. May 1, 2015 City manager’s proposed budget for ensuing year presented to the mayor and City Council. On or before the first Tuesday in June or a date designated by the City Council. City manager budget not required. May 5, 2015 Publish general summary of budget and notice of public hearing that must be held prior to adoption of tentative budget ordinances. Publish in newspaper of general circulation at least two weeks prior to first public hearing. No requirement. Publish Week of May 20, 2015 Publish notice of public hearing which must be held prior to adoption of five-year Capital Improvement Program by resolution. Publish in newspaper of general circulation at least two weeks prior to first public hearing. No requirement. Publish week of May 20, 2015 Public hearing immediately followed by adoption of tentative budget ordinances with or without amendment. On or before the last day of June. On or before the third Monday of July. June 3, 2015 Action Required 69 Table of Contents City Charter Prescribed Deadline Arizona State Statute Prescribed Deadline Publish truth-intaxation notice twice in a newspaper of general circulation (when required). No requirement. First, at least 14 but not more than 20 days before required public hearing; then at least seven days but not more than 10 days before required hearing. Not required for 2015-16 property tax levy Publish summary of tentatively adopted budget and notice of public hearing which must precede final adoption. No requirement. Once a week for two consecutive weeks following tentative adoption. Publish weeks of June 8, 2015 and June 12, 2015 Post a complete copy of the tentatively adopted budget on the city’s website and provide copies to libraries and City Clerk. No requirement. No later than seven business days after the estimates of revenue and expenses are initially presented before the City Council. June 12, 2015 Public hearing on budget plus property tax levy or truth-intaxation hearing (when required) immediately followed by adoption of final budget ordinances. No requirement. On or before the 14th day before the tax levy is adopted and no later than first Monday in August. June 17, 2015 Post a complete copy of the adopted final budget on the city’s website. No requirement. No later than seven business days after adoption. June 26, 2015 Public hearing and property tax levy adoption. No later than the last regularly scheduled Council meeting in July. No sooner than 14 days following final budget adoption and no later than the third Monday in August. July 1, 2015 Action Required 70 2014-15 Budget Dates Amendments to the Budget After Final Adoption Generally, by Arizona state statute, no expenditure may be made nor liability incurred for a purpose not included in the budget even if additional funds become available. Phoenix’s level of legal budgetary control is by fund except for the General Fund for which control is by program. In certain instances, however, the budget may be amended after adoption. All budget amendments require City Council approval. These are (1) transfers from any contingency appropriation, (2) increases in funds exempt from the Arizona State Constitution expenditure limit and (3) reallocations of amounts included in the original budget. An amount for contingencies is included in the General Fund and in many other restricted funds. Informal reservations of contingencies may be made throughout the fiscal year as approved by the City Council. Actual expenditures are recorded in the appropriate departmental budget. Then, at the end of the fiscal year, contingency amounts actually needed are transferred by City Council formal action to the appropriate departmental budget. If funds are available, appropriations may be increased for certain funds specifically excluded from the limitations in the Arizona Constitution. These funds are bond proceeds, Arizona Highway User Revenue, debt service and grants. At the end of each fiscal year, the City Council adopts an amendment to the budget ordinance for any necessary increases in these funds. These increases are largely caused by federal grants that become available throughout the fiscal year and by timing changes in capital projects funded by bond proceeds. Finally, transfers of amounts within any specific fund or within General Fund programs can be made upon approval of the city manager. Table of Contents PROPERTY TAXES AND BONDED DEBT LIMIT Arizona property tax law provides for two separate tax systems. A primary property tax is levied to pay current operation and maintenance expenses. Therefore, primary property tax revenue is budgeted and accounted for in the General Fund. A secondary property tax levy is restricted to the payment of debt service on long-term debt obligations. Therefore, secondary property tax revenue is budgeted and accounted for as a special revenue fund. determine the property’s secondary tax levy. The limited property value used in this calculation for most properties is the lesser of the property’s full cash value, or an amount 5 percent greater than the property’s prior-year limited property value. Prior to 2015-16, full cash value rather than limited property value applied. Generally, Arizona counties assess property and collect all property taxes. Proceeds are distributed monthly to the appropriate jurisdictions. Bonded Debt Limit Primary Property Tax Restrictions Primary property tax levies are restricted to an annual two percent increase plus an allowance for growth attributable to previously unassessed properties (primarily new construction). In addition, the City Charter limits the primary property tax rate to $1.00 plus an amount that provides for the establishment and support of free public libraries and reading rooms. The primary levy may also additionally increase by an amount equal to annual tort liability claims. Assessment ratios and the primary tax rate are applied to a property’s limited property value, less exclusions, to determine the property’s primary tax levy. Beginning in 2015-16, due to state Proposition 117 passed by Arizona voters in 2012, the limited property value used in this calculation for most properties is the lesser of the property’s full cash value, or an amount 5 percent greater than the property’s prioryear limited property value. The City Charter requires that eight cents of the primary property tax levy be allocated to the Parks and Playground Fund. Secondary Property Tax Restrictions Secondary property tax levies are restricted in their use to the payment of annual debt service on long-term debt obligations. Any over-collection of the secondary levy or any interest earned by invested secondary property tax funds must be used to reduce the following year’s levy. Beginning in 2015-16, due to state Proposition 117 passed by Arizona voters in 2012, assessment ratios and the secondary tax rate are applied to a property’s limited property value, less exclusions, to Arizona cities can issue general obligation bonds for purposes of water, sewer, lighting, open space preserves, parks, playgrounds, recreational facilities, public safety, law enforcement, fire emergency and street and transportation up to an amount not exceeding 20 percent of the secondary assessed valuation. General obligation bonds can be issued for all purposes other than those previously listed up to an amount not exceeding six percent of the secondary assessed valuation. An analysis of bonded debt limits is provided in the Debt Service chapter. ANNUAL EXPENDITURE LIMITATION Since fiscal year 1982-83, the city of Phoenix has been subject to an annual expenditure limitation imposed by the Arizona Constitution. This limitation is based upon the city’s actual 1979-80 expenditures adjusted for interim growth in population and inflation as measured by the gross domestic product implicit price deflator. The constitution exempts certain expenditures from the limitation. Constitutional exemptions generally do not apply to cities adopting a home rule option unless specifically approved by voters. The principal constitutional exemptions that could apply to the city of Phoenix are debtservice payments, expenditures of federal funds, certain state-shared revenues and other long-term debt obligations. Exemptions associated with revenues not expended in the year of receipt may be carried forward and used in later years. The 1979-80 expenditure base may be adjusted for the transfer of functions between governmental jurisdictions. The constitution provides for four processes to exceed the expenditure limitation: (1) a local four-year home rule option, (2) a permanent adjustment to the 1979-80 base, (3) a one-time override for the following fiscal year, and (4) an accumulation for pay-as-you-go capital. All require voter approval. City of Phoenix voters have approved eight local home rule options in 1981, 1985, 1991, 1995, 1999, 2003, 2007 and 2011. Before 1999, the home rule options generally excluded enterprise operations such as Aviation, Water, Wastewater and Solid Waste from the expenditure limitation. Beginning in 1999, the voters approved establishing the city’s annual budget as the spending limit. Voters approved the permanent annual exclusion in 1981 of the following amounts for payas-you-go capital: $5 million for Aviation, $6 million for Water, $6 million for Wastewater and $2 million for General Fund street improvements. The current home rule option, which was approved in 2011, will expire at the end of fiscal year 2015-16. As recommended by the 2015 Expenditure Limit Task Force, a home rule option will be presented to voters on the August 25, 2015 ballot that would once again set the limit at the city’s annual budget after public hearings in all Council districts. If approved, that limit will be in effect for four fiscal years from 2016-17 through 2019-20 and will allow Phoenix residents to continue to control local expenditures. BUDGET BASIS OF ACCOUNTING The city’s budget basis of accounting is based on the modified accrual basis plus encumbrances. This method recognizes revenues in the period that they become available and measurable, and expenditures are recognized in the period the associated liability is incurred. This method differs from generally accepted accounting principles (GAAP) used for preparing the city’s comprehensive annual financial report. The major differences between the modified accrual basis and the GAAP basis are listed below. A reconciliation of budgetary and GAAP fund balances is provided each year in the comprehensive annual financial report. 71 Table of Contents 1. For budgetary purposes, encumbrances (contractual commitments to be performed) are considered the equivalent of expenditures rather than as a reservation of fund balance. 2. Grant revenues are budgeted on a modified cash basis. GAAP recognizes grant revenues on an accrual basis. 3. Fund balances reserved for inventories, bonded debt and unrealized gains or losses on investments are not recognized in the budget. 4. In lieu property taxes and central service cost allocations (levied against certain Enterprise and Special Revenue funds) are budgeted as interfund transfers rather than revenues and expenses. 5. For budgetary purposes, all fixed assets are fully expensed in the year acquired. The differences between modified accrual basis plus encumbrances and GAAP accounting listed above are similar to those of many other local governments. These differences exist largely because they provide a more conservative view of revenues and expenditures and because they provide greater administrative controls. GENERAL FINANCIAL POLICIES In addition to the legal constraints outlined in the previous section, a number of administrative and City Councilapproved policies provide guidance and direction to the budget development process. Form of Budget Adoption 1. Allocation of Appropriations - Funds appropriated by the City Council are allocated to programs, offices, departments, divisions, sections, projects and type of expenditure by the city manager or as delegated to the Budget and Research director to provide managerial control and reporting of budgetary operations. 2. Budget Controls - At the department level, control of expenditures is governed by Administrative Regulation. City departments prepare revised expenditure estimates twice a year. The 72 Budget and Research Department keeps the city manager and the City Council advised on the status of the budget through periodic budget status reports. Mid-year revenue shortfalls can result in the adoption of mid-year expenditure reductions. 3. Contingency Amounts - A contingency allowance is appropriated to provide for emergencies and unanticipated expenditures. The use of contingency funds is intended for one-time expenses since it represents limited one-time resources in the fund balances. Expenditures may be made from contingencies only upon approval by the City Council with recommendation by the city manager. Over the last 10 years, the city’s contingency fund has been as low as 2.7 percent of General Fund expenditures, and will be at the highest level in 2015-16 at 4.0 percent. Best practices recommend a contingency fund of five percent of total expenditures. In order to ensure an adequate fund balance is maintained, the City Council has adopted a policy to gradually increase the contingency to five percent over multiple years. Enterprise and Special Revenue funds have varying levels of contingency funding consistent with the variability in revenues and expenditures associated with the services provided. Due to a potential increase in the sales tax for transportation from 0.4% to 0.7%, which will be presented to voters on the August 25, 2015 ballot, an additional $45 million has been included in the 2015-16 contingency for the Transit 2000 fund. 4. Ordinances - Three budget ordinances are adopted each fiscal year: (1) the operating funds ordinance, (2) the capital funds ordinance, and (3) the reappropriated funds ordinance. The last ordinance is required because the appropriation authority for unexpended amounts, including those encumbered, lapses at the end of the fiscal year. Since all expended amounts must be included in the budget adoption ordinance, the city re-budgets all encumbrances outstanding at year’s end. Cost Allocation and Expenditure Policies 1. Administrative Cost Recovery - The Finance Department prepares an indirect cost allocation plan that conforms to federal guidelines for grant reimbursement of appropriate administrative costs. The allocated costs are charged to eligible federal grant funds through a fund transfer to the General Fund. 2. Central Services Cost Allocation - The Finance Department annually calculates the full cost of central services provided to Enterprise funds. These allocated costs are recouped from the Enterprise funds through fund transfers to the General Fund. 3. Employee Compensation Costs - Costs for employee compensation including all wages, social security, industrial, health, life, unemployment, dental insurance and other personal allowances are allocated to each department. Annual amounts for cash conversion of vacation, compensatory time and sick leave are included in the budget. However, future values of compensated absences are not included in the budget but are disclosed in the notes to the comprehensive annual financial report at year’s end. 4. Enterprise Cost Recovery - Aviation, Water, Wastewater and Solid Waste are fully self-supporting from rates, fees and charges and, as such, are budgeted and accounted for as Enterprise funds. Cost recovery includes direct operation and maintenance expenses, capital expenditures, debt service, indirect cost allocation, and in-lieu property taxes, where allowable. The Convention Center, while accounted for using enterprise accounting principles, is partially financed from rental and parking fees with the remainder coming from earmarked sales taxes. Finally, federal regulations preclude the Aviation Fund from paying in-lieu property taxes. By City Council policy, the Convention Center Fund does not pay in-lieu property taxes. Table of Contents 5. Internal Cost Accounting Allocation Interdepartmental services performed by one department for another are credited to the performing department and charged to the receiving department to reflect the accurate costs of programs. The rates used are intended to reflect full costs including appropriate overhead. 6. Maintenance and Replacement of Rolling Stock and Major Facilities - A multiyear plan is used to project the need for, and costs of, significant street pavement, facility and equipment repair and replacement. The planning horizon for each asset category is matched to the life of the asset. Annually, that plan, combined with periodic physical inspections of streets, facilities, vehicles and other equipment, is used to develop funding levels for inclusion in the budget. During economic downturns, these amounts are debt-financed with a repayment schedule shorter than the expected life of the asset. 7. Pension Funding - In addition to other employee compensation amounts, pension amounts are allocated to each department. The required employer contribution rates are determined actuarially to fund full benefits for active members and to amortize any unfunded actuarial liability as a level percent of projected member payroll over the amortization period determined by the appropriate pension board. 8. Self-Insurance Costs - With a few exceptions, the city is fully self-insured for general and automotive liability exposures. The major exceptions to selfinsurance include airport operations, police aircraft operations and excess general and automotive liability for losses in excess of $7.5 million. An independent actuary determines the self-insurance costs, which are combined with purchased policy costs and allocated to department budgets based on the previous five years’ loss experience of each department. Revenue Management All local governments struggle to generate the funds necessary to provide, maintain and enhance the service demands of their community. Due to the legal limitations on property taxes in Arizona, and due to the pre-emption of city-imposed income, luxury and gas taxes, Arizona cities and towns largely rely on local sales taxes and state-shared sales, income and vehicle license taxes. In Phoenix, 39 percent of General Fund revenue comes from the local sales tax. This reliance on sales tax collections results in a highly cyclical revenue base. Significant decreases in total General Fund revenue and sales taxes in particular led to the City Council’s February 2010 approval of a temporary sales tax on food for home consumption effective April 1, 2010. The temporary food tax was reduced in half by the City Council effective Jan. 1, 2014, and the remaining tax expired by ordinance on March 31, 2015. Given the city’s reliance on sales taxes, developing personal income is an important step in managing the revenue base. In recent years, considerable effort has been devoted to attracting employers that will provide quality jobs and to developing a local workforce that will support the needs of quality employers. The city also has worked to develop an employment base that is not as heavily concentrated in the highly cyclical construction industry. However, the tenuous recovery in construction activity and slow job growth had a significant negative impact on revenue. Additionally, state legislative changes related to the “simplification” of Transaction Privilege Tax are expected to further reduce the city’s construction sales tax. Also important to managing the revenue base is the continued growth expected in Internet sales. The use tax is an important tool in reducing the impact of this shift from sales in “Bricks and Mortar” stores. The development of tourism-related sales tax base (hotels, restaurants and short-term car rentals) is another important hedge against future revenue loss due to growth in Internet sales. Finally, utility taxes levied against the sales of electricity, natural gas, telecommunications, water and sewer make up about 21 percent of our General Fund local sales tax base. Generally, utility taxes are not responsive to economic conditions and provide a fairly significant revenue source that remains stable during periods of economic downturn. In addition, several detailed revenue policies are listed below. 1. Privilege License and Use Taxes (Sales Tax) - The City Council may set the city sales tax rate by ordinance. The city sales tax rate on retail sales and most other categories is 2.0 percent. The Model City tax code exemption on food for home consumption was temporarily removed by City Council action in February 2010. By ordinance, the exemption was restored in April 2015. The food tax was previously last imposed in June 1980. The rate varies for certain other specialized taxing categories as outlined in the Operating Fund Revenues section of this document. 2. Property Tax - By City Council policy, the combined city property tax rate is $1.82 per $100 of assessed valuation. In accordance with the Council-adopted policy, the primary property tax levy is annually set at the previous year’s levy amount plus two percent and an amount associated with new property or to the limit imposed by the city charter, whichever is less. The secondary levy is then set at an amount necessary to achieve a total $1.82 tax rate. 3. In Lieu Property Taxes - In-lieu property taxes are charged to the Water, Wastewater and Solid Waste funds based upon acquisition or construction cost with the appropriate assessment ratio and current property tax rate applied. These amounts are calculated annually by the Finance Department. 73 Table of Contents 4. Annual User Fee Review - The city auditor conducts a comprehensive user fee review to project cost recovery rates, and then compares the projections to the established cost recovery policy. The rates are based upon generally accepted full-cost accounting standards. The city manager recommends expenditure reductions or fee adjustments to the City Council to maintain the established cost recovery policy. 5. Fines and Forfeitures - The Municipal Court has jurisdiction over establishing many of the fine and forfeiture fee schedules. 6. Parks and Recreation Fees and Charges - The Parks and Recreation Board has jurisdiction over establishing charges for miscellaneous recreational facilities and advising the City Council on fees to be set for golf courses, tennis centers and swimming pools. 7. Interest Earnings - Interest earnings from the investment of temporarily idle funds are credited to the fund generating the earnings. FUND STRUCTURE Special Revenue Funds The budget presented here is made up of three distinct fund groups: General, Special Revenue and Enterprise funds. All planned uses of these fund types are included in the annual budget. Fiduciary funds, which are described later in this section, are not included in the annual budget. Arizona Highway User Revenue (AHUR) – AHUR funds are made up of General Funds General – These revenues come from four major sources: local sales (privilege license) taxes, local primary property taxes, state-shared revenues, and user fees and other revenues. State-shared taxes include state-shared sales, vehicle license and income taxes. User fees and other revenues include cable and ambulance fees as well as interest earnings and fines. General funds are used to provide the most basic of city services including police, fire, parks, library, municipal court and neighborhood services. Parks – The City Charter requires that a portion of the primary property tax levy be used to support parks programs. To demonstrate compliance with this requirement, all parks revenues and expenditures are segregated in a separate fund. Library – State law requires that funds received for library purposes are segregated in a separate Library Fund. Revenues include library fines and fees, which are used to help offset library expenditures Cable Communications – Included in this fund are the revenues and expenditures associated with administering cable television licensing and programming the government and education access channels. 74 state-collected gas taxes and a portion of other state-collected fees and charges such as registration fees, driver’s licenses and motor carrier taxes. These funds can only be used for street maintenance and construction, and street-related debt service. Capital Construction – This fund is used to account for the two percent utility taxes on telecommunication services that are used for pay-as-you-go capital projects in the city’s right-of-way. City Improvement – This fund is used to account for debt payments incurred as a result of capital projects by the Civic Improvement Corporation. Community Reinvestment – Revenues and expenditures associated with economic redevelopment agreements are maintained in this fund. Court Awards – This fund includes revenue resulting from court awards of confiscated property under both the federal and state Organized Crime Acts. Expenditures are restricted to additional law enforcement programs in the Police and Law departments. Development Services – Fee revenues and expenditures associated with permitting and inspection services provided by the Planning & Development Department are maintained in this fund. Excise Tax – The Excise Tax Fund is used to account for tax revenues ultimately pledged to pay principal and interest on various debt obligations. Golf – The Golf Fund is used to account for revenue and expenditures associated with the rental, sales, development and maintenance of the city’s golf courses. Table of Contents Grant Funds – Grant funds include federal, state and local agency awards. These are Community Development Block Grant funds, Public Housing funds, Human Services funds and various other smaller grant allocations. Grant funds can be applied only to grant-eligible expenditures. Neighborhood Protection – These funds are used to account for the revenues and expenditures associated with a voterapproved 0.1 percent increase in the sales tax in 1993. Revenue from the tax increase is earmarked for police and fire neighborhood protection programs, and police Block Watch programs. The Police Department is allocated 70 percent, Fire Department 25 percent and Block Watch Programs 5 percent of revenues. Other Restricted Funds – This is a combination of funds used to segregate restricted revenues and related expenses. Included are Court Technology Enhancement Fees, Parks revenues such as Heritage Square and Tennis Center, and various other receipts and contributions received in small amounts and earmarked for restricted purposes. Parks and Preserves – This fund is used to account for the funds generated by the 0.1 percent increase in the sales tax approved by voters in 1999 for a 10-year period. In 2008, voters approved a 30-year extension to July 1, 2038. The funds are used to purchase state trust lands for the Sonoran Desert Preserve open space, and the development and improvement of regional and neighborhood parks to enhance community recreation. Public Safety Enhancement – These funds are used to account for the revenues and expenditures associated with a voterapproved 2.0 percent increment of the 2.7 percent sales tax on utilities with franchise agreements in March 2005. The Police Department, including the Office of Emergency Management, is allocated 62 percent and the Fire Department 38 percent of revenues. 2007 Public Safety Expansion – These funds are used to account for the 0.2 percent increase in the sales tax approved by voters in 2007. The funds are designated for hiring additional police personnel and firefighters; hiring crime scene investigator teams to improve evidence collection; improving fire protection services, to improve response times; and increasing paramedic and other emergency medical services. The Police Department is allocated 80 percent of this fund and the Fire Department is allocated 20 percent. Transit 2000 – This fund is used to account for the 20-year, 0.4 percent sales tax dedicated to transit improvements approved by voters on March 14, 2000. On the August 25, 2015 ballot, voters will be presented with an option to replace the Transit 2000 tax with a comprehensive transportation tax of 0.7 percent. If the item passes, the new tax will be in effect for a period of 35 years beginning on January 1, 2016. Fare box collections are also included in this fund. Enterprise Funds Regional Transit – This fund is used to account for transit services that are paid by and provided for other cities or funded by the Regional Public Transportation Authority. Regional Wireless Cooperative (RWC) – This fund accounts for revenues and expenditures associated with the Regional Wireless Cooperative (RWC), which is an independent, multi-jurisdictional organization that manages and operates a regional radio communications network built to seamlessly serve the interoperable communication needs of first responders and other municipal radio users in and around Central Arizona’s Valley of the Sun. Phoenix operates and maintains the network and is also responsible for accounting, budgeting, procurement and contracting for the RWC. Costs are shared among the RWC member organizations. Secondary Property Tax – In Arizona, property taxes are divided into two separate levies: primary and secondary. The primary levy can be used for general operating and maintenance expense. The secondary levy can only be used for payment of general obligation bond interest and redemption. Because of this restriction, secondary property tax funds are segregated in a Special Revenue Fund. Sports Facilities – This fund accounts for revenues generated from a 1.0 percent hotel/motel tax and a 2.0 percent tax on short-term vehicle rentals. These funds are designated for payment of debt service and other expenditures related to the downtown sports arena. Enterprise funds include Water, Wastewater, Aviation, Solid Waste and Convention Center funds. With the exception of Convention Center funds, these funds come entirely from the fees and rents paid by those who use the services and facilities provided. Enterprise funds are “self-contained” and can only be used to pay for the costs associated with Enterprise Fund-related services and programs. Therefore, fees are set to recover all costs associated with providing these services. These costs include day-today operations and maintenance, in lieu property taxes (as appropriate), pay-asyou-go capital improvements and debt service. Convention Center funds come from a combination of rental and parking income and earmarked sales taxes. These earmarked taxes include a portion of the hotel, restaurant and bar, construction contracting and advertising taxes levied by the city. This tax stream has been earmarked to repay the debt issued for the Convention Center facility and to provide for operations and maintenance costs. Fiduciary Funds Fiduciary funds, including trust and agency funds, represent funds held for others. As such, these funds are not included in the annual budget. Any contributions made to these funds using city funds are included in the budget for the appropriate fiscal year. Also, reserves and expenditures for fiduciary funds are not presented in the comprehensive annual financial report (CAFR). However, the year-end balances held in fiduciary funds are provided in the CAFR. 75 Table of Contents 76 Table of Contents Revenue Estimates Headline R pace compared to previous recoveries from economic recessions. Economists are predicting economic expansion in Arizona and the Phoenix metro area to continue at a moderate pace; gaining momentum in 2015 with no recession on the forecast horizon barring any unexpected economic shocks. There are several factors which continue to prevent a stronger pace of recovery, including slow rates of net migration and job increases. Additionally, the real estate and construction markets have not provided the same level of economic stimulus as experienced in years prior to the recession. City sales tax revenues are increasing; however, Phoenix is experiencing a diminished sales tax base due to population shifts to other cities and growth of businesses in other areas that provide taxable activities. Personal income is one of many indicators used for estimating state and local sales taxes and is expected to increase. Consistent with projections by local economists, the chart evenue estimates for 2015-16 are based on assumptions about the local economy, population changes, activity levels, underlying estimates for cost-recovery rates and fees, and on the continuation of current state revenue collection and sharing practices. In addition, other revenue estimates are developed using the most current information from outside entities that establish such fees. Examples of revenues derived from fees set by outside entities include portions of court fines and fees, and ambulance fees. Finally, consistent with the property tax policy adopted by Council in December 2011, the primary property tax levy remains at the maximum allowable amount. The current combined primary and secondary property tax rate remains the same at $1.82 in accordance with Council policy through 2015-16. State and local economic growth has improved over the past few years and is expected to continue, however at a slower below shows that personal income is expected to grow by 4.8 percent in 2015-16, which is up slightly from the 4.1 percent estimated for 2014-15. Several other economic indicators are used to develop revenue forecasts including the consumer price index, unemployment, population, gasoline sales, housing unit data, wage and salary related information, retail sales and disposable income. Projections of these economic variables are provided by The University of Arizona (UofA) and are used to develop sales tax forecasts using a statistical forecasting model developed specifically for the City of Phoenix. The estimation process also includes information gathered throughout the year from national and local publications, as well as opinions from professionals in economics and finance from state government, state universities and the private sector. Personal Income Growth 12% 10% 8% 8.2% $ 6% 4% 3.0% 2.8% 1.1% $ 2% 0% $ $ 3.8% $ 3.7% $ 3.1% $ 4.1% $ 4.8% $ $ (2%) (4%) (3.3%) (6%) 2006-07 2007-08 2008-09 2009-10 Fiscal Year 2010-11 2011-12 2012-13 2013-14 2014-15* 2015-16* *Estimated 77 Table of Contents FIVE YEAR EXCISE TAX FORECAST Excise taxes include local sales taxes, state-shared sales and income taxes, and sales tax license fees and permits. Excise taxes represent a significant portion of General Fund revenues. In addition to providing General Fund resources, local sales taxes also provide non-General Fund resources to programs such as Transit, Parks and Preserves, Convention Center and public safety. The following table details the five year excise tax revenue forecast. Included in the forecast are several economic assumptions including moderate growth for city and state sales tax; growth in population, but at a smaller rate than prior years; increases in personal income and job growth; decreased unemployment; marginal increases in consumer spending and continued improvement of the housing market. Although increases in personal income, jobs and population are expected, the pace of growth is expected to be slow and will prevent a robust recovery. The forecast also includes no further periods of recession and no change to state shared revenue formulas. The forecast accounts for elimination of the food for home consumption tax on April 1, 2015. CITY OF PHOENIX, ARIZONA FIVE YEAR EXCISE TAX REVENUE FORECAST (In Thousands of Dollars) 2013-14 2014-15 % 2015-16 % 2016-17 % 2017-18 % 2018-19 % 2019-20 % Actual Estimate Change Estimate Change Forecast Change Forecast Change Forecast Change Forecast Change Privilege License Tax Privilege License Tax1,3 $323,673 $323,103 -0.2% $326,222 1.0% $340,992 4.5% $357,223 4.8% $376,194 5.3% $397,131 5.6% 20,408 20,945 2.6% 20,189 -3.6% 21,110 4.6% 22,180 5.1% 23,457 5.8% 24,850 5.9% Police Block Watch1,3 1,457 1,496 2.7% 1,442 -3.6% 1,508 4.6% 1,584 5.0% 1,674 5.7% 1,775 6.0% Fire Neighborhood Protection1,3 7,288 7,480 2.6% 7,210 -3.6% 7,538 4.5% 7,922 5.1% 8,377 5.7% 8,876 6.0% Police - 2007 Public Safety Expansion1,3 46,647 47,875 2.6% 46,146 -3.6% 48,250 4.6% 50,693 5.1% 53,614 5.8% 56,799 5.9% Fire - 2007 Public Safety Expansion1,3 11,661 11,968 2.6% 11,535 -3.6% 12,062 4.6% 12,674 5.1% 13,404 5.8% 14,200 5.9% Parks and Preserves1,3 29,153 29,923 2.6% 28,841 -3.6% 30,157 4.6% 31,684 5.1% 33,510 5.8% 35,501 5.9% Police Neighborhood Protection1,3 Transit 2000 1,2,3 111,068 110,737 -0.3% 115,364 4.2% 120,628 4.6% 126,738 5.1% 134,041 5.8% 142,003 5.9% Convention Center Excise Tax3 44,311 47,706 7.7% 48,129 0.9% 49,830 3.5% 52,640 5.6% 56,369 7.1% 60,126 6.7% Sports Facilities Excise Tax3 15,988 16,486 3.1% 16,342 -0.9% 16,421 0.5% 16,602 1.1% 16,831 1.4% 17,063 1.4% 2,301 2,230 -3.1% 2,230 0.0% 2,284 2.4% 2,338 2.4% 2,394 2.4% 2,452 2.4% 110 -26.2% - Privilege License Fees (Annual) PLT Application Fees4 Treasury Collection Service Fee4 Government Lease Property Excise Tax Subtotal (PLT) 149 - -100.0% - - - - - - - 33 33 0.0% 9 -72.7% - -100.0% - - - - - - 302 300 -0.7% 325 8.3% 350 7.7% 375 7.1% 400 6.7% 425 6.3% $614,439 $620,392 1.0% $623,984 0.6% $651,130 4.4% $682,653 4.8% $720,265 5.5% $761,201 5.7% $87,297 $86,433 -1.0% $88,466 2.4% $90,846 2.7% $93,788 3.2% $96,808 3.2% $99,666 3.0% 6,885 6,924 0.6% 7,011 1.3% 7,116 1.5% 7,222 1.5% 7,331 1.5% 7,441 1.5% - 10,135 - 10,262 1.3% 10,416 1.5% 10,572 1.5% 10,731 1.5% 10,892 1.5% 4,688 4,694 0.1% 4,709 0.3% 4,780 1.5% 4,851 1.5% 4,924 1.5% 4,998 1.5% Utility & Franchise Utility & Franchise Tax Jail Tax General Excise Tax7 Storm Water Management Capital Construction 15,086 14,212 -5.8% 13,927 -2.0% 13,857 -0.5% 13,903 0.3% 14,026 0.9% 14,126 0.7% Police Public Safety Enhancement 15,406 15,517 0.7% 16,167 4.2% 16,787 3.8% 17,388 3.6% 17,956 3.3% 18,495 3.0% 3.0% Fire Public Safety Enhancement 9,443 9,509 0.7% 9,907 4.2% 10,286 3.8% 10,655 3.6% 11,003 3.3% 11,334 $138,805 $147,424 6.2% $150,449 2.1% $154,088 2.4% $158,379 2.8% $162,779 2.8% $166,952 2.6% Licenses & Permits 2,775 2,807 1.2% 2,797 -0.4% 2,867 2.5% 2,940 2.5% 3,016 2.6% 3,096 2.7% State Sales Tax3,5,6 127,005 131,672 3.7% 137,502 4.4% 144,241 4.9% 152,271 5.6% 161,376 6.0% 171,373 6.2% State Income Tax5,6 161,580 175,184 8.4% 174,234 -0.5% 178,000 2.2% 179,000 0.6% 183,000 2.2% 189,000 3.3% $1,044,604 $1,077,479 4.7% $1,291,622 5.0% Subtotal (Utility & Franchise) TOTAL 3.1% $1,088,966 1.1% $1,130,326 3.8% $1,175,243 4.0% $1,230,436 1/ Sales tax on food for home consumption reduced to 1% effective 1/1/2014, with complete elimination effective 4/1/2015. The reduction on 1/1/2014 only impacted the General Fund and Transit 2000 fund (see note 2). The Neighborhood Protection, Public Safety Expansion and Parks and Preserves funds were not impacted until the complete elimination of the tax on 4/1/2015. 2/ Effective with the reduction on 1/1/2014, the Transit 2000 fund no longer received any portion of the sales tax on food revenue, which was offset by reduced expenses from refinancing of Transit 2000 debt. 3/ FY 14/15 includes one-time revenue from Super Bowl 2015 to city and state sales tax projections in the hotel/motel, restaurants and bars, leases and rentals, and retail sales tax categories. 4/ Effective 1/1/2015, the City no longer charges a privilege license application fee and revenue is not expected to continue from treasury collection service activity due to legislation requiring the State of Arizona to collect taxes on behalf of all cities and towns. 5/ 6/ 7/ Assumes 2010 Census population for state shared revenues. Assumes no change to State shared revenue formulas or legislation that could impact state income or sales tax collections. City Council adopted a General Excise Tax on Water accounts in June 2014. Note: * Assumes no further period of recession and modest revenue growth for the forecast period. 78 * Assumes no change to current revenue base as provided in applicable state statutes and city ordinances. * Assumes no future fee increases/decreases or new sources of revenue. Table of Contents GENERAL FUNDS Total 2015-16 General Fund revenues are estimated to be $1,060.5 million or 1.0 percent more than 2014-15 estimates of $1,050.1 million. General Fund revenues consist of four major categories: local taxes, state-shared revenues, primary property taxes and user fees. Following are descriptions of the revenue sources within these four categories and explanations of 2015-16 revenue estimates. Local and state sales tax collections represent approximately 52 percent of General Fund revenues. Local sales taxes for 2015-16 are expected to grow by 1.3 percent over 2014-15 estimates. This is an increase from the (0.3) percent growth rate in local sales taxes estimated in 201415, which includes a one-time audit adjustment of $(3.1) million and accounts for the complete elimination of the food for home consumption tax on April 1, 2015. Phoenix’s share of state sales taxes for 2015-16 is expected to grow by 4.4 percent over 2014-15 estimates. This is increased from the 3.7 percent growth in Phoenix’s share anticipated in 2014-15. Combined local and state sales tax revenues for 2015-16 are expected to grow by 2.0 percent over 2014-15 estimates. Combined rates of growth since 2005-06 are provided in the chart below. Local and State Sales Tax Revenue Growth 16% 13.8% 9.0% 12% 8% 4.4% 4.4% 3.0% 3.0% 2.0% 4% 0.6% 0% (4%) (3.5%) (8%) (6.1%) (12%) (12.7%) (16%) 2005-06 2006-07 2007-08 2008-09 2009-10 Fiscal Year 2010-11 2011-12 2012-13 2013-14 2014-15* 2015-16* * Estimated 79 Table of Contents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able of Contents GENERAL FUNDS LOCAL SALES TAXES AND FEES Total Revenues – $1,060.5 Million This major revenue category consists of local sales tax, privilege license fees, use tax, franchise taxes and fees, and other general excise taxes. The 2015-16 estimate is $434.5 million, which is $5.3 million or 1.2 percent greater than the 2014-15 estimate of $429.3 million. The assumptions used to estimate local taxes and related fees follow. Local Sales Tax and Related Fees 41.0% Local Sales Tax The city of Phoenix’s local sales tax consists of 15 general categories that are collected based on a percentage of business income accruing in each category. To protect local businesses, Phoenix also levies a use tax on purchases where no sales taxes were paid. Of the 15 categories collected, all except advertising provide General Fund resources and contribute to voter-approved resources for police and fire, parks and preserves, and transit programs. Portions of several categories and the entire advertising category are restricted to the Convention Center Fund and/or the Sports Facilities Fund. Effective April 1, 2010, the temporary Phoenix Emergency Privilege Sales Tax on Food provided for the taxation of the sale of food for home consumption under the retail classification. The rate for the sales tax on food was reduced from two percent to one percent effective January 1, 2014 and the tax expired as planned on March 31, 2015. Only the General Fund and Transit 2000 funds were impacted by the rate reduction. While the Transit 2000 fund no longer received any portion of the sales tax on food after the rate was reduced, the revenue impact was offset by reduced expenses from refinancing of Transit 2000 debt. The voter-approved Neighborhood Protection, 2007 Public Safety Expansion and Parks and Preserves Funds were not impacted until the complete elimination of the tax on April 1, 2015. Beginning in May 2005, 2 percent of utilities sales tax collections paid by those utilities with a franchise agreement were directed to the newly established Public Safety Enhancement Fund. Finally, an additional 2 percent tax on the telecommunications category provides resources for the Capital Construction Fund. The table below provides a listing of the local sales tax categories, indicating the specific tax rates for each fund and the total tax rate for each category. CURRENT LOCAL SALES TAX RATES BY CATEGORY General Neighborhood Fund Protection Advertising Contracting Job Printing Publishing Transportation/Towing Restaurants/Bars Leases/Rentals/ Personal Property Short-Term Motor Vehicle Rental Commercial Rentals Lodging Rentals Under 30 Days Lodging Rentals 30 Days and Over Retail Retail Food Sales (1) Amusements Utilities Telecommunications 2007 Public Safety Expansion Public Safety Enhancement Parks & Transit Convention Sports Capital Preserves 2000 Center Facilities Construction Total – 0.7% 0.7% 0.7% 0.7% 0.7% – 0.1% 0.1% 0.1% 0.1% 0.1% – 0.2% 0.2% 0.2% 0.2% 0.2% – – – – – – – 0.1% 0.1% 0.1% 0.1% 0.1% – 0.4% 0.4% 0.4% 0.4% 0.4% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% – – – – – – – – – – – – 0.5% 2.0% 2.0% 2.0% 2.0% 2.0% 1.2% 0.1% 0.2% – 0.1% 0.4% – – – 2.0% 1.2% 1.3% 0.1% 0.1% 0.2% 0.2% – – 0.1% 0.1% 0.4% 0.4% – – 2.0% – – – 4.0% 2.1% 1.2% 0.1% 0.2% – 0.1% 0.4% 2.0% 1.0% – 5.0% 1.2% 1.2% 0.6% 1.2% 2.7%* 2.7% 0.1% 0.1% 0.1% 0.1% – – 0.2% 0.2% 0.2% 0.2% – – – – – – 2.0%** – 0.1% 0.1% 0.1% 0.1% – – 0.4% 0.4% – 0.4% – – – – – – – – – – – – – – – – – – – 2.0% 2.0% 2.0% 1.0% 2.0% 4.7% 4.7% The General Fund portion of the utilities category includes the 2.0 percent franchise fee paid by utilities with a franchise agreement. The Public Safety Enhancement designated 2.0 percent sales tax applies only to those utilities with a franchise agreement. (1) Effective 04/01/10, the City of Phoenix re-instated the Retail Food Sales tax under the Retail Category at 2.0% for 5 years. However, the City of Phoenix decreased this rate to 1% effective 01/01/14, with full expiration on 03/31/15. Prior to the reduction in the rate to 1% on 01/01/14, the sales tax on food was allocated the same as other Retail Sales tax. * ** 81 Table of Contents General Fund sales tax revenue is collected on three rental categories: leases and rentals of personal property, commercial real property rentals and apartment rentals. For 2015-16, the leases and rentals of personal property and commercial real property categories are expected to grow 1.7 and 4.7 percent respectively and apartment rentals is projected to grow by 4.0 percent. These three categories combined are approximately 18 percent of local General Fund sales tax revenue. The contracting category is expected to decline by 1.3 percent in 2015-16 based on projections from the UofA. Activity in Phoenix for the commercial, retail and residential markets has not fully recovered since the recession and the growth trend in the current fiscal year continues to be negative. Additionally, state legislative changes to contracting sales tax are expected to decrease annual collections in this category. This category represents approximately 4 percent of the local General Fund sales tax revenue. The restaurants and bars category is expected to increase 4.6 percent and the hotel/motel category is expected to increase 1.1 percent in 2015-16. These two categories, combined with revenue from short-term motor vehicle rentals, are closely related to tourism activity. The expected growth rate for these categories in 2015-16 is lower than expected economic activity as 2014-15 collections included one-time increases to sales tax revenue related to the Super Bowl. Revenues from these activities represent approximately 9 percent of local General Fund sales tax revenue. The utility tax category is approximately 21 percent of local General Fund sales tax revenue. The category includes electricity, natural and artificial gas, water consumption, sewer service and communications activities. The 2015-16 estimate for utility sales and franchise tax revenue is $88,318,000, which is an increase of 1.7 percent over the 2014-15 estimate. The increase is due to expected modest increases in account growth and utility consumption as the economy continues to improve. 82 GENERAL FUNDS Local Sales Taxes Various Leases and Rentals 18% Retail 41% Tourism-related 9% Contracting 4% A use tax is assessed on the purchase of tangible personal property, which is stored, used or consumed within the city, and for which a local sales tax has not been paid at an equivalent rate to the city of Phoenix rate. The tax also applies to items purchased for resale and subsequently used or consumed in the business. The 2015-16 estimate of $22,183,000, is an increase of 7.5 percent over the 2014-15 estimate. This category is subject to fluctuations in purchasing practices, as well as economic drivers. The use tax category is approximately 5.3 percent of local General Fund sales tax revenue. The following table shows General Fund sales tax collections since 2011-12. The amounts shown exclude the additional tax items that are collected based on water service accounts (jail tax and general excise tax). Other 7% Utility & Franchise 21% GENERAL FUND SALES TAXES (In Thousands of Dollars) Fiscal Year Revenues 2011-12 $392,922 % Change From Previous Year 5.1% 2012-13 403,646 2.7 2013-14 410,970 1.8 2014-15 (Est.) 409,536 (0.3) 2015-16 (Est.) 414,688 1.3 1/ Accounts for the expiration of the food for home consumption sales tax effective April 2015 and one-time revenue from the Super Bowl. 1/ Table of Contents Privilege License Fees The city charges a $50 annual license fee to businesses that engage in activity where a transaction privilege tax is imposed. This category also includes a $2 per unit ($50 maximum) annual fee on each apartment complex for non-transient lodging. The 2015-16 estimate for privilege license fee revenue of $2,239,000 represents a 5.6 percent decrease from the 2014-15 estimate of $2,373,000. The decrease is attributable to the elimination of a $20 privilege license tax application fee that will no longer be required due to legislation directing the State of Arizona to collect taxes on behalf of all cities and towns. Other General Fund Excise Taxes The jail tax collected on water service accounts was implemented on October 1, 1990, and provides resources to help offset jail costs paid to Maricopa County for misdemeanor defendants. The City Council voted to reduce the jail tax 50 percent effective July 2012. The 2015-16 estimate of $7,011,000 represents a 1.3 percent increase from the 2014-15 estimate of $6,924,000. This category also includes a general city services excise tax on municipal services bills based on water meter size implemented in July 2014. The 2015-16 estimate for the general city services excise tax is $10,262,000 and represents a 1.3 percent increase from the 2014-15 estimate of $10,135,000. STATE-SHARED REVENUES This major revenue category consists of the city’s share of the state sales tax, the state income tax and vehicle license tax. The 2015-16 estimate for this category is $367.5 million, which is $6.2 million or 1.7 percent more than the 2014-15 estimate of $361.3 million. The increase is due to an estimated increase of 4.4 percent in stateshared sales taxes and moderate growth of 2.5 percent in state vehicle license taxes. State-shared income tax revenue for 201516 is estimated to decrease 0.5 percent from the 2014-15 estimate. State-shared GENERAL FUNDS Total Revenues – $1,060.5 Million State-Shared Revenue 34.7% income taxes are based on actual collections received two years prior. The 2015-16 projected state-shared income tax revenue estimate of $174,234,000 is based on actual collections received in 2013-14 and is slightly less than the 2014-15 projected revenue of $175,184,000. State Sales Tax The state sales tax rate on most taxable activities is 5.6 percent. The revenues are split between a “distribution base,” of which Phoenix receives a share, and a “combined non-shared” category, which is allocated entirely to the state. With exceptions for some categories, the distribution base consists of either 20 or 40 percent of collections depending on the tax classification. The 0.6 percent education tax included in the total tax rate is not included in the distribution base. Under the current formula, incorporated cities receive 25 percent of the distribution base. These funds are distributed to individual cities on the basis of relative population percentages. Phoenix’s share of the distribution to cities for 2015-16 is estimated at 28.80 percent. The city’s share of the state sales tax for 2015-16 is expected to be $137,502,000, which is $5,830,000 or 4.4 percent more than the 2014-15 estimate of $131,672,000. This estimate is based on the assumption ________________________________________________________________________ STATE SALES TAXES (In Thousands of Dollars) ________________________________________________________________________ Cities’ Share of State Collections Phoenix’s Share __________________ ______________________________ Fiscal Year Total % Change Percent Amount % Change ________________________________________________________________________ 2011-12 $392,476 5.1% 28.8% $114,018 2.0% 2012-13 411,118 4.7 28.8 118,730 4.1 2013-14 437,629 6.4 28.8 127,005 7.0 2014-15 (Est.) 457,283 4.5 28.8 131,672 3.7 2015-16 (Est.) 475,335 3.9 28.8 137,502 4.4 83 Table of Contents that, similar to the local economy, the state economy will continue to improve in 2015-16. The table on the previous page shows the cities’ share of state sales taxes, Phoenix’s allocation and annual increase/decrease since 2011-12. The population factor changes with decade or mid-decade census counts and periodic adjustments made throughout the year. State Income Tax Since 1973, cities in Arizona have shared 15 percent of the actual state personal and corporate income tax collected two years earlier. Individual cities receive their portion based on the cities’ share of the state population. The 15 percent portion of the state income tax, which will be distributed to Arizona cities and towns in 2015-16, is expected to be $605.6 million. The distribution represents actual individual and corporate income tax collections by the state in the 2013-14 fiscal year. The anticipated $605.6 million is a 0.5 percent decrease from the previous fiscal year. The decrease is attributable to lower than estimated individual and corporate income tax collections. Phoenix's total distribution for 2015-16 is estimated at $174,234,000 and is a decrease of $950,000 or 0.5 percent from the 2014-15 estimate of $175,184,000. The following table shows the total cities’ share of state income tax, Phoenix’s share, percentage allocation and annual increase/decrease since 2011-12. Similar to sales tax sharing, population is changed only on the basis of a census count with periodic corrections made throughout the year. 84 STATE INCOME TAX (In Thousands of Dollars) % Shared w/Cities Fiscal Year 2011-12 2012-13 2013-14 2014-15 (Est.) 2015-16 (Est.) Cities’ Share of State Collections Total 15.0% 15.0 15.0 15.0 15.0 $424,573 513,628 561,001 608,936 605,634 % Change (10.4)% 21.0 9.2 8.5 (0.5) Phoenix’s Share Percent Amount % Change 28.8% 28.8 28.8 28.8 28.8 $122,012 147,668 161,580 175,184 174,234 (15.1)% 21.0 9.4 8.4 (0.5) Table of Contents Vehicle License Tax Vehicle license taxes have been shared with Arizona cities and towns since 1941. The tax is assessed on the basis of an ad valorem rate on each $100 in value. The value is equal to a percent of the manufacturer’s base retail price at the time of initial registration. During each succeeding year, this value is decreased until the established minimum amount is reached. The Arizona Department of Transportation collects and distributes the tax. Currently, 37.61 percent of collections are allocated to the Arizona Highway User Revenue Fund. The remainder is allocated by percentage to various state funds as well as to the counties and cities. The state is responsible for distributing funds to cities according to their relative population within the county. Based on the 2010 Census, Phoenix’s percentage of population within Maricopa County is approximately 40.9 percent, down from 42.6 percent based on the 2005 Census. Phoenix’s share of the vehicle license tax for 2015-16 is anticipated to be $55,807,000 which is $1,350,000 or 2.5 percent more than the 2014-15 estimate of $54,457,000. The following table shows the cities’ share of the vehicle license tax, Phoenix’s share, allocation percentage and annual percentage change since 2011-12. PRIMARY PROPERTY TAX Arizona property taxes are divided into two levies. The primary levy is used for general operation and maintenance expense. The secondary levy can only be used for voterapproved general obligation bond debt service. The annual increase in the primary property tax levy is limited by the Arizona Constitution to a 2 percent increase over the prior levy plus an estimated levy for previously unassessed property (primarily new construction), and allowable tort liability judgments. The Phoenix City Charter also limits the primary property GENERAL FUNDS Total Revenues – $1,060.5 Million Primary Property Tax 13.2% ________________________________________________________________________ PRIMARY PROPERTY TAX ________________________________________________________________________ Primary Assessed Rate per $100 Valuation % Primary Levy % Net Assessed Fiscal Year (in Millions) Change (in Thousands) Change Valuation ________________________________________________________________________ 2011-12 $12,232 (19.0)% $128,955 (3.3)% $1.0542 2012-13 10,803 (11.7) 133,929 3.9 1.2397 2013-14 9,890 (8.5) 145,024 8.3 1.4664 2014-15 10,298 4.1 139,448 (3.8) 1.3541 2015-16 (Est.) 10,577 2.7 141,880 1.7 1.3414 ________________________________________________________________________ ________________________________________________________________________ VEHICLE LICENSE TAX (In Thousands of Dollars) ________________________________________________________________________ Amount Distributed by Phoenix’s Share Increase/(Decrease) Fiscal Year Maricopa County Percent Amount Amount Percent ________________________________________________________________________ 2011-12 $113,392 2012-13 118,206 2013-14 126,240 2014-15 (Est.) 133,000 40.9% $46,400 $(1,898) (3.9)% 40.9 48,370 1,970 4.2 40.9 51,689 3,319 6.9 40.9 54,457 2,768 5.4 2015-16 (Est.) 136,297 40.9 55,807 1,350 2.5 ________________________________________________________________________ 85 Table of Contents Primary Property Tax Rate (combined rate each year is $1.82) $1.75 $1.50 $1.47 $1.25 $1.00 $1.35 $1.34 $1.24 $1.05 $0.75 $0.50 $0.25 $0.00 2011-12 2012-13 2013-14 2014-15 Fiscal Year tax rate to no more than $1.00 plus the amount to cover the costs of libraries. Before 1995-96, the maximum levy allowed by the Arizona Constitution had been levied each year. Leading up to 199596, a number of years of declining assessed valuations, necessitated deferral of the property tax-supported Capital Improvement Program. A new revenue policy also was established. This policy called for a maximum and minimum allowable combined primary and secondary property tax rate. By 1995-96, the application of this revenue policy had driven the combined rate down to the adopted minimum of $1.82. By Council policy, the $1.82 combined rate remains in effect today. The 86 2006 Bond Committee recommended that maximum allowable primary property taxes be levied in order to help support operating and maintenance costs resulting from 2006 bond-funded capital projects. In 2012, voters approved Proposition 117, amending the Arizona Constitution by capping the annual increase in limited property values used to calculate primary net assessed value. Beginning in fiscal year 2015-16, the amendment caps the limited property value at no greater than 5 percent above the previous year, plus new construction. The above chart shows the changes in the primary property tax since 2011-12. In accordance with the Council adopted policy, the estimated 2015-16 primary property tax levy is $141,880,000. The levy is a 1.7 percent increase over the 2014-15 levy of $139,448,000. The primary 2015-16* *Estimated net assessed valuation of $10.58 billion is 2.7 percent above the 2014-15 primary net assessed valuation of $10.30 billion. Historically, actual property tax collections have been slightly lower than the amount levied. For 2015-16, collections for primary property tax are estimated to be $140,363,000 or 98.9 percent of the levy amount. The 2015-16 levy results in a primary property tax rate of $1.3414 per $100 of assessed value and a secondary property tax rate of $0.4786, which maintains a total property tax rate of $1.82 per $100 of assessed value. The table on the previous page shows primary assessed valuation, primary property tax revenues and primary rates since 2011-12. Table of Contents USER FEES/OTHER REVENUES This major revenue category consists of licenses and permits, fines and forfeitures, cable television fees, parks and libraries fees, various user fees designed to recover the costs of providing specific city services, and other miscellaneous General Fund revenue sources. The 2015-16 estimate for this category is $118.1 million, which is $3.5 million or 2.9 percent less than the 2014-15 estimate of $121.6 million. Following are descriptions of the various categories and explanations of the revenue estimates. GENERAL FUNDS Total Revenues – $1,060.5 Million User Fees and Other Revenues 11.1% Licenses and Permits This category consists of various business permit application and annual fees including liquor license applications, amusement machines, annual liquor licenses and other business license applications and fees. The 2015-16 estimate of $2,797,000 is slightly less than the 2014-15 estimate of $2,807,000. The 2014-15 estimate accounts for a one time increase in business license application fees as a result of the Super Bowl, which explains the slight decline in revenue for 2015-16. Fines and Forfeitures Court Default Fee This category is comprised of various sanctions including traffic moving violations, criminal offense fines, parking violations, driving under the influence and defensive driving program revenues. The 2015-16 estimate is $16,225,000, which is 0.5 percent higher than the 2014-15 estimate of $16,148,000. The increase is attributable to anticipated increases in revenue from parking violations. A $25 default fee was implemented in 1993-94 in order to recover court costs associated with defendants who fail to appear for court appearances or fail to pay previously imposed sanctions on civil traffic violations. The 2015-16 estimate for this revenue category is $920,000, which is unchanged from the 2014-15 estimate. Activity related to the court default fee is not expected to increase. Cable Communications The city imposes up to a 5 percent fee on the gross receipts of cable television licensees in return for the use of streets and public rights of way by cable companies in the provision of cable television service. The 2015-16 estimate of $9,500,000 is unchanged from the 2014-15 estimate. The projection assumes no change in the customer base for the current cable providers. Cable providers also make annual payments to the Educational Access Account, which are adjusted annually by the consumer price index. 87 Table of Contents Fire Library Fees Police The Fire Department receives fees from various services. The majority of the revenue comes from emergency transportation service (ETS). This user fee includes basic life support and advanced life support services and related charges for mileage and supplies for the provision of ambulance service. The 201516 estimate for ETS is $30,800,000, which is $755,000 or 2.4 percent less than the 2014-15 estimate of $31,555,000. The projected decrease is due to state legislative action that will reduce the reimbursement rate for emergency transportation services from the Arizona Health Care Cost Containment System from 80.0% to 68.6% in 2015-16. Other Fire revenue sources include fire prevention inspection fees, computer-aided dispatch (CAD) and various other services provided to the community. The 2015-16 estimate for other fire services is $12,135,000 which is $368,000 or 3.1 percent more than the 2014-15 estimate of $11,767,000. The increase is based on historical growth rates and assumes modest growth in 2015-16. Library fee and fine revenue for 2015-16 is $1,018,000 which is $7,000 or 0.7 percent more than the 2014-15 estimate of $1,011,000. Library revenues are expected to grow modestly due to an increase in fees for room rentals at City libraries effective January, 2015. The Police Department receives revenues for various services and programs. Police services are provided on a fee-per-hour basis for school and athletic events as well as other activities where a law enforcement presence is desired. In addition, a false alarm program includes both permit fees and assessments for false alarm responses. For 2015-16, the estimate of $14,041,000 is $1,211,000 or 7.9 percent less than the 2014-15 estimate of $15,252,000. The decrease is due to onetime revenue received in 2014-15 for police personal services billings that will not occur in 2015-16. Hazardous Materials Permit and Inspection Fee Because incidents involving hazardous materials have increased over the years, a hazardous materials permit and inspection fee was established in October 2001. Revenues from this category are used to recover direct costs incurred for inspecting businesses that use hazardous materials. Upon review in 2003-04, the annual permit fee amount was raised. This annual permit now varies from $400 to $1,650 and depends on the volume of hazardous materials stored on site. The 2015-16 estimate is $1,250,000, which is unchanged from the 2014-15 estimate. 88 Parks and Recreation Fees This category includes parks concession revenues, swimming pool revenues, fees for the use of various park facilities such as ball fields, recreation programs, cell towers and swimming pools, activities at Maryvale Stadium and the Papago Baseball Facility, and other miscellaneous park fees. The 2015-16 estimate of $7,304,000 is $228,000 or 3.0 percent below the 2014-15 estimate of $7,532,000. The decrease in 2015-16 is due to an expected contractual decrease in rent revenue from Live Nation. Planning User fees in this category include revenue from the sale of codes and plans, rezoning fees and zoning adjustment fees for use permits and variances. The 2015-16 estimate of $1,314,000 is $60,000 or 4.8 percent above the 2014-15 estimate of $1,254,000. Activity levels for rezoning and zoning cases are anticipated to increase in 2015-16. Street Transportation This user fee category includes permit fees for utility construction in the public rights of way as well as utility ordinance inspections. The 2015-16 estimate of $4,432,000 is $279,000 or 5.9 percent less than the 2014-15 estimate of $4,711,000. The decrease is due to an anticipated reduction in recoveries from damage claims. Other Service Charges Revenue in this category is composed of several non-tax sources including interest income, parking meter revenue, in lieu property taxes, sales of surplus and abandoned property, and various rental, parking and concession categories. The 2015-16 estimate of $13,379,000 is $1,340,000 or 9.1 percent less than the 2014-15 estimate of $14,719,000. The decrease is primarily due to fewer sales of city owned land and buildings anticipated in 2015-16 compared to 2014-15. The decrease is offset by anticipated increases in parking meter revenues and interest earnings. Table of Contents All Other Fees Neighborhood Protection Sales Tax This fee category consists of miscellaneous service charges in the Finance, Human Services and Neighborhood Services departments and miscellaneous categories. The 2015-16 estimate of $2,975,000 is $191,000 or 6.0 percent less than the 201415 estimate of $3,166,000 and is due to one-time recoveries from the State in 2014-15, which is not anticipated to occur in 2015-16. This 0.1 percent sales tax rate was approved by the voters in October 1993 and implemented in December 1993. As presented to the voters, the 0.1 percent increase is specifically earmarked for Police neighborhood protection programs (70 percent), Police Block Watch programs (5 percent) and Fire neighborhood protection programs (25 percent). The 2015-16 estimate of $28,841,000 is $1,080,000 or 3.6 percent less than the 2014-15 estimate of $29,921,000. These estimates are consistent with those for the same categories in the local sales tax discussion and reflect the expiration of the food tax effective April 1, 2015. Also, $218,000 is estimated for combined net interest earnings in 2015-16. NON-GENERAL FUNDS Non-General Fund revenues consist of two major categories: Special Revenue and Enterprise funds. The following sections provide descriptions of the various revenue sources in each category and explanations of 2015-16 revenue estimates. The table on the next page provides the 2014-15 and 2015-16 estimates and 2013-14 actual revenue amounts for revenues within these two categories. SPECIAL REVENUE FUNDS This category consists of several revenue sources that are earmarked for specific purposes. Included in this category are voter-approved sales taxes for Neighborhood Protection, Parks and Preserves, Transit 2000, Public Safety Enhancement, and 2007 Public Safety Expansion. Also included in this category are revenue from Court Awards, Development Services, Capital Construction, Sports Facilities, Arizona Highway User Revenue funds, Public Transit, Community Reinvestment, Secondary Property Tax, Golf Courses, grant funds and other revenues. 2007 Public Safety Expansion Tax The 2007 Public Safety Expansion sales tax is a 0.2 percent sales tax approved by voters in September 2007 and implemented in December 2007. Revenues are allocated 80 percent to Police and 20 percent to Fire. The funds are to be used for hiring additional police personnel and firefighters; to hire crime scene investigation teams to improve evidence collection; and to improve fire protection services, improve response times, and increase paramedic and other emergency medical services. The 2015-16 estimate is $57,681,000 or 3.6 percent less than the 2014-15 estimate of $59,843,000. These estimates are consistent with those for the same categories in the local sales tax discussion and reflect the expiration of the food tax effective April 1, 2015. Also, ($104,000) is estimated for interest earnings in 2015-16 due to the negative ending fund balance in this fund. Public Safety Enhancement Sales Tax The Public Safety Enhancement sales tax was implemented on May 1, 2005, and is made up of the 2.0 percent increment of the 2.7 percent sales tax on utilities with franchise agreements. The fund is allocated between Police and Fire needs. The Police Public Safety Enhancement Fund is allocated 62 percent of revenues and is dedicated to Police and Emergency Management needs. The Fire Public Safety Enhancement Fund is allocated 38 percent of the revenues collected and is dedicated to Fire needs. The 2015-16 estimate of $26,074,000 is $1,048,000 or 4.2 percent greater than the 2014-15 estimate of $25,026,000. Parks and Preserves Sales Tax The Parks and Preserves sales tax is a 0.1 percent sales tax rate increase approved by voters in September 1999 and implemented in November 1999. Revenues from the 0.1 percent tax are allocated to park improvements and acquisition of desert preserves. This tax was renewed by voters for a 30-year period in May 2008. Sixty percent of the revenues are to be used for parks and recreation and forty percent for desert preserves. The 2015-16 estimate of $28,841,000 is $1,082,000 or 3.6 percent less than the 2014-15 estimate of $29,923,000. These estimates are consistent with the estimates for the same categories in the local sales tax discussion and reflect the expiration of the food tax effective April 1, 2015. Also, $206,000 is estimated for interest earnings in 2015-16. 89 Table of Contents ">";"  $#"% !"# A <@> >#  + 6&   0 %,       !"# $#"% " &'&   /  ' 0 1 23   ' 0 1  &    5       6     7 % 3      3    3 $  8  9&71 #    6    1      1 3 1 62   :   3  ;0    3 $      3  $  < 3  6     ! & 3   9  =  00' 9    >&    +0? , ;   ' 9   ;  9      ;   1 % 3    @   ' 6  ;  >&  ;   '  ;  6 3  $  "6   $#"%   :  1  : 7  1   :      6   3 $  6>6 ">";"  $#"% 90 * ()( 4)( )4( () /()4 )44 ) )4 )( ) )( )( ()44/ )4 4)(/ / )4/( 4  )  ) ) * /)4 4)44 )( ) ) )/ )( * 44)/   * ) ()/( ) ) )4 /)4 ) )(/ )/ 4)/4 ) )(4 ) )// ) ( )/   )  )4 )/ * 4)/ ) /)/ ()//( ) )4/ )( * ()     * ()( /)// )/ ()/ 4)( ) )( ) ) 4)4/ )/ )( )/( )/ )(/  )/   )  ) )/    ?+%   , $        * +), +), )4 +)/4, )/4( +), ) +4, +, +(, +/)//, +, +, +, +(,  +4,     +, )/ -. -. -. -. -. -/. -. -. -(. -. -. /-. -. -4. -. -. -/. -. -. -. -. -. -4. -. -4. 4/-(. /-. -. -. -. * 4/) ) )( )4 )( ()/ 4) * )4 +/(, ) +)((, )/4 ()4 )( * (/) * )4 -. )4 ) ) )  -. -(. -/. -. -. () ) -. -. ()( (4)4 ) )( )( )( (() )4 /)4 )(( )( )4 /) () ) * )/)/4 * )) * ))( * ))4/ * )/)/ * ))4 * * Table of Contents Transit 2000 Funds The Transit 2000 tax is a 0.4 percent sales tax approved by the voters in March 2000 and implemented in June 2000. The 0.4 percent tax is specifically earmarked for transit programs and improvements. The 2015-16 estimate of $115,364,000 is $4,627,000 or 4.2 percent greater than the 2014-15 estimate of $110,737,000. These estimates are consistent with the estimates for the same categories in the local sales tax discussion. Effective with the food tax reduction on January 1, 2014, the Transit 2000 fund no longer received any portion of the sales tax on food revenue, which was offset by reduced expenses that resulted from refinancing of Transit 2000 debt. Also included in this fund are fare box and other miscellaneous transit system revenues. Fare box revenues are the revenues collected by the transit service for bus ridership. The 2015-16 fare box revenue estimate of $45,612,000 is 2.1 percent greater than the 2014-15 estimate of $44,657,000. The increase is primarily attributable to anticipated increases in ridership. The 2015-16 estimate also includes interest earnings and other miscellaneous revenue of $7,653,000 which is a 2.8 percent increase from 2014-15 estimate of $7,446,000. The increase is primarily attributable to increased revenue from bus shelter advertising and interest earnings. Court Awards Funds The city of Phoenix receives funds as a result of participation in the arrest and/or prosecution of certain criminal cases. These funds, referred to as Court Awards funds, represent court-ordered forfeitures of seized assets. Their use is limited to police and prosecutor functions. Revenue estimates are based on cases in progress. The estimate for 2015-16 is $5,263,000, which is $2,561,000 or 32.7 percent less than the 2014-15 estimate of $7,824,000. The decrease is due to reimbursements for the Police Department RMS system replacement that are included in 2014-15, but not in 2015-16. Development Services Revenues in this user fee category include building permits and plans review, subdivision and site plan fees, sign permit fees and engineering permits and plan review fees. These fees are used to fully support the activities of Development Services. The 2015-16 estimate is $43,496,000, which is $1,445,000 or 3.4 percent more than the 2014-15 estimate of $42,051,000. This increase assumes a continued increase in permit and review activity as the economy continues to expand. Capital Construction This category includes revenue from a 2 percent increase in the sales tax on telecommunications implemented in February 1998 and is intended to reimburse Phoenix residents for the use of their public rights of way by the telecommunications industry. These funds are used primarily for right-of-way improvements in the Street Transportation Capital Improvement Program. The 201516 estimate is $13,927,000, or 2.0 percent less than the 2014-15 estimate of $14,212,000. The telecommunications tax category has experienced a declining trend; thought to be caused by transition of wireless plans from direct voice to nontaxable data/Internet-based communications. This declining trend is not expected to improve in 2015-16. The 2015-16 estimate also includes interest earnings of $85,000. Sports Facilities Sports facilities revenues consist of a 1 percent portion of the 5.0 percent hotel/motel tax category, a 2 percent tax on short-term motor vehicle rentals, and interest revenue generated by the fund. The 2015-16 estimate is $16,342,000, which is $144,000 or 0.9 percent less than the 2014-15 estimate of $16,486,000. The revenue estimates are consistent with the General Fund sales tax estimates in the hotel/motel and short-term vehicle rental categories, and account for one-time revenue from Super Bowl in 2014-15. The 2015-16 estimate includes $7.6 million for the hotel/motel portion and $8.7 million for the short-term car rental portion. Also, $280,000 is estimated in 2015-16 for interest revenue. Arizona Highway User Revenue The State Transportation Financing Plan adopted by the Legislature in 1981 and amended in 1982 and 1985 included a 13 cent per gallon gas tax plus other user fees and charges such as registrations, driver’s licenses, motor carrier taxes, other miscellaneous fees and an increased share of the motor vehicle license taxes. Additional gasoline taxes were added in 1986 (3 cents per gallon), in 1988 (1 cent per gallon), and in 1990 (1 cent per gallon) for a total state gas tax rate of 18 cents per gallon. A new distribution formula for Arizona Highway User Revenue (AHUR) was passed by the Legislature and signed by the governor in May 1996 (effective July 1, 1996). It was intended to be revenue neutral to cities. This distribution formula provides 27.5 percent to incorporated cities and towns (distributed one-half on the relative population of the cities and towns and one-half on the county origin of sales/relative population of the counties) and 3 percent to cities over 300,000 population (Phoenix, Tucson and Mesa). In 2014, the Arizona State Legislature directed a special distribution of a portion of AHUR revenues to cities and counties during fiscal years 2014-15 through 201617. Forty-eight percent of this funding is distributed to incorporated cities and towns and an additional 5 percent to cities over 300,000 population (Phoenix, Tucson and Mesa). For 2015-16, it is anticipated that Phoenix will receive $86.7 million from the allocation to all cities and towns and $21.5 91 Table of Contents million from the allocation to cities and towns over 300,000 population. The total 2015-16 AHUR estimate of $108,137,000 is $41,000 less than the 201415 estimate of $108,178,000. Additionally, the 2015-16 interest earnings and other income estimate of $350,000 is $50,000 less than the 2014-15 estimate of $400,000. The reduced 2015-16 estimate is primarily attributable to a prior-year State special distribution reversion in 2014-15 that is not projected for 2015-16. This is partially offset by slight increases estimated for the motor carrier tax (0.3 percent), vehicle license tax (0.3 percent), vehicle registration (0.4 percent) and other (0.1 percent) categories. The table above shows the state-shared Arizona Highway Users allocations to the city of Phoenix since 2011-12. Regional Transit Revenues This category includes revenue from the Regional Public Transportation Authority (RPTA) for the regional transportation plan, other state funding agencies, and the sale of bus service provided to other jurisdictions. The 2015-16 estimate of $42,547,000 is $7,776,000 or 15.5 percent lower than the 2014-15 estimate of $50,323,000. The decrease is due to a reduction in reimbursements from RPTA for regional transportation plan funded projects. Community Reinvestment The 2015-16 estimate of $4,592,000 is $366,000 lower than the 2014-15 estimate of $4,958,000 and represents estimated revenues to be received through various economic redevelopment agreements in the downtown area. 92 ARIZONA HIGHWAY USER REVENUES (In Thousands of Dollars) Fiscal Year AHUR Distribution 2011-12 $90,368 Increase/(Decrease) Amount Percent ($14,540) (13.9)% 2012-13 98,804 8,436 9.3 2013-14 102,008 3,204 3.2 2014-15 (Est.) 108,178 6,170 6.0 2015-16 (Est.) 108,137 (41) 0.0 ________________________________________________________________________ SECONDARY PROPERTY TAX ________________________________________________________________________ Net Assessed Rate per Valuation Secondary Levy $100 Assessed Fiscal Year (in Millions)1 % Change (in Thousands) % Change Valuation ________________________________________________________________________ 2011-12 2012-13 2013-14 2014-15 2015-16 (Est.) 1/ $12,344 10,850 9,975 10,819 10,577 (23.3)% (12.1) (8.1) 8.5 (2.2) $94,529 62,961 35,271 50,404 50,622 (37.3)% (33.4) (44.0) 42.9 0.4 $0.7658 0.5803 0.3536 0.4659 0.4786 Secondary Net Assessed Valuation prior to 2015-16; Primary thereafter. Secondary Property Tax By law, secondary property taxes are used to pay debt service on voter-approved general obligation bonds. In 2012, voters approved Proposition 117, amending the Arizona Constitution by capping the annual increase in limited property values used to calculate primary net assessed value. Proposition 117 additionally replaced secondary net assessed value with primary net assessed value as the base for secondary property taxes beginning in 2015-16. The amendment caps the limited property value at no greater than 5 percent above the previous year, plus new construction. As discussed in the General Fund revenue section, the estimated 2015-16 primary property tax rate is $1.3414 per $100 of assessed valuation. The 2015-16 secondary rate of $0.4786 per $100 of assessed value maintains a combined property tax rate of $1.82, a rate the City has held constant since 1995-96. The 2015-16 secondary property tax levy of $50,622,000 is based on this $0.4786 rate and the primary net assessed valuation of $10.58 billion. This resulting levy increases the 2014-15 secondary property tax levy of $50,404,000 by $218,000, or 0.4 percent. Also included in the 2015-16 estimate is $4,716,000 in bond interest subsidies. Revenues are partially offset by an estimated $542,000 in uncollected taxes. In total, secondary property tax revenue is estimated to be $54,796,000. The table above shows secondary assessed valuation, secondary property tax levies and secondary property tax rates since 2011-12. Regional Wireless Cooperative The Regional Wireless Cooperative (RWC) is an independent, multi-jurisdictional organization that manages and operates a regional radio communications network built to seamlessly serve the interoperable Table of Contents communication needs of first responders and other municipal radio users. It is comprised of eighteen cities and districts. As the managing network and administrative member, Phoenix is responsible for operating and maintaining the network and for the accounting, budgeting, procurement and contracting functions. The revenue in this fund primarily consists of reimbursements from the other participating jurisdictions for their share of the cost to operate and maintain the network. The 2015-16 revenue estimate of $5,127,000 is slightly less than the 2014-15 estimate of $5,277,000. Golf Courses Revenue sources in the Golf Course category include greens fees, golf cart rentals and pro shop sales at city-run golf courses which include Aguila, Cave Creek, Encanto and Palo Verde. The 2015-16 estimate of $5,970,000 is slightly lower than the 2014-15 estimate of $6,362,000. The reduction is due to less revenue expected for the Maryvale Golf Course, which Grand Canyon University began operating in January 2015. Arizona State University began operating Papago Golf Course in May 2014. Impact Fee Program Administration In 1987, the City Council established an Impact Fee Program. Impact fees are charged to new development in the city’s peripheral planning areas. Impact fees assess new development for its proportionate costs of public infrastructure that will be required due to the development. Impact fees may only be used to pay for the identified public infrastructure. In conjunction with the Impact Fee Program, an administrative fee collected as a percentage of the gross impact fee is also charged. This administrative fee pays for the costs of administering the overall Impact Fee Program. Beginning in 2004-05, the revenue from the administrative fee and the related costs were significant enough to require separate accounting. The 2015-16 revenue is estimated at $305,000, which is 4.1 percent above the 2014-15 estimate of $293,000. Other Restricted Fees Included in this category are revenues associated with the Court Technology Enhancement fee and the Judicial Collection Enhancement Fund, Heritage Square, the Tennis Center at Washington Park, Vehicle Impound fees, Affordable Housing Program revenues, storm water management fees, and monopole rentals from several city parks. Also included is revenue from restricted fees for recreation and other programs, and donations specified for various city programs. The 2015-16 estimate of $32,913,000 is $2,646,000 or 8.7 percent more than the 2014-15 estimate of $30,267,000. The increase is primarily due to anticipated increases in the sale of excess city-owned real property and in technical assistance revenues received from other jurisdictions for computer aided dispatch services. Public Housing Grants The 2015-16 Public Housing grants revenue included in the annual operating budget is $87,022,000 which is a 5.2 percent increase from 2014-15 of $82,740,000. This increase is due to increased HOME program funds from the federal government. The HOME program is aimed at increasing the availability of affordable rental housing and expanding home ownership opportunities for firsttime homebuyers. Other items in this category include housing subsidies, interest income and housing assistance payments. Human Services Grants The 2015-16 revenue estimate of $42,424,000 is $791,000 or 1.8 percent less than the 2014-15 estimate of $43,215,000. The decrease is due to fewer federal grant funds available for Head Start and Housing and Urban Development. This category includes funds from the Department of Health and Human Services, Workforce Investment Act, Aging Program Grants and Head Start funds. Community Development Block Grant Each year since 1974, the city has received Community Development Block Grant (CDBG) funds from the U.S. Department of Housing and Urban Development. These funds are used to support a variety of projects and programs that must meet the following national objectives: benefit lowand moderate-income persons; aid in the prevention or elimination of slums and blight; or meet other urgent community development needs. The 2015-16 CDBG entitlement is $32,392,000 which is $15,155,000 or 87.9 percent more than the 2014-15 estimate of $17,237,000. The increase is due to a carryover from 2014-15 of grant revenues from the federal government. Criminal Justice Grants The 2015-16 grant revenue for criminal justice programs is estimated to be $5,180,000 which is $4,599,000 or 47.0 percent less than the 2014-15 estimate of $9,779,000. The decrease is due to a reduction in federal grant funding. This category includes Police, Court and Law department grants. Grants include funding for the Police Department training academy, drug trafficking prevention and other crime related prevention programs. Public Transit Grants The 2015-16 Federal Transit Administration Grant estimate is $65,916,000 reflecting an increase of $3,783,000 or 6.1 percent above the 201415 estimate of $62,133,000. The increase is due to a carryover of grant funds from 2014-15 to support capital budget projects. Other Grants The 2015-16 budget also includes $49,571,000 for federal, state and other grants which is $9,084,000 or 22.4 percent more than the 2014-15 estimate of $40,487,000. The increase is due to 93 Table of Contents additional grant funds expected for HOPE VI and ARRA grants for the Neighborhood Stabilization Program. This category includes funding for various parks and recreation and library activities, workforce development programs, housing development grants and the Neighborhood Stabilization Program. ENTERPRISE FUNDS This category includes revenues from the city’s Enterprise funds including Aviation, Water, Wastewater and Solid Waste. These Enterprise funds fully recover their costs through user fees associated with the provision of their services. This category also includes the Convention Center that, in addition to the user fees associated with the operation of the Convention Center, is supported by earmarked sales taxes. Following are descriptions of each Enterprise Fund category and explanations of the revenue estimates. Aviation Aviation revenue estimates include landing fees, concession revenues and interest income at Sky Harbor International, Deer Valley and Goodyear airports. Total Aviation revenue for 2015-16 is anticipated to be $332,191,000, which is $1,822,000 or 0.6 percent more than the 2014-15 estimate of $330,369,000. The increase is due to expected increases in airline landing fees. The table below shows Aviation revenue by major category and annual percent change since 2011-12. Water System Water system revenues include water sales, development fees, various water service fees, resource acquisition fees, fees paid by other jurisdictions for the operation of the Val Vista Water Treatment Plant and other miscellaneous fees. Total water system revenue for 2015-16 is projected to be $411,108,000, which is $11,502,000 or 2.9 percent more than the $399,606,000 estimate for 2014-15. The increase is due to estimated increases in water sales and environmental consumption charges. The 2015-16 estimate includes anticipated small increases in the number of accounts. The table on the following page shows water system revenues by major category since 2011-12. Wastewater System Wastewater system revenues include monthly sewer service charge revenues, which are based on water consumption rates, development fees, the sale of wastewater treatment services to other jurisdictions, the sale of effluent and other miscellaneous fees. The wastewater system is expected to generate revenue of $214,792,000 in 2014-15, which is $3,386,000 or 1.6 percent more than the 2013-14 estimate of $211,406,000. The SUMMARY OF AVIATION REVENUES (In Thousands of Dollars) Airline Operation Concessions and Rentals Rental Car Facility1/ Interest Other/Federal Grants 2011-12 2012-13 2013-14 2014-15 (Est.) 2015-16 (Est.) $ 115,526 $ 124,314 $132,739 $ 133,460 $ 135,770 169,125 175,192 185,178 187,052 186,553 41,158 41,390 – – – 928 528 1,807 800 800 7,937 2,433 5,071 3,879 3,895 Goodyear 1,674 1,850 2,116 2,133 2,138 Deer Valley 2,960 3,062 3,013 3,045 3,035 $339,308 $348,769 $329,924 $330,369 $332,191 2.0% 2.8% (5.4)% 0.1% 0.6% Total Aviation Revenue Change From Prior Year Rental Car Facility revenues were reclassified in 2013-14 from operating to capital to properly account for revenue earmarked to service debt associated with the facility. 1/ 94 Table of Contents SUMMARY OF WATER SYSTEM REVENUES (In Thousands of Dollars) Water Sales Environmental Consumption Charge Raw Water Charge 2011-12 2012-13 2013-14 2014-15 (Est.) 2015-16 (Est.) $288,711 50,585 $301,238 45,091 $303,593 45,494 $304,692 45,495 $314,045 46,809 26,183 25,439 25,679 25,802 26,651 Interest 1,862 1,815 2,247 2,619 2,191 Development Fees 1,820 2,333 2,478 2,500 2,700 Combined Service Fees 3,008 2,804 2,579 6,000 6,000 Val Vista 6,424 5,461 5,494 5,830 5,813 All Other 10,222 39,951 10,684 6,668 6,899 $388,815 $424,132 $398,248 $399,606 $411,108 10.0% 9.1% (6.1)% 0.3% 2.9% Total Water Revenue Change From Prior Year ____________________________________________________________________________________________________________ SUMMARY OF WASTEWATER SYSTEM REVENUES (In Thousands of Dollars) ____________________________________________________________________________________________________________ 2014-15 2015-16 2011-12 2012-13 2013-14 (Est.) (Est.) ____________________________________________________________________________________________________________ Sewer Service Charge Environmental Charges Development Fees Interest $158,511 $146,592 $147,309 $148,777 $150,639 35,868 33,747 33,831 34,067 34,490 1,670 2,282 2,371 2,400 2,600 2,166 1,285 1,297 1,480 1,465 Multi-City 15,804 15,832 16,502 16,453 17,610 Other 18,825 15,351 10,821 10,371 10,358 $232,844 $215,089 $212,131 $213,548 $217,162 3.1% (7.6)% (1.4)% 0.7% 1.7% Total Wastewater Revenue Change From Prior Year 95 Table of Contents increase is due to expected increases in sewer service charges, sales of effluent and revenue from the multi-city sewer system. The table on the previous page shows Wastewater revenue by major category and annual percent change since 2011-12. Solid Waste This category includes revenues from the monthly residential collection and landfill tipping fees. The 2015-16 estimate of $149,326,000 is an increase of $1,502,000 or 1.0 percent greater than the 2014-15 estimate of $147,824,000. The increase is due to expected increases in solid waste service fees, city landfill fees and interest earnings. CONVENTION CENTER SALES TAXES (In Thousands of Dollars) Fiscal Year Amount Collected Increase/(Decrease) Amount Percent 2011-12 $40,030 $2,195 2012-13 40,828 798 5.8% 2.0 2013-14 44,311 3,483 8.5 2014-15 (Est.) 47,706 3,395 7.7 2015-16 (Est.) 48,129 423 0.9 2015-16 CONVENTION CENTER Earmarked Sales Taxes Convention Center The majority of Convention Center revenues are from earmarked sales taxes including, a 0.5 percent tax on advertising, a 0.5 percent portion of the 2.0 percent tax on restaurant and bar sales, construction, publishing, printing, and transportation and towing, plus a 2.0 percent portion of the 5.0 percent hotel/motel tax on rooms rented for 30 days or less. Earmarked sales taxes are expected to produce $48,129,000 in 2015-16, an increase of 0.9 percent above the 2014-15 estimate of $47,706,000. Convention Center operating revenues are expected to be $13,322,000, parking revenue is expected to be $2,886,000, and interest revenue is expected to be $223,000, for total revenue estimates of $64,560,000. This is $611,000 or 1.0 percent more than the 2014-15 total estimated revenue of $63,949,000. The increase is due to anticipated increases in sales tax and operating revenues. Tax estimates are consistent with General Fund sales tax estimates for the categories included in Convention Center. The following table shows the Convention Center excise tax collections since 2011-12. 96 Tourism-related 67% Contracting 25% Other 8% Overall growth rates differ from General Fund sales taxes due to the smaller number of categories, differing proportions of the total and their more volatile nature. As shown in the pie chart above, contracting and tourism represent 92 percent of the sales tax revenue to this fund. Both industries are considered volatile; and both have experienced dramatic changes in the last several years. In the General Fund, however, contracting and tourism represent only 13 percent of the sales tax revenue. Because of this, any changes to these more volatile industries have a greater impact in this fund’s sales tax revenue than in the General Fund’s sales tax revenue. The growth rate for 2014-15 accounts for one-time revenue from the Super Bowl. The 2015-16 estimates assume continued economic growth. Table of Contents General Government MAYOR Program Goal The mayor is elected on a nonpartisan ballot to represent the entire city for a four-year term that expires in January 2016. The mayor represents the city in all official capacities and provides leadership to the City Council, administrative staff and the community at large. The mayor recommends and votes on policy direction for the city and chairs all City Council meetings. Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $1,628,000 $1,831,000 $1,831,000 13.5 12.5 12.5 Source of Funds: General $1,628,000 $1,831,000 $1,831,000 Budget Allowance Explanation The Mayor’s Office 2015-16 operating budget allowance of $1,831,000 is the same as the 2014-15 estimated expenditures and reflects the equalization and stabilization of the elected officials’ budgets. 97 Table of Contents CITY COUNCIL Program Goal Expenditure and Position Summary The City Council is composed of eight council members elected by districts on a nonpartisan ballot. Four-year terms for council members from even-numbered districts expire in January 2018. Terms for council members from odd-numbered districts expire in January 2016. The City Council serves as the legislative and policy-making body of the municipal government and has responsibilities for enacting city ordinances, appropriating funds to conduct city business and providing policy direction to the administrative staff. Under the provisions of the City Charter, the City Council appoints a city manager, who is responsible for carrying out its established policies and administering operations. Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $3,345,000 $3,536,000 $3,536,000 31.0 33.0 33.0 $3,345,000 $3,536,000 $3,536,000 Source of Funds: General Budget Allowance Explanation The 2015-16 City Council operating budget allowance of $3,536,000 is the same as the 2014-15 estimated expenditures and reflects the equalization and stabilization of the elected officials’ budgets. l it y C ou n ci P h oe n ix C 98 2013-14 Actual Table of Contents CITY MANAGER City Manager’s Office Major Performance Measures and Service Levels Program Goal The following significant performance measures and service level trends will be achieved with the 2015-16 budget allowance: The city manager provides professional administration of the policies and objectives established by the mayor and City Council, develops alternative solutions to community problems for mayor and City Council consideration and plans programs that meet the future public needs of the city. Deputy city managers oversee and provide assistance to city departments to ensure achievement of their departmental objectives and the objectives of the city government as a whole. 2013-14 Actual Progress towards meeting and exceeding Innovation and Efficiency goal $90.8 million Number of citywide operational improvements as identified through the Comprehensive Organizational Review Exercise worked on during the year 2014-151 Estimate 2015-16 Budget $102 million $110 million 5 5 5 Based on 10 months actual. 1 Budget Allowance Explanation The City Manager’s Office 2015-16 operating budget allowance of $2,536,000 is $1,000 more than 2014-15 estimated expenditures. The decrease in the General fund is primarily due to aligning a position with staff needs by downgrading a position in the Youth and Education Coordination program, as part of the Zero Based Budget review. Additionally, the Chief Sustainability Officer was moved out of the City Manager’s Office in order to create the Office of Sustainability. These General Fund savings were offset by the acceptance of a new City Services grant and the carryover of unspent Youth and Education grant funds. Expenditure and Position Summary Operating Expense Total Positions 2013-14 Actual 2014-15 Estimate 2015-16 Budget $2,481,000 $2,535,000 $2,536,000 19.0 18.0 17.0 $2,170,000 __ $2,349,000 $2,235,000 218,000 87,000 84,000 __ 224,000 102,000 53,000 Source of Funds: General Other Restricted State and Federal Grants Water 30,000 REGIONAL WIRELESS COOPERATIVE (RWC) Program Goal Budget Allowance Explanation The Regional Wireless Cooperative (RWC) is an independent, multi-jurisdictional organization which manages and operates a regional radio communications network. This network was built to seamlessly serve the interoperable communication needs of first responders and other municipal radio users in and around Central Arizona's Valley of the Sun. Formerly known as the Phoenix Regional Wireless Network, the RWC has expanded to serve a growing list of cities, towns and fire districts, along with many other area entities who serve public safety needs. The RWC was formed through a governance structure founded on the principle of cooperation for the mutual benefit of all members. The RWC 2015-16 operating budget allowance of $5,004,000 is $312,000 or 5.9 percent less than 2014-15 estimated expenditures. The decrease reflects lower than anticipated system costs. Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $4,428,000 $5,316,000 $5,004,000 4.0 4.0 4.0 Source of Funds: RWC $4,428,000 $5,316,000 $5,004,000 99 Table of Contents GOVERNMENT RELATIONS Government Relations Major Performance Measures and Service Levels Program Goal The following significant performance measures and service level trends will be achieved with the 2015-16 budget allowance: The Office of Government Relations represents the city, as appropriate, in contacts with federal, state, regional, county and other city governments. Government Relations also is charged with citywide grants coordination. Budget Allowance Explanation The Government Relations 2015-16 operating budget allowance of $1,064,000 is $55,000 or 5.5 percent more than 2014-15 estimated expenditures and reflects normal inflationary increases. These increases are partially offset by the elimination of 1 vacant position. 2013-14 Actual 2014-151 Estimate 2015-16 Budget Percentage of Arizona State legislative bills supported by the city which were enacted. 75% 57% 60% Percentage of Arizona State legislative bills opposed by the city which were not enacted. 100% 62% 60% 74% 70% 75% 38 35 30 Success rate of federal and state competitive grants and private foundation grants that Government Relations assisted departments with. Number of tribal gaming grants processed by Government Relations. Based on 10 months actual experience. 1 Expenditure and Position Summary Operating Expense Total Positions Source of Funds: General Other Restricted 2013-14 Actual 2014-15 Estimate 2015-16 Budget $1,094,000 $1,009,000 $1,064,000 6.0 5.0 5.0 $1,084,000 10,000 $990,000 19,000 $1,064,000 — COMMUNICATIONS OFFICE Communications Office Major Performance Measures and Service Levels Program Goal The following significant performance measures and service level trends will be achieved with the 2015-16 budget allowance: The Communications Office (formerly Public Information Office) disseminates information on city governmental services to residents, and assists them in using and understanding the information. The office also encourages participation in city government and develops programming for the government access cable television channel. Percent of news releases that generate media coverage Budget Allowance Explanation Percent of email responses to public inquiries within one day The Communications Office 2015-16 operating budget allowance of $2,293,000 is $42,000 or 1.8 percent less than 2014-15 estimated expenditures. The decrease is primarily due to elimination of funding for the biennial Community Opinion Survey and the Employee Opinion Survey per previous Council action as part of the annual zero-based budget review, and reduced funding for replacement of capital equipment. 2013-14 Actual 2014-151 Estimate 2015-16 Budget 85% 88% 86% New PHX 11 programs produced per year 298 432 324 Percent of news distributed to stakeholders by 5 p.m. daily 91% 90% 92% 100% 100% 100% 3.5 3.0 3.5 1,441,000 1,200,000 1,200,000 2 Average response time to public records requests (days) Phoenix.gov page visits (monthly average) Based on 10 months actual experience. 2014-15 includes 100 “Top Things to Do in Phoenix” social media videos that promoted Phoenix prior to the 2015 NFL Super Bowl. 1 2 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $2,525,000 $2,335,000 $2,293,000 18.6 18.6 18.6 Source of Funds: General Other Restricted 100 $2,185,000 $1,993,000 $1,948,000 340,000 342,000 345,000 Table of Contents CITY AUDITOR City Auditor Impact of Recommendations Program Goal The City Auditor Department supports the city manager and elected officials in meeting residents’ needs for quality government, products and services by providing independent and objective feedback on the city’s programs, activities and functions. The city auditor’s work is vital in maintaining trust and confidence that city resources are used effectively and honestly. The City Auditor budget also funds an annual independent audit conducted by outside auditors in accordance with the City Charter. This includes an audit of city accounting and financial records, the federal single audit, review of the City of Phoenix Employees’ Retirement System, external audits of specific activities and review of business systems for possible improvements. Budget Allowance Explanation The City Auditor 2015-16 operating budget allowance of $2,440,000 is $70,000 or 3.0 percent more than 2014-15 estimated expenditures. The increase is due to normal inflationary costs. Millions $6.0 $6 $5 $4 $3 $2.3 $2 $1.5 $1.0 $1.2 2014-15* 2015-16* $1 $0 2011-12 2013-14 2012-13 Fiscal Year *Estimated The Economic Impact in 2013-14 was larger than average due to a review of the Police Support Unit. City Auditor Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the proposed 2015-16 budget allowance: 2013-14 Actual 2014-151 Estimate 2015-16 Budget Percent of audit plan completed 84% 70% 80% Performance audit and management reports issued2 103 95 100 Average audit cycle time (calendar days)2 171 180 180 Economic impact of audits as a result of identified improvements or cost savings (millions) 3 $6.0 $1.0 $1.2 100% 100% 100% Hearing rulings issued timely according to time frames listed in the City Code Based on 10 months actual experience. Number of audit reports issued and average cycle time can vary due to the size and complexity of audits conducted. 3 Economic Impact in 2013-14 was larger than average due to a review of the Police Air Support Unit that identified over $3 million in potential revenue and cost savings to the city. The majority of these savings will come from a reduction in fleet of three helicopters and associated parts inventory and identified underpayments by Aviation contractors and business partners. 1 2 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $2,294,000 $2,370,000 $2,440,000 25.5 26.5 26.5 Source of Funds: General $2,294,000 $2,370,000 $2,440,000 101 Table of Contents EQUAL OPPORTUNITY Equal Opportunity Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the proposed 2015-16 budget allowance: The Equal Opportunity Department promotes and enforces equal opportunities for city employees and the public through voluntary education, community involvement and enforcement programs. These programs are carried out by a combination of staff and volunteer panels appointed by the Mayor and City Council. Budget Allowance Explanation 2013-14 Actual 2015-16 Budget Discrimination complaints in employment, public accommodations, housing and Americans with Disabilities Act (ADA) accessibility, investigated and closed2 185 200 200 Percentage of discrimination complaints investigated timely3 73% 80% 80% The 2015-16 Equal Opportunity operating budget allowance of $2,811,000 is $11,000 or 0.4 percent less than 2014-15 estimated expenditures. The decrease is primarily due to reduced staff costs resulting from one-time employee retirement costs in 2014-15. Outreach presentations to small and disadvantaged businesses and small business advocacy organizations4 8 12 15 Number of disadvantaged business enterprises (DBEs) certified5 81 91 90 Expenditure and Position Summary Number of small business enterprises (SBEs) certified 631 645 645 1,450 1,844 1,800 2013-14 Actual Operating Expense 2014-15 Estimate 2015-16 Budget $2,586,000 $2,822,000 $2,811,000 Total Positions 26.0 25.0 Construction subcontracts monitored for participation of DBE subcontractors and non-DBE-certified construction subcontractors 25.0 Based on 10 months actual experience. Discrimination complaints investigated and closed are based on the number of cases filed. 3 Timelines may be dictated by state and federal enforcement agencies and not by city timelines. 4 The projected increases reflect a 2014-15 EOD Strategic Plan goal to conduct new outreach to local chambers of commerce and business advocacy organizations. This outreach is in addition to ongoing certification workshops for small businesses. 5 The number of firms is estimated to decrease as certification files are transferred to the Arizona Department of Transportation (ADOT) for DBE firms located outside of Maricopa County. However, in 2014-15, ADOT continued to process applications. When files were transferred to the correct agencies, Phoenix received more firms than we transferred to ADOT. 1 Source of Funds: General 2 $2,197,000 $2,334,000 $2,322,000 Community Development Block Grant 252,000 252,000 257,000 131,000 230,000 229,000 6,000 6,000 3,000 Federal and State Grants Other Restricted 102 2014-151 Estimate Table of Contents HUMAN RESOURCES Human Resources Department Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the proposed 2015-16 budget allowance: The Human Resources Department partners with departments and employees to hire, compensate, support and develop a diverse workforce that is dedicated to delivering high-quality services to the community. Budget Allowance Explanation The Human Resources Department 2015-16 operating budget allowance of $11,018,000 is $295,000 or 2.6 percent less than 2014-15 estimated expenditures. The decrease is primarily due to reduced debt service costs related to the Personnel Building. The General Fund increase is mainly due to fewer anticipated vacant positions and is partially offset by reductions in consulting services from the completion of the pension reform process. 2013-14 Actual 2014-151 Estimate 2015-16 Budget Percentage of hiring managers satisfied with applicants placed on hiring eligible list 87% 82% 82% Annualized employee turnover rate 5.3% 6.0% 6.0% Employee performance evaluations completed on time 84% 84% 84% The number of employee suggestions received 112 60 60 Based on 10 months actual experience. 1 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions Source of Funds: General City Improvement Other Restricted 2014-15 Estimate 2015-16 Budget $10,406,000 $11,313,000 $11,018,000 95.1 99.1 99.1 $9,188,000 $9,653,000 $9,742,000 784,000 1,149,000 773,000 434,000 511,000 503,000 103 Table of Contents PHOENIX EMPLOYMENT RELATIONS BOARD Phoenix Employment Relations Board Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the proposed 2015-16 budget allowance: Program Goal The Phoenix Employment Relations Board oversees administration of the city’s meet and confer ordinance. Primary responsibilities of the board include conducting representation elections, and selecting mediators and fact finders to resolve impasses. The board consists of five members appointed by the City Council and has one staff member. Number of cases filed annually2 2015-16 Budget 9 8 6 Based on 10 months actual experience. Number of cases filed varies depending upon specific issues encountered. 2 Expenditure and Position Summary Operating Expense Total Positions 2013-14 Actual 2014-15 Estimate 2015-16 Budget $58,000 $76,000 $84,000 1.0 1.0 1.0 $58,000 $76,000 $84,000 Source of Funds: General RETIREMENT SYSTEMS Retirement Systems Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the proposed 2015-16 budget allowance: Retirement Systems provides staff support to the general, police and fire retirement boards and administers retirement programs for all city employees. 2013-14 Actual 2014-151 Estimate 2015-16 Budget 641 771 350 308 368 100 998 2,396 9,111 690 1,900 9,000 750 1,700 8,200 Overall member satisfaction survey as rated on a scale of 1 to 4, with 4 being the best 3.89 3.90 3.90 Success of educational classes as rated on a scale of 1 to 4, with 4 being the best 3.67 3.70 3.70 General city retirements2 Budget Allowance Explanation Public safety retirements 2 The Retirement Systems proposed 2015-16 gross operating budget allowance of $1,989,000 is $64,000 or 3.1 percent less than 2014-15 estimated expenditures. The decrease is primarily due to reduced funding for temporary agency services and one-time audit services. Expenditure and Position Summary 2013-14 Actual Operating Expense (Gross1) Total Positions Source of Funds: General (Gross1) 2014-15 Estimate 2015-16 Budget General city and public safety member contacts Appointments Walk-in service Telephone calls Based on 10 months actual experience. 1 Increases in 2014-15 were likely due to the pension reform initiative referred to the voters in 2 November 2014, which ultimately did not pass. Decreases in 2015-16 are based on an $1,800,000 $2,053,000 $1,989,000 14.0 14.0 14.0 $1,800,000 $2,053,000 $1,989,000 Gross costs are recovered through citywide assessments to all city departments. 1 104 2014-151 Estimate 1 Budget Allowance Explanation The Phoenix Employment Relations Board 2015-16 operating budget allowance of $84,000 is $8,000 or 10.5 percent more than 2014-15 estimated expenditures. The increase is primarily due to increased funding for contracted hearing officers and transcription services for expected increased activity in 2015-16 that is separate from the number of cases filed, and normal inflationary increases. 2013-14 Actual expected return to historical averages prior to pension reform actions. Table of Contents LAW Law Department Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: The Law Department provides effective legal services to the mayor and City Council, city manager, departments and advisory boards; interprets and enforces city, state and federal laws as they pertain to city services and activities; and effectively administers and prosecutes criminal cases filed in Phoenix Municipal Court using the prosecutorial function and discretion in a fair, impartial and efficient manner. Budget Allowance Explanation The Law Department 2015-16 operating budget allowance of $20,973,000 is $290,000 or 0.4 percent more than 2014-15 estimated expenditures. The increase reflects increased personnel costs and was partially offset by the elimination of 10 vacant positions. 2013-14 Actual 2014-151 Estimate 4,056 3,325 3,900 80,234 72,039 74,000 1,006 1,044 900 42,485 37,928 40,000 Number of civil cases closed, including those assigned to outside counsel and handled through the alternative dispute resolution process 818 913 700 Ordinances and resolutions for City Council adoption drafted and reviewed 979 1,129 1,000 Number of jury trials prosecuted 134 95 150 Criminal cases sent to diversion Pre-trial disposition conferences set New civil cases opened in the fields of condemnation, collection, taxes and civil litigation, excluding liability and other cases assigned to outside counsel Number of defendants submitted for charging review 2015-16 Budget Based on 10 months actual experience. 1 Expenditure and Position Summary Operating Expense 2013-14 Actual 2014-15 Estimate 2015-16 Budget $19,831,000 $19,634,000 $20,039,000 204.0 194.0 194.0 $19,066,000 Total Positions Source of Funds: General $18,745,000 $18,598,000 Court Awards 290,000 353,000 323,000 Federal and State Grants 636,000 650,000 617,000 Other Restricted 160,000 33,000 33,000 105 Table of Contents INFORMATION TECHNOLOGY Information Technology Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: Information Technology Services (ITS) coordinates the use of information technology across the various departments and agencies of city government to ensure that accurate and timely information is provided to residents, elected officials, city management and staff in the most costeffective manner possible. The department provides operating departments with information processing through the application and coordination of computer technology and procures, manages and maintains the city’s radio, telephone and computer network systems. Budget Allowance Explanation The Information Technology Services 201516 operating budget allowance of $37,509,000 is $123,000 or 0.3 percent more than 2014-15 estimated expenditures. The slight increase reflects strategic technology infrastructure investments, increased personnel costs, and normal inflationary adjustments. These increases are offset by the elimination of 10 vacant positions. 2013-14 Actual 2014-151 Estimate Percentage of on-time operations center services 99.0% 99.0% 99.0% Number of ITS-supported network devices 18,500 18,500 18,242 99.9% 98.0% n/a2 n/a2 n/a2 n/a2 99.9% n/a2 99.9% 98.0% 96.7% 98.2% 97.5% 96.0% 99.9% 13,262,004 99.9% 98.0% 98.0% 98.0% 98.0% 97.0% 98.5% 13,300,000 < 21 days < 21 days < 21 days 18,500 18,500 18,500 Critical systems availability percentage: Enterprise network Telephone network Phoenix.gov ePay CC&B TALIS RWC Number of visits to phoenix.gov Average cycle time of telephone service requests Units of portable and mobile radio equipment3 Based on 10 months actual experience. ITS has implemented a new system to track system availability. Data from the system for 2013-14 is not available. 3 Includes all portable and mobile radios support on behalf of all RWC members, as well as support of portable and mobile radios for Fire’s VHF system. 1 2 Expenditure and Position Summary 2013-14 Actual 2014-15 Estimate Operating Expense $34,037,000 2015-16 Budget $37,386,000 $37,509,000 171.0 168.0 170.0 $31,288,000 $34,291,000 $34,404,000 Cable Communications 437,000 436,000 419,000 1,584,000 1,576,000 Total Positions Source of Funds: General City Improvement Other Restricted Aviation 106 2015-16 Budget 1,684,000 - 250,000 250,000 250,000 271,000 277,000 Solid Waste 203,000 378,000 408,000 Water 175,000 176,000 175,000 Table of Contents CITY CLERK AND ELECTIONS City Clerk Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: The City Clerk Department maintains orderly and accessible records of all city activities and transactions including posting all public meeting notifications; preparing agendas and minutes for City Council formal meetings; providing for effective administration of city elections and annexations; administering liquor, bingo and regulatory license services; and providing printing, typesetting, document imaging and mail delivery services to all city departments. 2013-14 Actual 2014-151 Estimate 2015-16 Budget Number of Council Formal and special meeting agenda items 2,089 2,100 2,000 Open meeting law notices posted 3,065 3,100 2,900 Percent of open meeting law notices posted in accordance with state law2 100% 100% 100% Total printing and copy impressions (millions) 33.6 37.7 36.2 City Council regular and special elections held 2 1 1 17,398 17,900 18,000 142,000 115,000 110,000 License services applications and contacts Budget Allowance Explanation The City Clerk 2015-16 operating budget allowance of $5,070,000 is $578,000 or 12.9 percent more than 2014-15 estimated expenditures. The increase is primarily due to the carryover of funding for the implementation in 2015-16 of a citywide record management system and normal inflationary increase. This increase is partially offset by the elimination of one vacant position. Records imaged and available for public access online Based on 10 months actual experience. Includes meeting notices and meeting result postings as required by state law. 1 2 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $5,236,000 $4,492,000 $5,070,000 63.5 56.0 56.0 Source of Funds: General City Improvement $5,073,000 $4,477,000 $5,054,000 163,000 15,000 16,000 107 Table of Contents FINANCE Finance Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: The Finance Department strives to maintain a fiscally sound governmental organization that conforms to legal requirements and generally accepted financial management principles; maintains effective procurement procedures for commodities and services; provides for effective treasury management and a citywide risk management program; acquires, manages and disposes of property for public facilities; provides an effective debt management program; and provides financial advisory services for all city departments. 2013-14 Actual 2014-151 Estimate 2015-16 Budget Sales tax and franchise fees collected (millions) $752 $750 $730 Average real estate acquisition cycle time (months) 5.51 0.75 0.75 Average property damage claims cycle time (days) 37 60 60 Average invitation for bid (IFB) cycle time (days) 86 85 85 Based on 10 months actual experience. 1 Expenditure and Position Summary 2013-14 2014-15 2015-16 Operating Expense $21,452,000 $20,322,000 $33,347,000 Budget Allowance Explanation Total Positions The 2015-16 Finance Department operating budget allowance of $33,347,000 is $13,025,000 or 64.1 percent more than 2014-15 estimated expenditures. The primary variances are in the General Fund and City Improvement Fund. The City Improvement Fund budget allowance for 2015-16 is $8,060,000 more than 2014-15. This is primarily due to an expected increase in debt service payments for the planned telephone system and network upgrade, and the 700 MHz radio conversion project. Source of Funds: The General Fund budget allowance for 2015-16 of $22,795,000 is $5,223,000 or 29.7% more than 2014-15. This increase reflects additional funding to pay Phoenix’s portion of the newly implemented Arizona Department of Revenue Transaction Privilege (Sales) Tax Simplification effort, an expected decrease in vacant positions and normal inflationary increases. These increases are partially offset by savings through increased usage of electronic banking services, reduced postage for monthly tax statements which will be handled by the Arizona Department of Revenue and the elimination of an administrative support position. The increase is also partially offset by the elimination of five vacant positions. 108 Aviation City Improvement General Other Restricted Public Housing Sports Facilities Wastewater Water 229.0 219.0 218.0 320,000 322,000 319,000 1,095,000 161,000 8,060,000 $17,711,000 $17,572,000 $22,795,000 388,000 260,000 ____ (1,000) 125,000 (6,000) 109,000 129,000 129,000 761,000 739,000 739,000 1,068,000 1,140,000 1,186,000 Table of Contents BUDGET AND RESEARCH Budget and Research Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: The Budget and Research Department ensures effective, efficient allocation of city resources to enable the City Council, city manager and city departments to provide quality services to our residents. Budget Allowance Explanation The Budget and Research Department’s 2015-16 operating budget allowance of $3,057,000 is $160,000 or 5.5 percent higher than 2014-15 estimated expenditures. In 2014-15 two positions were vacant for more than half the year resulting in personal services savings. Both positions will be filled in 2015-16 and the budget increase reflects the expected costs. 2013-14 Actual 2014-151 Estimate 2015-16 Budget Percent variance of actual versus estimated expenditures for each major fund (data for the General Fund is shown) -1.7% 0 -± 1% 0 -± 1% Percent variance of actual versus estimated revenues for each major fund (data for the General Fund is shown) -0.1% 0 -± 1% 0 -± 1% 89% 75% 75% 54.1% 61.5% 65% Percent of Requests for Council Action processed within 24 hours Capital Improvement Program expenditures as a percentage of budget Based on 10 months actual experience. 1 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $2,996,000 $2,897,000 $3,057,000 24.0 24.0 24.0 Source of Funds: General $2,996,000 $2,897,000 $3,057,000 109 Table of Contents sw or n th an 3, 20 0 t h as m ore en tm ar . ep el p er so n n ix P ol ic e D 0 ci vi li an T h e P h oe n e th an 1, 00 or m d an of fi ce rs 110 Table of Contents Public Safety The Public Safety Program Represents 33.3% of the Total Budget. The Public Safety program budget includes the Police Department, Fire Department and the Office of Homeland Security and Emergency Management. POLICE Program Goal Budget Allowance Explanation The Police Department provides the community with a law enforcement system that integrates and uses all departmental, civic and community resources for police services and protection of the lives and property of our residents. The Police Department 2015-16 operating budget allowance of $572,949,000 is $13,661,000 or 2.4 percent more than 201415 estimated expenditures and reflects public safety retirement contribution increases that are partially offset by the Police Major Performance Measures and Service Trends The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: 2013-14 Actual 2014-151 Estimate 2015-16 Budget 5.7 14.4 38.9 5.9 15.5 43.8 5.9 15.8 45.7 96% 91% 93% 27,425 27,400 27,400 182,146 179,000 175,000 23,883 25,200 26,500 81% 22% 25% 43% 6% 23% 8% 15% 74% 22% 24% 41% 6% 22% 8% 15% 80% 22% 25% 42% 6% 23% 8% 15% Average Response Time (Minutes) Priority 1 – Emergency Priority 2 – Non-Emergency Priority 3 – All Others Percentage of phone calls to 9-1-1 and Crime Stop answered within 10 seconds Cases accepted by the county attorney for issuance of complaint Moving violation citations issued Traffic accidents Percentage of cases cleared: Murder Rape Robbery Aggravated Assault Burglary Theft Auto Theft Arson Based on 10 months actual experience. 1 111 Table of Contents elimination of 34 vacant civilian positions. Police — Violent Crimes per 1,000 Residents The 2015-16 budget also includes funds to implement a new 40 hour training module for all law enforcement personnel. This course is designed to enhance knowledge regarding mental health, cultural awareness and situational and tactical analysis. 12 9 6.7 5.9 6.0 5.9 2014-15* 2015-16* 5.8 6 3 0 2011-12 2012-13 2013-14 Expenditure and Position Summary Fiscal Year 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate *Estimated 2015-16 Budget $555,422,000 $559,288,000 $572,949,000 4,429.5 4,328.5 4,329.5 Source of Funds: General $454,377,000 $464,014,000 $477,616,000 Public Safety Expansion 47,185,000 42,525,000 42,700,000 Neighborhood Protection 17,005,000 15,685,000 19,107,000 Public Safety Enhancement 13,652,000 11,423,000 11,700,000 City Improvement 4,865,000 6,936,000 7,037,000 Court Awards 7,301,000 4,772,000 5,315,000 Police — Property Crimes per 1,000 Residents 80 60 43 41 39 37 2013-14 2014-15* 40 Federal and State Grants 6,036,000 9,128,000 4,563,000 Other Restricted 3,805,000 3,562,000 3,617,000 Sports Facilities 1,196,000 1,243,000 1,294,000 36 20 0 2011-12 2012-13 Fiscal Year 112 2015-16* *Estimated Table of Contents FIRE Fire — First Unit Average Response Time Program Goal Minutes The Fire Department provides the highest level of life and property safety through fire prevention, fire control and emergency medical and public education services. 6 4:38 4:40 4:44 2011-12 2012-13 2013-14 4:48 4:50 4 Budget Allowance Explanation The Fire Department 2015-16 operating budget allowance of $312,745,000 is $8,218,000 or 2.7 percent more than 201415 estimated expenditures and is the result of increases in personnel costs for public safety retirement contributions and other operational necessities such as liability insurance, vehicle maintenance and facility maintenance. 2 0 2014-15* 2015-16* *Estimated Fiscal Year Department has changed standardized reporting for response time to include only emergency calls. These increases are partially offset by the elimination of three non-sworn vacant positions. Fire Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: 2013-14 Actual 2014-151 Estimate 2015-16 Budget Percent of fire and emergency medical call responses within four minutes 34.6% 38.0% 38.0% Patient transports to Valley hospitals via emergency medical vehicles 66,555 67,220 67,220 61.6% 67.0% 67.0% 787 800 800 152,454 13,876 156,000 14,100 156,000 14,100 6,735 6,900 6,900 Percentage of time Advanced Life Support (ALS) medical calls are responded to with paramedic units within five minutes Number of fire investigations to determine cause only Number of calls by type: Emergency Medical Fire Other (mountain/swift water/ trench/tree rescues/other) Based on 10 months actual experience. 1 113 Table of Contents Expenditure and Position Summary Operating Expense Total Positions 2013-14 2014-15 2015-16 Actual Estimate Budget Fire — Percentage of Time First Unit Arrives on Scene in Four Minutes or Less $286,383,000 $304,527,000 $312,745,000 1,994.6 1,990.6 2,000.3 40% 37.8 37.0 2011-12 2012-13 Source of Funds: General $245,404,000 $253,865,000 $259,566,000 Public Safety Enhancement 5,506,000 7,318,000 9,163,000 Neighborhood Protection 4,862,000 5,837,000 8,116,000 Public Safety Expansion 11,187,000 14,045,000 15,089,000 Federal and State Grants 12,954,000 15,254,000 12,413,000 4,000 6,000 __ Other Restricted 3,110,000 4,598,000 4,818,000 City Improvement 3,356,000 3,604,000 3,580,000 Federal Transit Authority Program Goal The Office of Homeland Security and Emergency Management provides the city with the capability to plan for, mitigate, respond to and recover from large-scale community emergencies and disasters as a result of human-caused, technological or natural hazards. Budget Allowance Explanation The Office of Homeland Security and Emergency Management 2015-16 operating budget allowance of $649,000 is $154,000 or 19.2 percent less than 2014-15 estimated expenditures. The 2014-15 estimated expenditures included funding for one-time expenditures related the NFL’s SuperBowl XLIX and ProBowl public safety preparedness. Expenditure and Position Summary 2013-14 Actual 2014-15 Estimate 2015-16 Budget $464,000 $803,000 $649,000 6.0 6.0 6.0 General $14,000 $189,000 $14,000 Public Safety Enhancement 427,000 448,000 423,000 23,000 166,000 212,000 Total Positions Source of Funds: Federal and State Grants 114 38.0 38.0 2014-15* 2015-16* 30% 20% HOMELAND SECURITY AND EMERGENCY MANAGEMENT Operating Expense 34.6 10% 0% 2013-14* Fiscal Year *Estimated Table of Contents cl u d in g 0 ca ll s, in th an 18 0, 00 fi sc al e in or s m ll to ca re sp on d ed 14 ,0 00 fi re t an en th tm e ar or s an d m ix F ire D ep st an ce ca ll T h e P h oe n ed ic al as si m 00 0, 16 n ea rl y 5. ye ar 20 14 -1 115 Table of Contents s, c vi ol at io n ci vi l tr af fi d an al in ie s cr im al C ou rt tr ix M u n ic ip n or ca se s. oe n h P ea e h em d T im in al m is cr ic ff ra n on -t 116 as w el l as Table of Contents Criminal Justice The Criminal Justice Program Represents 2.3% of the Total Budget. Municipal Court Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: 2013-14 Actual 2014-151 Estimate 2015-16 Budget 63,000 58,000 60,000 180,000 160,000 165,000 35 33 33 Number of criminal cases with a pending trial date at year end 3,232 3,000 3,000 Percent of trials/hearings appealed 3.5% 3.5% 3.5% 2.5 days 2.5 days 2.5 days 2.5 minutes 2.5 minutes 5.0 minutes Criminal filings Civil filings The Criminal Justice program budget includes the Municipal Court, Public Defender and City Prosecutor. MUNICIPAL COURT Program Goal The Municipal Court provides, with integrity, to all individuals who come before this court: equal access, professional and impartial treatment, and just resolution of all court matters. Average number of days from arraignment to hearing for minor traffic cases Average cycle time for sending out restitution and bail refund checks Average hold time for incoming information calls to the Customer Call Center Based on 10 months actual experience. 1 Municipal Court - Percent of criminal cases resolved within 180 days from case filing Budget Allowance Explanation 100% The Municipal Court’s 2015-16 operating budget allowance of $40,705,000 is $454,000 or 1.1 percent more than 2014-15 estimated expenditures. The increase reflects normal inflationary increases which are partially offset by the elimination of ten vacant positions. In addition to the elimination of vacant positions, the department closed two courtrooms as part of an efficiency review due to a continued decrease in the number of criminal and civil filings over the last few years. Six vacant positions which staffed those courtrooms were eliminated. 96.6% 96.6% 2011-12 2012-13 96.6% 95.9% 95.9% 2013-14 2014-15* 2015-16* 80% 60% 40% 20% 0 Fiscal Year *Estimated Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $35,909,000 $40,251,000 $40,705,000 295.0 285.0 279.0 Source of Funds: General $27,871,000 $27,462,000 $27,542,000 Other Restricted 1,806,000 6,292,000 6,347,000 City Improvement 6,232,000 6,497,000 6,816,000 117 Table of Contents PUBLIC DEFENDER Public Defender Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the proposed 2015-16 budget allowance: The Public Defender Program provides legal representation for indigent defendants in Phoenix Municipal Court. Budget Allowance Explanation The Public Defender Program’s 2014-15 operating budget allowance of $4,967,000 is $114,000 or 2.3 percent more than 201415 estimated expenditures. The increase reflects normal inflationary increases. The 2015-16 budget adds two full time positions to enhance the Veterans Court and Mental Health Specialist programs. The cost of these positions is offset by a reduction in contracted services previously used to provide these services. 118 Defendants charged with misdemeanor crimes represented in Phoenix Municipal Court Based on 10 months actual experience. 1 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $4,788,000 $4,967,000 $5,081,000 9.0 9.0 11.0 Source of Funds: General $4,788,000 $4,967,000 $5,081,000 2013-14 Actual 2014-151 Estimate 2015-16 Budget 13,896 12,750 13,000 Table of Contents 119 Table of Contents - he st 20 14 . T ri d ge A u gu B of a t ay en w m en re p la ce th e G re ta il ed th e er ti m e co m p le te d en ov on ct at ti je th ta ro es p or ci g n sp l d ef ic ie n ar d w in n in at ed on ra S tree t Tra u aw tu ct si ry ru is st st u h n -i n d s si gn s of id ge , w h ic ou br ri x se ew co n st ru ct io bo n ed e it u e tr ip le ta in . T h th at ex h ib u re s a u n iq r an d m ai n ai at st ru ct u re p fe , re d h to as an t W p en si ve tt le m en e C re ek be ca m e ex ac k in g, se ay ov er C av p an si on cr w ay P ar k w ex e en th re s G st e th re si . ct u re th at ou s br id ge cu lv er t st ru at p la gu ed th e p re vi th n d eg ra d at io 120 Table of Contents Transportation The Transportation Program Represents 21.5% of the Total Budget. Street Transportation Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the proposed 2015-16 budget allowance: 2013-14 Actual The Transportation program budget includes Street Transportation, Aviation and Public Transit. STREET TRANSPORTATION 2014-151 Estimate 2015-16 Budget Routine street maintenance requests for service completed within 21 days 82% 80% 80% Percent of all traffic signal control cabinets inspected annually 95% 95% 90% Routine traffic operation requests for service completed within 30 days 93% 93% 93% Construction project complaints or inquiries addressed within two working days 98% 97% 97% 1.4 2.5 2.5 6 9 10 Utility plan review turnaround time within 10 working days 97% 97% 95% Complete requests for sign and crosswalk work within 45 days 80% 80% 80% Program Goal The Street Transportation Department provides for the safe, efficient, and convenient movement of people and goods on city streets, and also supports citywide construction projects through the office of the City Engineer. The Street Transportation Department also provides for the economical, safe and aesthetic design and construction of facilities on city property. Number of days to review and respond to street light requests2 Number of days to review private development plans2 Based on 10 months actual experience. Decrease in 2014-15 is due to anticipated vacancies. 1 2 121 Table of Contents Budget Allowance Explanation The Street Transportation 2015-16 operating budget allowance of $71,444,000 is $2,502,000 or 3.6 percent more than 2014-15 estimated expenditures. This is primarily due to an increase in expenditures in the Arizona Highway User Revenue (AHUR) fund. The increase in the General Fund is primarily due to an expected decrease in vacant positions and normal inflationary increases. The increase is partially offset by the elimination of 31 vacant positions, transferring oversight of the bridge inspection program to the Arizona department of Transportation, reducing the installation and maintenance of “No Parking” signs along major arterial streets, developing in-house training programs and reducing temporary agency staffing costs due to the postponement of a planned project. Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $68,085,000 $68,942,000 $71,444,000 664.0 653.0 652.0 Source of Funds: General $18,034,000 $18,530,000 $19,222,000 Arizona Highway User Revenue 46,710,000 48,066,000 City Improvement 735,000 104,000 106,000 Capital Construction 130,000 129,000 129,000 Federal and State Grants Other Restricted % within 1 day 100% 49,653,000 53,000 50,000 105,000 2,423,000 2,063,000 2,229,000 Street Transportation – Maintenance Rapid Response (Responding to urgent issues such as obstructions in the roadway) 97.0% 97.0% 95.0% 95.0% 2011-12 2012-13 2013-14 2014-15* 97.0% 80% 60% 40% 20% 0% Fiscal Year 122 2015-16* *Estimated Table of Contents AVIATION Sky Harbor Airport– Passengers Arriving and Departing Program Goal The Aviation Department provides the Phoenix metropolitan area with a selfsupporting system of airports and aviation facilities that accommodate general and commercial aviation in a safe, efficient and convenient manner. Passengers (Millions) 50 48 46 44 40.6 40.6 41.1 41.4 42.2 2011-12 2012-13 2013-14 2014-15* 2015-16* 42 Budget Allowance Explanation 40 The Aviation Department’s 2015-16 operating budget allowance of $236,851,000 is $2,618,000 or 1.1 percent more than 2014-15 estimated expenditures. The increase reflects the full year operating cost of the PHX Sky Train® Stage 1a expansion to Terminal 3. The increase also includes one-time capital technology enhancements and replacements as well as normal inflationary increases. 38 The 2015-16 budget also includes three positions for the new Airspace Noise Planning Services program to address issues relating to changes in airspace routes. 36 34 32 30 Fiscal Year *Estimated Aviation Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: 2013-14 Actual 2014-151 Estimate 2015-16 Budget $115.80 $115.80 $115.80 $116.28 $116.28 $116.28 Not available2 Not available2 Not available2 $7.24 $9.24 $9.21 $7.27 $9.15 $9.25 $7.28 $9.17 $9.27 Aircraft takeoffs and landings 866,513 867,000 868,000 Total international passengers 2,244,147 2,300,000 2,310,000 309,763 310,000 312,000 Airline rental rates (cost per square foot): Terminal 2 Terminal 3 Terminal 4 Gross sales per departing passenger: Terminal 2 Terminal 3 Terminal 4 Air cargo processed (in tons) Based on 10 months actual experience. At the time of publication, rental rates had not yet been finalized. 1 2 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $223,936,000 $234,233,000 $236,851,000 853.0 853.0 856.0 Source of Funds: Aviation $223,936,000 $234,233,000 $236,851,000 123 Table of Contents PUBLIC TRANSIT Transit– Annual Bus Ridership (Boardings) Program Goal The Public Transit Department provides improved public transit services and increased ridership in the Phoenix urbanized area through the operation of a coordinated regional fixed-route and paratransit bus transportation system. Millions 60 40 40 39 39 39 2012-13 2013-14 2014-15* 2015-16* 38 Budget Allowance Explanation The Public Transit 2015-16 operating budget allowance of $263,299,000 is $15,429,000 or 6.2 percent more than 201415 estimated expenditures. The increase is primarily due to increases in the Transit 2000 and City Improvement funds. These increases are partially offset by a decrease in Federal Transit Authority funding. The Transit 2000 Fund increase is due to decreased federal funding available for preventative maintenance credits to offset expenses in FY15-16; the final settlement payment related to the conversion of transit service contracts to a cost-per-mile model in 2010; additional funding for the Northwest Light Rail extension; and contractual increases in the cost per mile of bus and rail services. The City Improvement Fund increase is due to additional debt service payments for light rail. Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions Source of Funds: General Transit 2000 Regional Transit Federal Transit Authority City Improvement 124 2014-15 Estimate 2015-16 Budget $229,716,000 $247,870,000 $263,299,000 104.5 104.5 104.5 $11,679,000 $17,946,000 $17,940,000 130,064,000 133,628,000 153,164,000 25,036,000 27,414,000 28,510,000 21,449,000 41,488,000 21,360,000 47,522,000 13,658,000 50,027,000 20 0 2011-12 Fiscal Year *Estimated Public Transit Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: 2013-14 Actual 2014-151 Estimate 2015-16 Budget On-time performance for bus service 92.8% 95.0% 95.0% On-time performance for Dial-a-Ride prescheduled service 91.9% 95.0% 95.0% Cost recovery from bus fares 24.5% 25.0% 25.0% 2.40 2.36 2.40 Average weekday ridership - light rail (Phoenix only) 28,008 27,225 27,770 Number of Senior Center Shuttle Trips 98,721 98,750 98,750 Bus boardings per revenue mile Based on 10 months actual experience. 1 Table of Contents ow l g S u p er B ev er d u ri n ed to ay d ar p ip m sh co er d h ig h es t ri rl y d ou bl ed ’s ea it n 13 . w ip 20 sa sh 7, ic e ra il ri d er ec em be r an si t se rv SU at u rd ay, D y 31 , li gh t A S ar u P h oe n ix tr an on n g t Ja in se , d S at u rd ay p re vi ou sl y en ts in cl u ev ay e d to ag ip er ed w ee k . O n sh el av d er h o tr av . O n an h ig h es t ri 00 ri d er s w in P h oe n ix ,8 rt 65 it s fo rm er ce e n er co w a , th ere p e an d O n th at d ay iv al in Tem e, ar ts fe st m ar d in gs . ga bo ll 00 ba ,0 fo ot ip is at 35 sh er d ri , S at u rd ay M et ro rt es y Va ll ey P h ot o: C ou 125 Table of Contents n a P u bl ic s an d A ri zo id n ey oe n ix S u n h P rt at th e S u e co th ba sk et ba ll gr an t fr om ro fo u n d e a p th a om d e fr ze av t li h or vi ta en t w il l Wit h su p p P ro je ct re h e in ve st m it y. e R eb ou n d m u n it y. T m g co m m u n co in S er vi ce , th g d n n si ou p u bl ic h ou d th e su rr n an or ts sb en O d P. re si e li ve s of ef fe ct on th 126 Table of Contents Community Headline Development The Community Development Program Represents 8.4% of the Total Budget. The Community Development program budget includes Planning and Development, Housing, Community and Economic Development, Neighborhood Services and the Phoenix Community Development Investment Corporation. PLANNING AND DEVELOPMENT Program Goal Budget Allowance Explanation The Planning and Development Department manages planning, development and preservation for a better Phoenix. Key services of the department include design review, permitting, inspections, implementation and updates to the General Plan, administration of the Zoning Ordinance, processing rezoning requests and Historic Preservation. The Planning and Development Department 2015-16 operating budget allowance of $46,258,000 is $1,095,000 or 2.4 percent more than 2014-15 estimated expenditures. This is primarily a result of increased Development Services funding for elevator inspections, hillside plan review services, additional staff for an Electronic Plan Review Self Certification Team, increased customer service in the Communication section, addressing complex civil infrastructure and traffic issues in subdivision development, increased filled positions and normal inflationary factors. The General Fund increased by $56,000 or 1.3 percent due to normal inflationary factors. This increase is partially offset by the elimination of two vacant positions. Planning and Development Total Construction Permits Issued Thousands 60 50.8 50 47.5 43.2 40 30 26.0 29.0 20 10 0 2011-12 2012-13 2013-14 Fiscal Year 2014-15* 2015-16* *Estimated 127 Table of Contents Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions Planning and Development Major Performance Measures and Service Levels 2014-15 2015-16 Estimate Budget The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: $37,950,000 $45,163,000 $46,258,000 283.0 295.8 2013-14 Actual 2014-151 Estimate 2015-16 Budget 43,255 50,800 47,500 Turnaround time for major commercial building plans (days) 33 34 35 Turnaround time for medium commercial building plans (days) 26 35 35 Turnaround time for minor commercial building plans (days) 18 25 25 Turnaround time for residential building plans (days) 26 26 23 Percent of commercial inspections completed on time 95% 97% 97% Percent of residential inspections completed on time 96% 95% 96% 116% 100% 100% Average number of days to schedule pre-application meeting prior to rezoning application 12 12 14 Average number of days to complete Zoning Verification letters 9 10 15 100% 100% 100% 399 410 450 17 12 10 614 500 500 304.8 Source of Funds: Development Services Total construction permits issued $32,174,000 $39,533,000 $41,520,000 General 4,185,000 4,274,000 4,330,000 Federal and State Grant 1,398,000 1,073,000 — Community Development Block Grant 66,000 66,000 66,000 217,000 342,000 Other Restricted 127,000 Percent of costs recovered through fees Board, Commission and Committee packets available seven days prior to meeting Number of design reviews performed on building permits in historic districts2 Number of city grants awarded for historic rehabilitation projects Number of regulatory compliance reviews for federally funded city capital projects Based on 10 months actual experience. This projection includes the cumulative number of Certificates of Appropriateness, Certificates of No Effect, demolition reviews and demolition appeal hearings. 1 2 128 Table of Contents HOUSING Housing Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: The Housing Department provides and promotes diversified living environments for low-income families, seniors and persons with disabilities through the operation and leasing of assisted and affordable housing. Budget Allowance Explanation The Housing Department’s 2015-16 operating budget allowance of $89,697,000 is $3,243,000 or 3.8 percent more than 2014-15 estimated expenditures. The increase is primarily due to the carry-over of unspent federal funds, as well as additional federal grant funding and public housing assistance payments. 2013-14 Actual Affordable housing units for families and individuals 2014-151 Estimate 2015-16 Budget 2,679 2,240 2,240 797 377 210 Rental assistance provided for low-income residents in the private housing market 6,602 6,740 6,740 City-provided public housing units for families and seniors 2,614 2,608 2,596 Utilization rate for Section 8 vouchers 90% 93% 95% 96.6% 96% 97% Affordable housing units created or preserved for families and individuals owned and operated by private sector developers Occupancy rate for City-owned and operated public housing units Based on 10 months actual experience. 1 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $75,913,000 $86,454,000 $89,697,000 186.0 181.0 181.0 Source of Funds: Public Housing Other Restricted $70,672,000 $79,802,000 $81,037,000 2,614,000 4,290,000 5,061,000 Community Development Block Grant 1,151,000 1,530,000 3,146,000 Federal and State Grants 939,000 335,000 93,000 HOPE VI 418,000 369,000 233,000 City Improvement 70,000 74,000 73,000 General 49,000 54,000 54,000 129 Table of Contents COMMUNITY AND ECONOMIC DEVELOPMENT Program Goal The Community and Economic Development Department creates or facilitates development activities that add or retain jobs, enhances city revenues and enhances the quality of life including business development in Sky Harbor Center, downtown redevelopment area and other non-redevelopment areas. Budget Allowance Explanation The Community and Economic Development Department’s 2015-16 operating budget allowance of $29,497,000 is $341,000 or 1.2 percent more than 201415 estimated expenditures and reflects federal Workforce Investment Act grant allocations for 2015-16. These increases are partially offset by the elimination of 2 vacant positions and the transfer of 6 positions to a newly created department called The Phoenix Community Development and Investment Corporation (PCDIC), which had previously been managed by CED. Also reflected is the transfer of a position from the Finance Department responsible for overseeing the Phoenix IDA. This change was identified in the CORE Review as a potential enhancement to economic development activities. Community and Economic Development Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: 2013-14 Actual 2014-151 Estimate 2015-16 Budget 6,000 6,000 7,500 Projected average annual salary for new jobs with companies newly located in Phoenix $35,000 $44,000 $48,000 Number of job seekers assisted through the Workforce Development Initiatives 27,000 30,000 32,000 Projected jobs created/retained within the city of Phoenix as a result of department efforts Based on 10 months actual experience. 1 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2015-16 Budget $25,209,000 $29,156,000 $29,497,000 97.0 96.0 90.0 General 4,478,000 4,584,000 4,629,000 Aviation 42,000 80,000 80,000 4,516,000 5,740,000 5,705,000 Community Reinvestment 414,000 609,000 487,000 Convention Center 429,000 441,000 457,000 Other Restricted 2,806,000 3,554,000 3,072,000 Sports Facilities 141,000 144,000 148,000 31,000 31,000 31,000 11,947,000 13,328,000 14,242,000 Source of Funds: City Improvement Water Federal and State Grants Community Development Block Grant 130 2014-15 Estimate 405,000 645,000 646,000 Table of Contents NEIGHBORHOOD SERVICES Neighborhood Services _ Neighborhood Preservation Case Cycle Time Program Goal To preserve and improve the physical, social and economic health of Phoenix neighborhoods, support neighborhood selfreliance and enhance the quality of life of residents through community-based problem solving, neighborhood-oriented services and public/private cooperation. Calendar Days 100 80 60 40 Budget Allowance Explanation The Neighborhood Services 2015-16 operating budget allowance of $56,192,000 is $21,487,000 or 61.9 percent more than 2014-15 estimated expenditures. This increase is due to unspent Community Development Block Grant (CDBG), HOME and other federal and state grant funding that was carried forward and included in the 2015-16 budget. The General Fund budget of $12,362,000 is $671,000 or 5.7 percent more than the 2014-15 estimated expenditures. This is primarily due to an expected increase in the number of filled positions, one time CDBG funding in 201415 that offset General Fund expenditures and normal inflationary increases. This increase is partially offset by the elimination of four vacant positions. 34 30 27 33 30 20 0 2011-12 2012-13 2013-14 Fiscal Year 2014-15* 2015-16* *Estimated Standard case cycle time is the number of calendar days it takes to open and close cases in which a violation is resolved before a citation is issued or cases in which the inspector was not able to confirm a reported violation. Tas k ti -G ra ff it i r of th e A n be C en te r e em th m r a fo se rv es as or ga n iz er io d ar oo ic ty 's R rh ci iz bo L ei gh p or te d th e al so is a n . S h e su p gr af fi ti ip l sh ra F or ce an d er ve d se rh oo d L ea p la n n in g bo by gh ei ve N ti r ia fo in it e P h oe n ix u n it y. G ra ff it i F re h er co m m in ts en re m ov al ev 131 Table of Contents Expenditure and Position Summary 2013-14 Actual 2014-15 Estimate Operating Expense $44,516,000 $34,705,000 Total Positions 205.5 Neighborhood Services Major Performance Measures and Service Levels 2015-16 Budget The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: $56,192,000 194.0 194.0 $11,499,000 $11,691,000 $12,362,000 2013-14 Actual Source of Funds: General Other Restricted 85,000 31,000 164,000 1,161,000 384,000 1,566,000 346,000 ___ ___ 17,475,000 8,443,000 16,245,000 HOME Human Services Grant Federal and State Grants Community Development Block Grant Residents who receive landlord/tenant counseling2 2015-16 Budget 5,159 4,250 5,000 80,287 60,000 70,000 1,625 300 450 Neighborhood Preservation cases opened annually 67,949 65,000 67,000 33 30 91% or above 91% or above 50 40 Sites where graffiti was removed through the Graffiti Busters Program3 Number of household units rehabbed or assisted through housing rehabilitation programs4 13,950,000 14,156,000 2014-151 Estimate 25,855,000 Neighborhood Preservation average standard case cycle time5 Percent of Neighborhood Preservation cases resolved voluntarily The number of new neighborhood groups6 27 92% 69 Based on 10 months actual experience. Variance in 2014-15 is due to temporary staff vacancies. 3 The variance in 2014-15 is due to unexpected staff vacancies and staff time dedicated to the implementation of a web-based graffiti case management system. 4 This count includes both owner occupied and rental units and each housing unit may include one type or multiple types of improvements/rehab work in addition to standard rehab, and may be funded by multiple sources of funding. 5 Standard case cycle time refers to the number of calendar days it takes to open and close cases in which a violation is resolved before a citation is issued (closed compliance) and cases in which the inspector was not able to confirm a reported violation (closed no violation). 6 Includes all neighborhood organizations listed through Neighborhood Notification. 1 2 132 Table of Contents PHOENIX COMMUNITY DEVELOPMENT & INVESTMENT CORPORATION (PCDIC) Program Goal Budget Allowance Explanation The Phoenix Community Development and Investment Corporation (PCDIC) attracts and provides funds for projects that will improve the quality of life of those individuals who live and work in underserved areas of the community. To accomplish this mission, PCDIC seeks to do the following: The PCDIC Department’s 2015-16 operating budget allowance is $776,000. The PCDIC program was previously part of the Community and Economic Development Department (CED), however, PCDIC was established as a stand-alone department to enhance the program’s effectiveness. n n n n Provide commercial real estate gap financing to attract employers actively creating jobs. Provide gap financing for commercial real estate for small businesses and non-profits having difficulty securing loans at favorable rates. Remove blight, particularly within the city’s most distressed NMTC Census Tracts. Help non-profits expand services to the disadvantaged communities they serve. Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions Source of Funds: Other Restricted 2014-15 Estimate 2015-16 Budget _ _ _ _ $776,000 6.0 _ _ 776,000 133 Table of Contents d S ta rt of th e H ea n iv er sa ry an li sh m en ts p th m 50 co e ac fo r th ei r le br at ed th ce ts t en p ro vi d in g en ar r p tm fo d ce s D ep ar ie r m od el u d en ts an vi m st er re S rt p ta e an S th m d u it s er H ea h as be en P h oe n ix H ef it ed fr om gn iz ed fo rm ea d S ta rt T h e ci ty of n h av e be n ce 19 65 , H fi ci al s re co re in of d S y il it y. ch C it . n on P ro gr am e co m m u an 31 m il li u ti on s to th s. M ore th an d co n tr ib p or tu n it y fo r su cc es op ch il d re n an . ve se rv ic es si en h re p co m 134 Table of Contents Community Headline Enrichment The Community Enrichment Program Represents 9.6% of the Total Budget. The Community Enrichment program budget includes Parks and Recreation, Library, Phoenix Convention Center, Human Services and the Phoenix Office of Arts and Culture. Budget Allowance Explanation The Parks and Recreation Department 2015-16 budget allowance of $107,016,000 is $2,377,000 or 2.3 percent more than 201415 estimated expenditures. The increase in the General Fund is primarily due to fewer anticipated vacant positions, increased utility costs, and increased costs for liability insurance. Also included in the 2015-16 budget is funding for staff to provide recreation services at the newly expanded Coffelt-Lamoreaux Recreation Center. In addition, staff is being added to provide sports activities at the Papago Baseball Complex, the cost of which is offset by new revenue. These increases are partially offset by the elimination of 25 vacant positions, and reduced funding for Phoenix Golf and various commodities. The decrease in the 2015-16 budget for the Phoenix Parks and Preserves Initiative (PPPI) fund is primarily due to reduced costs for staff and equipment replacement. This is partially offset by the addition of contractual funds for janitorial services at three new major trailheads: Apache Wash, Desert Vista, and Desert Hills. PARKS AND RECREATION Program Goal The Parks and Recreation Department provides and maintains a diverse parks and recreation system available and accessible to all, which contributes to the physical, mental, social and cultural needs of the community and permits outlets that cultivate a wholesome sense of civic pride and social responsibility. Parks and Recreation – Recreation Facility Attendance Thousands 800 644 600 619 584 545 540 540 2013-14 2014-15* 2015-16* 400 200 0 2010-11 2011-12 2012-13 Fiscal Year *Estimated *The decrease in recreation facility attendance in fiscal year 2012-13 and 2013-14 is due to membership cards no longer being required at various recreational facilities, which is how attendance is recorded. 2013-14 reflects the first full year of this operational change over the prior fiscal year. 135 Table of Contents Expenditure and Position Summary 2013-14 Actual Operating Expense $106,770,000 Total Positions 1,078.6 2014-15 Estimate $104,639,000 1,048.6 Parks and Recreation Major Performance Measures and Service Levels 2015-16 Budget The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: $107,016,000 2013-14 Actual 1,056.0 Source of Funds: General $90,607,000 $88,181,000 $90,558,000 Other Restricted 2,260,000 3,206,000 4,034,000 City Improvement 1,900,000 1,919,000 1,795,000 702,000 713,000 705,000 Federal and State Grants Parks and Preserves 2,603,000 4,268,000 4,098,000 Golf 8,698,000 6,352,000 5,826,000 2015-16 Budget Construction projects completed 80% 80% 85% Fill 80% or more of all non-team sport registration openings. 78% 75% 75% Usage of athletic field’s available programmable time 48% 40% 40% Community usage of Recreation and Community Center available programmable time 42% 42% 40% Recreation Facility Attendance 545,490 545,000 545,000 Number of Golf Rounds 212,161 219,000 225,000 Based on 10 months actual experience. 1 136 2014-151 Estimate Table of Contents LIBRARY Program Goal Library _ Library Material Circulation (Items circulated) Millions The Library provides information and resources that are relevant, accessible and responsive to the intellectual needs and interests of the community. 18 14.5 11.2 12 10.4 10.4 10.4 Budget Allowance Explanation The 2015-16 Library operating budget allowance of $35,778,000 is $33,000 or 0.1 percent more than 2014-15 estimated expenditures. The increase in the General Fund is due mainly to an expected increase in the number of filled positions and the transfer of one full-time position from the Public Works Department. Increases are also due to normal inflationary increases primarily for library materials and electricity. These increases are partially offset by reduced expenses for contract custodial services. Reductions in federal and state grants represent reduced grant funding for College Depot. Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 377.3 0 2011-12 2012-13 2014-15* 2015-16* *Estimated The projected decrease from prior years is due to a change in lending policy that increases the loan period from one to three weeks, thereby decreasing the number of items circulated. Also, the decrease reflects a downward trend that libraries across the country are also experiencing. The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: 378.3 2013-14 Actual 2014-151 Estimate 2015-16 Budget 162,000 160,000 160,000 4,764,000 4,700,000 4,700,000 Library’s website “visits”2 32,975,000 32,000,000 32,000,000 Library material circulation3 10,428,000 10,000,000 10,000,000 Source of Funds: General 2013-14 Fiscal Year Library Major Performance Measures and Service Levels 2015-16 Budget $34,080,000 $35,745,000 $35,778,000 375.6 6 $33,326,000 $34,843,000 $35,281,000 Federal and State Grants 427,000 789,000 451,000 Other Restricted 327,000 113,000 46,000 Early literacy program attendance Library visitors Based on 10 months actual experience. The new library website was launched in September 2013 and provides enhanced reporting of website “visits.” 3 The projected decrease is due to a change in lending policy that increase the loan period from one to three weeks, thereby decreasing the number of items circulated. Also, the decrease reflects a downward trend that libraries across the country are also experiencing. 1 2 137 Table of Contents PHOENIX CONVENTION CENTER Phoenix Convention Center Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: The Phoenix Convention Center and Venues hosts a diverse range of conventions, trade shows, meetings and entertainment events in one of the premier convention facilities in the United States. The department is committed to delivering the highest levels of customer service and guest experience in the industry. The Phoenix Convention Center and Venues enhances the economic vitality of the downtown area, the city of Phoenix and the state of Arizona by supporting tourismrelated industries, businesses and cultural organizations. Budget Allowance Explanation 2013-14 Estimated direct spending impact from conventions (millions)2 $305 $305 163,000 210,000 212,000 Number of conventions 50 49 59 Number of local public shows 80 85 84 Percent square feet occupancy (average of all event types) 31% 35% 35% Number of theatrical performances 270 265 250 280,000 280,000 267,000 $4.83 $5.12 $5.14 $1,117 $1,170 $1,121 $907 $833 $939 Number of convention delegates Total theater attendance Total parking revenue (millions) Operating expense per parking space Based on 10 months actual experience. Estimated direct spending impact is reported by the Greater Phoenix Convention and Visitors Bureau.. 1 2 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $43,179,000 $43,872,000 $45,667,000 237.0 229.0 229.0 $41,419,000 $42,015,000 $43,644,000 1,260,000 1,275,000 1,383,000 ___ 40,000 69,000 500,000 542,000 571,000 Source of Funds: Convention Center General Other Restricted Sports Facilities 138 2015-16 $237 Revenue per parking space The Phoenix Convention Center 2015-16 operating budget allowance of $45,667,000 is $1,795,000 or 4.1 percent more than 2014-15 estimated expenditures. The increase is primarily due to higher operating costs for the tourism and marketing contract with the Greater Phoenix Convention and Visitor Bureau (GPCVB), an expected decrease in vacant positions, information technology upgrades, vehicle replacements and normal inflationary increases. 2014-151 Table of Contents HUMAN SERVICES Human Services _ Meals Served by Senior Nutrition Program Program Goal The Human Services Department promotes self-sufficiency by providing a wide array of services that foster the economic, physical and social well-being of residents. Thousands 800 621 600 The Human Services 2015-16 operating budget allowance of $62,030,000 is $669,000 or 1.1 percent less than 2014-15 estimated expenditures. The overall decrease is primarily due to decreased Human Services grant funding. The overall increase in the General Fund is attributable to an expected increase in the number of filled positions and normal inflationary costs and is partially offset by the elimination of five vacant positions. The decrease in Human Services grant funding is due to a FY15-16 level funding award for the Early Head Start Child Care Partnership grant that did not include FY1415 start-up costs and level funding award for Housing and Urban Development (HUD) Emergency Solutions Grant that did not include prior year costs. Operating Expense Total Positions 2014-15 Estimate 581 2015-16 Budget $57,387,000 $62,699,000 $62,030,000 320.0 327.0 327.0 Source of Funds: General $17,195,000 $17,989,000 $18,171,000 Human Services Grants 38,612,000 43,213,000 42,424,000 Community Development Block Grant 660,000 554,000 546,000 Federal and State Grant 21,000 15,000 — Water 210,000 210,000 210,000 Wastewater 140,000 140,000 140,000 Other Restricted 251,000 285,000 285,000 City Improvement 298,000 293,000 254,000 581 2013-14 2014-15* 400 200 0 2011-12 2012-13 Fiscal Year 2015-16* *Estimated Beginning in fiscal year 2012-13, meals served declined due to decreased congregate meal participation and grant funding for the Home Delivered Meal program. Human Services Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: Number of homeless households (individuals and families) assisted through emergency shelter Expenditure and Position Summary 2013-14 Actual 565 560 Budget Allowance Explanation Number of households served at family service centers2 Percentage of school attendance for Head Start 2013-14 Actual 2014-151 Estimate 2015-16 Budget 6,598 6,480 6,500 20,304 19,826 15,182 89% 89% 89% 6,401 6,700 6,700 Number of meals served to seniors 565,172 581,462 581,462 Number of victim services provided 11,938 12,000 12,000 Medical and dental exams completed for Head Start Based on 10 months actual experience. Decreased households served is projected for FY 15-16 as a result of decreased grant funding. 1 2 139 Table of Contents PHOENIX OFFICE OF ARTS AND CULTURE Phoenix Office of Arts and Culture Major Performance Measures and Service Levels Program Goal The following significant performance measures and service trends will be achieved with the proposed 2015-16 budget allowance. The Phoenix Office of Arts and Culture supports the development of the arts and cultural community in Phoenix, and seeks to raise the level of awareness and participation of city residents in the preservation, expansion and enjoyment of arts and culture. Budget Allowance Explanation The Phoenix Office of Arts and Culture 2015-16 operating budget allowance of $3,968,000 is $2,398,000 or 152.7 percent more than 2014-15 estimated expenditures. The increase is primarily due to the transfer of funds from the Public Works Department for tenant relations, maintenance, and utilities for city-owned cultural facilities. 2013-14 Actual 2014-151 Estimate Grant applications processed to support arts activities through schools and nonprofit organizations2 52 61 69 Grant awards administered to support arts activities through schools and nonprofit organizations 47 54 56 4 4 7 11 13 13 82% 71% 70% 67 64 64 Completed Percent-for-Art projects to enhance city capital improvement projects with artwork Local artists/arts organizations training workshops3 Percent of projects in Art Plan being implemented 4 Community Presentations Based on 10 months actual experience. Anticipate an increase in grant applications based on changes to eligibility rules and increased outreach that would encourage more organizations to apply. The overall amount of grant funds available will remain unchanged in 2015-16. 3 Numbers reflect presentations and workshops to local artists, the annual grant workshop training for arts organizations, as well as the arts learning workshops. 4 Measures reflect projects that were in design, under construction, or completed. 1 2 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-151 Estimate 2015-16 Budget $1,397,000 $1,570,000 $3,968,000 10.0 10.0 10.5 Source of Funds: General Federal and State Grants Other Restricted 140 $1,278,000 $1,473,000 $3,830,000 115,000 72,000 113,000 4,000 25,000 25,000 2015-16 Budget Table of Contents lt u re 's A rt s & C u ix O ff ic e of n tw or k , oe ar h l P ra e ro u gh th g' s sc u lp tu in ck u el in e L y as C re at ed th M ar ee t an d B P ro gr am , e 24 th S tr se at in g th h P u bl ic A rt at it " w s, re er u u t F lo w ad e st ru ct sh a d e. T h e ri as "N ot h in g B w ai ti n g to e, d ou bl es rs id ge -R n d n se ed by -a as P ar k rt of p w ere in sp ir th e co m fo st ru ct u re s th e e d ad an sh ts to en h an ce e en rd en s in th area re si d ga in in e ta of el n as es ou B im ag th M ce li n ed n s w it h S ou en s th at on rd ga er co n ve rs at io fl ow Ja p an es e h is to ry of R oa d . 141 Table of Contents n ou n ce h sc h il d an at h an R ot n en t, Jo em or re ay ag d Tu cs on M U n d er th e . an es n ti if er s to ci u n o aq ta S n th e tw Tu cs on ay or G re g en t be tw ee er w at er in on th e iv em P h oe n ix M R ge re o ta ag or ad er or sh iv e w at ti m es of n u se d C ol u re s tu at er it w fu of an in n ov at g ed e n m th e st or lo se . D u ri il l st ore so w il l p u m p w at er ot h er w is e er on P h oe n ix w ld at cs W ou u T w ro , ix et ge P h oe n In ex ch an cs on an d M n ix s u T oe er h of P w at er th at om y st to it th ei r cu d el iv er y iv er, th e C w at er fo r el iv er it to d er C ol or ad o R d iv an R s o er ad r aq u if r C ol or er s. ou t of th ei ix cu st om p ar t of th ei el y, P h oe n il l or d er a at w s im er lt d u vi d p ro n ts , an tm en t p la w at er trea 142 Table of Contents Environmental HeadlineServices The Environmental Services Program Represents 15.4% of the Total Budget. The Environmental Services program budget includes Water Services, Solid Waste Management, Public Works, Environmental Programs and the Office of Sustainability. WATER SERVICES Program Goal Budget Allowance Explanation The Water Services Department is responsible for the Water and Wastewater programs. The Water Program provides a safe and adequate domestic water supply to all residents in the Phoenix service area. The Wastewater Program assists in providing a clean, healthy environment through the effective management of all waterborne wastes generated within the Phoenix drainage area. The Water Services 2015-16 operating budget allowance of $266,725,000 is $9,355,000 or 3.6 percent more than 201415 estimated expenditures. The increase is primarily due to a contractual price increase in chemicals and sewer services; an expected increase in the number of filled positions; increases in odor services costs as a result of operating a new odor control station; increases in preventative maintenance to restore previous maintenance schedule not met due to vacancies; increase in raw water purchases; additional consulting expenses for studies such as the warehouse logistics study and scheduled motor vehicle replacement. Water Services Waterline Leaks Repaired (Percent repaired within 48 hours) 100% 98% 86% 90% 2012-13 2013-14 95% 92% 80% 60% 40% 20% 0% 2011-12 Fiscal Year 2014-15* 2015-16* *Estimated 143 Table of Contents Expenditure and Position Summary Water Services Major Performance Measures and Service Levels 2013-14 Actual The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: Operating Expense $251,419,000 2013-14 Actual 156 Water main break/leaks per year Waterline leaks repaired within 48 hours 90% 2014-151 Estimate 144 92% 2015-16 Budget 168 95% Total Positions 28% 25% 25% Sanitary sewer overflows per 100 miles 0.67 1.00 1.00 109.4 110.9 112.9 61.7 61.9 62.1 1,465,241 1,395,000 1,331,200 97.0% 89.0% 90.0% Gallons of water produced system wide (billions) Gallons of wastewater treated system wide (billions) Telephone Calls-Received Telephone Calls-Percent Answered 2 Based on 10 months actual experience. Percent answered is calculated based on total calls logged into the queue and calls answered. Callers can elect to end their call before receiving assistance and would not be counted as “answered.” 1 2 144 2015-16 Budget $257,370,000 $266,725,000 1,475.1 1,463.1 1,463.1 $164,317,000 $170,229,000 $174,862,000 85,155,000 $85,042,000 90,006,000 1,947,000 2,099,000 1,857,000 Source of Funds: Water Wastewater Other Restricted Percent of miles of sewer cleaned per year 2014-15 Estimate Table of Contents SOLID WASTE MANAGEMENT Solid Waste — Recyclable Material Processed Program Goal Thousands of Tons The Solid Waste Management Program assists in providing a safe and aesthetically acceptable environment through effective, integrated management of the solid waste stream, including collection, disposal, source reduction and recycling activities. construction of facilities on city property. 150 125 105.6 107.0 108.0 2011-12 2012-13 2013-14 100 114.0 115.0 2014-15* 2015-16* 75 50 Budget Allowance Explanation The Solid Waste Management 2015-16 operating budget allowance of $121,013,000 is $6,473,000 or 5.7 percent more than 2014-15 estimated expenditures. The Solid Waste operating and maintenance expenditures are expected to increase due to the opening of the new 27th Avenue Composting Facility, increases in equipment replacement costs, increases in personal services costs and other normal inflationary increases 25 0 Fiscal Year *Estimated _______________________________________________________________________ Solid Waste Management Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: 2013-14 Actual 2014-151 Estimate 2015-16 Budget Residential households served with same day contained solid waste and recyclable material collections 399,456 401,639 404,000 Tons of residential recyclable materials collected 108,230 114,000 115,000 Tons of total solid waste disposed at city landfills2 805,453 820,000 840,000 Tons of solid waste from city residences disposed3 535,892 570,000 580,000 Based on 10 months actual experience. Tonnage is down from prior year due to the department’s efforts to increase recycling programs. FY15-16 increase is due to anticipated increase in consumer consumption. 3 Tonnage includes Solid Waste Field Services tonnage, transfer station residential loads, non-profit free loads and recycling rejects. 1 2 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions 2014-15 Estimate 2015-16 Budget $111,041,000 $114,540,000 $121,013,000 593.5 585.5 585.5 $111,041,000 $114,540,000 $121,013,000 Source of Funds: Solid Waste 145 Table of Contents PUBLIC WORKS Program Goal The Public Works Department provides mechanical and electrical maintenance and energy conservation services for city facilities; procures, manages and maintains the city’s fleet of vehicular equipment; and provides for the economical, safe and aesthetic design and construction of facilities on city property. Budget Allowance Explanation The Public Works 2015-16 operating budget allowance of $22,323,000 is $790,000 or 3.4 percent less than 2014-15 estimated expenditures. The decrease reflects the elimination of 22 vacant positions and the transfer of some facilities maintenance costs to the Office of Arts and Culture as recommended in the Citywide CORE Review. Public Works Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2015-16 budget allowance: 2013-14 Actual Square footage of buildings maintained Facility service requests completed Fleet vehicles per mechanic Units of equipment for which fleet management is provided2 Annual miles of fleet vehicle utilization (in millions) 2015-16 Budget 10,618,306 10,618,306 10,573,285 20,535 20,535 20,535 38.8 41.1 40.7 7,374 7,325 7,252 45.5 43.4 43.1 Based on 10 months actual experience. Units of equipment and utilization are lower in 2014-15 and 2015-16 due to citywide turn in of underutilized vehicles. 1 2 Expenditure and Position Summary 2013-14 Actual Operating Expense Total Positions Source of Funds: General City Improvement Other Restricted Solid Waste Federal and State Grants 146 2014-151 Estimate 2014-15 Estimate 2015-16 Budget $18,679,000 491.0 $23,113,000 $22,323,000 433.0 427.0 $13,042,000 5,162,000 84,000 213,000 $15,967,000 $14,834,000 6,396,000 6,416,000 716,000 719,000 ____ (5,000) 178,000 39,000 354,000 Table of Contents ENVIRONMENTAL PROGRAMS Environmental Programs Total Training Provided to Employees/Consultants on Environmental Issues Program Goal The Office of Environmental Programs provides coordination and monitoring for the city’s environmental programs and activities, and develops and implements regulatory policies and programs. Number Trained 3,000 Budget Allowance Explanation 2,000 The Office of Environmental Programs 2015-16 operating budget allowance of $1,113,000 is $19,000 or 1.7 percent more than the 2014-15 estimated expenditures and reflects normal inflationary increases. These increases are partially offset by the elimination of 1 vacant position. 1,626 1,221 989 1,000 750 550 0 2011-12 2012-13 Fiscal Year Operating Expense Total Positions 2013-14 Estimate 2014-15 Budget $1,045,000 $1,094,000 $1,113,000 11.0 10.0 10.0 $706,000 $681,000 $660,000 Source of Funds: General Federal and State Grants Water Fund Capital Construction Other Restricted Funds *Estimated The fluctuations reflect budget reductions to general training, mandatory stormwater training, and Maricopa County assuming dust control training. Expenditure and Position Summary 2012-13 Actual 2015-16* 2014-15* 2013-14 — — — 161,000 208,000 242,000 58,000 70,000 70,000 120,000 135,000 141,000 Environmental Programs Major Performance Measures and Service Levels The following significant performance measures and service level trends will be achieved with the 2015-16 budget allowance: 2013-14 Actual 2014-151 Estimate 2015-16 Budget 1,221 550 750 Number of facility assessments and technical assistance visits conducted2 66 95 90 Number of Brownfields projects implemented 0 0 1 57 55 50 Total employees/consultants receiving training on environmental issues Pollution prevention and hazardous materials/hazardous waste compliance assistance provided3 Based on 10 months actual experience. Departments are assessed on a cyclical basis. The annual variance reflects different departments which have a varying number of facilities. 3 Projection based on historical data and available funding. 1 2 147 Table of Contents 148 Table of Contents Contingencies The Contingency Fund provides for possible emergencies and unanticipated costs that may occur after the budget is adopted. The possibility of natural disasters, public or employee safety emergencies or up-front costs for productivity opportunities necessitates the need for adequate contingency funds. The use of contingency is intended for unanticipated one-time expenses, since it represents limited one-time resources in the fund balance. Use of these contingency funds requires the recommendation of the city manager and City Council approval. agreed to increase the Contingency Fund each year for the next several years, with the goal of achieving a fund that equals 5.0 percent of General Fund operating expenditures. This higher contingency percentage will improve the city’s ability to withstand future economic cycles. In the 2015-16 budget, $1,132,000 was added above the 2014-15 amount. This increases the contingency percentage to 4.0 percent for 2015-16. The following table shows contingency funding and set-aside amounts over the past 10 years. Set-asides have been used in the past to prepare for known future costs such as declining grant funding and new capital project operating costs. Comparison of Annual Budget for General Fund Contingency Amount to Operating Expenditures (000’s) Fiscal Year General Fund Operating Expenditures Contingency and Set-Aside Amounts 2006-07 1,083,304 2007-08 1,184,192 2008-09 1,177,763 2009-10 1,110,780 2010-11 1,012,414 2011-12 1,059,115 2012-13 1,109,322 2013-14 1,125,373 2014-15 1,145,995 2015-16 1,149,761 28,860 — 34,230 — 31,900 — 29,800 — 31,000 3,000 35,840 2,050 40,658 2,000 43,658 — 45,268 — 46,400 — GENERAL FUND CONTINGENCY The budget reflects an increase in the General Fund contingency from the 201415 budgeted level of $45,268,000. The General Fund contingency in 2015-16 will be $46,400,000. The 2014-15 contingency of $45,268,000 was equal to 3.95 percent of General Fund operating expenditures. Over the last 10 years, the General Fund contingency has been as low as 2.7 percent and will be at its highest level in 2015-16 at 4.0 percent. The 2015-16 budget continues the planned gradual increase of the contingency percentage of operating expenditures. In March 2010, the Council Percent of Operating Expenditures 2.7 2.9 2.7 2.7 3.1 3.4 3.7 3.9 3.95 4.0 149 Table of Contents OTHER FUND CONTINGENCIES Similar to the General Fund, other funds also include contingency amounts. The contingency amounts and percentages of total operating expenditures vary to accommodate differences in the volatility of operations and revenues. Due to a potential increase in the sales tax for transportation from 0.4% to 0.7%, which will be presented to voters on the August 25, 2015 ballot, an additional $45 million has been included in the 2015-16 contingency for the Transit 2000 fund. Use of these amounts requires City Council approval. The following table shows the contingency amount for each of the other funds. 150 2015-16 Other Fund Operating Expenditure and Contingency Amount (000’s) Operating Expenditures Contingency Amount $208,164 $55,000 45,520 4,000 8.8 Aviation 251,527 14,000 5.6 Water 185,759 9,000 4.8 Wastewater 95,385 4,500 4.7 Solid Waste 125,421 4,000 3.2 47,101 3,000 6.4 Fund Transit 2000 Planning and Development Convention Center Percent of Operating Expenditures 26.4% Table of Contents Debt Service 2015-16 Debt Service Debt service expenditures include payments of principal and interest plus costs of issuance. The debt service allowance in 2015-16 for existing debt and future bond sales is $616,635,000. As shown in the following pie chart, debt service expenditures are funded by Water, Wastewater, City Improvement, Aviation, Secondary Property Tax, Passenger Facility Charge, Convention Center, Sports Facilities, Solid Waste and other funds. City Improvement debt service includes $92.2 million in general government nonprofit corporation bond debt service payments funded by the General Fund ($39.8 million), Transit 2000 ($50.1 million) and other operating funds ($2.3 million). Secondary Property Tax shown in the pie chart represents the annual tax levy for general obligation bonded debt service, federal subsidy and related interest earnings. Types of Bonds Issued and Security Under Arizona law, cities are authorized to issue voter-approved general obligation, highway user revenue and utility revenue bonds. For the city of Phoenix, this includes property tax-supported bonds and revenue bonds (such as water revenue and airport revenue bonds). The city’s general obligation bonds are “full faith and credit” bonds. This means they are secured by a legally binding pledge to levy property taxes without limit to make annual bond principal and interest payments. Revenue bonds (such as water revenue and airport revenue bonds) are secured by a pledge of these enterprises’ net revenues (revenues net of operation and maintenance expenses) and do not constitute a general obligation of the city backed by general taxing power. Highway user revenue bonds are secured Passenger Facilities Charges 7.3% Solid Waste 2.3% Sports Facilities 3.7% Water 18.4% Aviation 10.2% Wastewater 12.3% Convention Center 3.0% City Improvement* 15.0% Other 7.4% Secondary Property Tax 20.4% *Funded by General, Transit 2000, Housing, Library and other funds. by state-shared gas taxes, other highway user fees and charges, and also are not general obligations of the city. recommended bond authorizations. These authorizations provided funding to construct capital improvements in the following areas: Debt Management In general, the city has used general obligation bonds to finance capital programs of general government (nonenterprise) departments. These include programs in the areas of fire protection, police protection, libraries, parks and recreation, service centers and storm sewers. The debt service on these bonds is paid from the secondary property tax levy. By state law, the city can only use its secondary property tax levy to pay principal and interest on long-term debt. Currently, to finance the capital programs of enterprise departments, the city has used revenue bonds secured by and repaid from the revenues of these enterprises. In the past, the city also has used general obligation bonds for water, airport, sanitary sewer and solid waste purposes when deemed appropriate. Since the 1950s, the city has used a community review process to develop and acquire voter approval for general obligation bond programs. At a bond election held on March 14, 2006, voters approved all of the $878.5 million of the 2006 Citizens’ Bond Committee n Police and Fire Protection n Police, Fire and Computer Technology n Parks, Recreation and Mountain Preserves n Education Facilities n Library Facilities n Street Improvements n Storm Sewers n Senior Facilities n Cultural Facilities n Affordable Housing Neighborhood Revitalization In December 2011, the City Council adopted a policy to delay lower priority bond projects subject to an annual review of property values and financial conditions. In addition, General Obligation debt has been restructured and refinanced to take advantage of favorable market rates. The General Obligation Reserve Fund is utilized strategically to pay down debt service to the staff recommended balance while preserving the high bond ratings. 151 Table of Contents Bond Ratings As shown in the chart below, the city’s bonds are rated favorably by the major bond rating agencies, Moody’s Investors Service and Standard and Poor’s. The city’s general obligation bonds are rated Aa1 and AA+, respectively. Standard and Poor’s also has assigned a Financial Management Assessment (FMA) score of “strong.” Maintaining high bond ratings has resulted in a broader market for the city’s bonds and lower interest costs to the city. The following table is a statement of the city’s bonded indebtedness. Debt Limitation Under the provisions of the Arizona Constitution, outstanding general obligation bonded debt for combined water, sewer, light, parks, open space preserves, playgrounds, recreational facilities, public safety, law enforcement, fire emergency, streets and transportation may not exceed 20 percent of a city’s taxable property, nor may outstanding general obligation bonded debt for all other purposes exceed 6 percent of a city’s taxable property. Unused borrowing capacity as of March 1, 2015, is shown below, based upon 2014-15 assessed valuation. Debt Burden Debt burden is a measurement of the relationship between the debt of the city supported by its property tax base (net direct debt) to the broadest and most generally available measure of wealth in the community: the assessed valuation of all taxable property and the assessed valuation adjusted to reflect market value. In addition, net debt can be compared to population to determine net debt per capita. The city makes these comparisons each time it offers bonds for sale. They are included in the official statements (bond prospectuses) that are distributed to prospective investors. The following table provides debt burden ratios as of March 1, 2015. 152 The city’s debt burden remains in the low-to-moderate range. This means the amount of net debt supported by the city’s property tax base is moderate, relative to the value of that tax base. The city has considerable bonded debt outstanding. However, the use of revenue bonds for enterprise activities and enterprise-supported general obligation bonds, in combination with a wellmanaged, property tax-supported bond program, has permitted the maintenance of a low-to-moderate debt burden. General Government Nonprofit Corporation Bonds In addition to bonded debt, the city uses nonprofit corporation bonds as a financing tool. This form of financing involves the issuance of bonds by a nonprofit corporation for city-approved projects. The city makes annual payments equal to the bond debt service requirements to the corporation. The city’s payments to the corporation are guaranteed by a pledge of excise taxes or utility revenues generated by the city’s airport, water system or wastewater system. Pledged excise taxes may include city sales, use, utility and franchise taxes; license and permit fees; and state-shared sales and income taxes. The city has used nonprofit corporation financing selectively. In general, it has financed only those projects that will generate revenues adequate to support the annual debt service requirements or that generate economic benefits that more than offset the cost of financing. The city also has used nonprofit corporation financing for projects essential to health and safety: e.g., police precinct stations. Similar to bonded debt, these financings are rated by bond rating agencies. City of Phoenix Bond Ratings Rating(1) General Obligation Senior Lien Water Revenue (4) Junior Lien Water Revenue (2) Senior Lien Airport Revenue (2) Junior Lien Airport Revenue (2) Senior Lien Street and Highway User Revenue (4) Junior Lien Street and Highway User Revenue (4) Senior Lien Tax Excise Tax Revenue (2) Junior Lien Tax Excise Tax Revenue (3) Subordinated Excise Tax Revenue (2) Senior Lien Wastewater System Revenue (2) Junior Lien Wastewater System Revenue (2) Rental Car Facility Charge Revenue Bonds (2) Transit Excise Tax Revenue Bonds (Light Rail) (2) State of AZ Distribution Revenue Bonds (2) Senior Hotel Revenue Bonds (5) Subordinate Hotel Revenue Bonds (5) Moody’s Aa1 Aa2 Aa2 Aa3 A1 Aa3 Aa3 Aa2 Aa3 Aa3 Aa2 Aa2 A3 Aa2 Aa3 Ba1 A2 Standard & Poor’s AA+ AAA AAA AAA+ AAA AA AAA AA+ AA+ AAA AA+ A AA AA BB BBB+ Represents underlying rating, if insured. Issued by the City of Phoenix Civic Improvement Corporation. (3) There are currently no outstanding junior lien non-sports facilities backed bonds. (4) No bonds are currently outstanding. (5) Issued by the Downtown Phoenix Hotel Corporation. (1) (2) Table of Contents Statement of Bonded Indebtedness General Obligation Bonds (In Thousands of Dollars)(1) Purpose Various Airport Sanitary Sewer Solid Waste Water Non-Enterprise General Obligation Bonds $1,430,205 — — — — Revenue Supported General Obligation Bonds $ — 7,870 14,141 9,875 33,685 Total General Obligation Bonds $1,430,205 7,870 14,141 9,875 33,685 Subtotal Less: Restricted Funds $1,430,205 (248,260) $ 65,571 — $1,495,776 (248,260) Direct Debt Less: Revenue Supported $1,181,945 — $ 65,571 (65,571) $1,247,516 (65,571) Net Debt $1,181,945 $ — $1,181,945 (1) Represents general obligation bonds outstanding as of March 1, 2015. Such figures do not include the outstanding principal amounts of certain general obligation bonds and street and highway user revenue bonds which have been refunded or the payment of which has been provided for in advance of maturity. The payment of the refunded debt service requirements is secured by obligations issued or fully guaranteed by the United States of America which were purchased with proceeds of the refunding issues and other available moneys and are held in irrevocable trusts and are scheduled to mature at such times and in sufficient amounts to pay when due all principal, interest and redemption premiums where applicable, on the refunded bonds. Water, Sewer, Light, Parks, Open Spaces, Playgrounds, Recreational Facilities, Public Safety, Law Enforcement, Fire Emergency, Streets and Transportation Purpose Bonds 20% Constitutional Limitation Direct General Obligation Bonds Outstanding(1) $2,163,726,837 (1,132,676,176) Unused 20% Limitation Borrowing Capacity $ 1,031,050,661 All Other General Obligation Bonds 6% Constitutional Limitation Direct General Obligation Bonds Outstanding1 Less: Principal Redemption Funds held in Restricted Fund as of April 1, 2014 $ 649,118,051 363,100,000(1) Direct General Obligation Bonds Outstanding (114,839,875) Unused 6% Limitation Borrowing Capacity $534,278,176 (248,260,125) Represents general obligation bonds outstanding as of March 1, 2015. (1) 153 Table of Contents Net Direct General Obligation Bonded Debt Ratios Per Capita Debt Pop. Est. (1,505,070)1 Secondary Assessed Valuation ($10,818,634,186) Full Cash Valuation ($106,487,248,298) Direct General Obligation Bonded Debt Outstanding as of March 1, 2015 $828.88 11.53% 1.17% Net Direct General Obligation Bonded Debt Outstanding as of March 1, 2015 $785.31 10.93% 1.11% Population estimate obtained from the city of Phoenix Planning and Development Department as of July 1, 2014. 1 Debt Service by Source of Funds and Type of Expenditure (In Thousands of Dollars) Fund 2013-14 Actual 2014-15 Estimate 2015-16 Budget Secondary Property Tax $ 43,096 $ 55,299 $ 126,024 74,945 73,719 87,169 Aviation Capital Reserve 25,000 - 800 Convention Center 39,033 39,641 39,239 General 30,540 33,303 39,815 Housing 70 74 73 Passenger Facility Charges 44,867 44,867 44,867 Solid Waste 13,908 15,772 14,468 Sports Facilities 21,881 21,877 22,542 Transit 2000 41,486 47,520 50,069 Wastewater Water Other Funds - Various Sources Total 71,232 58,064 76,006 121,395 115,030 113,286 252 1,097 2,277 $527,705 $506,263 $616,635 $238,117 $258,474 $281,949 289,588 247,789 334,686 $527,705 $506,263 $616,635 Type of Expenditure Principal Interest and Other Total 154 Table of Contents Overview of Capital Improvement Headline Program Process The Capital Improvement Program is a five-year plan for capital expenditures needed to replace, expand and improve infrastructure and systems. Other planning processes, the most significant of which are explained in this section, identify the need and provide funding for capital projects and related operating costs. On April 7, 2015, the City Council reviewed the Preliminary 2015-20 Capital Improvement Program. The Capital Improvement Program reflected here includes the preliminary plan presented to Council, including the Terminal 3 modernization project, street overlay and park renovation, and LED streetlight conversion project. The preliminary plan, as adjusted, has been updated to reflect cost or timing changes identified since the preliminary program was developed. 2015-20 Capital Improvement Program Development The annual citywide Capital Improvement Program update process began in January when departments prepared revised 2014-15 estimates and updated their five-year capital improvement programs. The 2014-15 estimates reflect updated construction cost estimates, project delays, awarded contract amounts, project carry-overs and other program changes. The 2015-20 program includes projects planned for authorized bond funding and the latest estimates for pay-as-you-go projects funded with operating funds, federal funds, impact fees and other sources. Also included are net new operating costs and/or savings. Budget and Research staff reviewed the departments’ programs for funding availability, reasonableness and technical accuracy. Presented in this citywide program are projects reviewed and adopted through several planning processes. These include capital projects funded through the most recently adopted multi-year rate plans for enterprise funds such as Water, Wastewater and Solid Waste, and from other planning processes including infrastructure financing plans for impact fees and various multi-year facility maintenance plans. Also reflected are capital projects from sales tax and voterapproved bond programs including the 2006 Bond Program approved by Phoenix voters in March 2006. In conjunction with the CIP process, city engineering staff works with departments to level design and construction bid award dates evenly throughout the fiscal year. By avoiding bidding capital projects during the last quarter of the fiscal year, the city has controlled construction costs and increased project quality by making better use of locally available construction resources. As projects to construct building facilities are designed, they are reviewed by a Facilities Review Team made up of representatives from the Public Works, Information Technology, Planning and Development, Parks and Recreation, and Budget and Research departments. This team reviews project designs for compliance with city standards for sustainability, maintainability and compatibility with enterprise-wide systems and to determine the project is being designed within funding limitations. Information on the capital and operating costs and timelines are closely monitored and linked to the citywide annual operating budget through these reviews. 155 Table of Contents 2006 Citizens’ Bond Committee Program A Citizens’ Bond Committee process was initiated by the City Council in June 2005. More than 700 community volunteers were appointed by the City Council to serve on 17 bond subcommittees to help shape the 2006 Citizens’ Bond program. Two of the committees evaluated the city’s capacity to service new debt and to fund the operating costs of new capital facilities. These committees reviewed multi-year forecasts for assessed valuation and property tax levies, and for General Fund revenues and expenses. They recommended annual bond and operating cost capacities before 14 service-related committees began their work to evaluate five-year capital facility needs identified by city departments as well as capital project funding requests by community nonprofit organizations. The City Council formed the $878.5 million in projects into seven propositions all of which were approved by voters in March 2006. The decline in the local real estate market from the recent recession resulted in a reduction in property tax revenue, which placed a strain on the property tax supported GO Bond Program. As a result, a portion of this program is indefinitely deferred until the city has the bond capacity to move forward with these projects. 156 Enterprise Funds Capital Construction Funds Fees for the Water, Wastewater and Solid Waste enterprise funds are billed to customers on a single billing. As a result, all three of these enterprise funds complete annual updates to their multiyear rate plans on a similar timeline. These plans are first reviewed by the City Council Transportation and Infrastructure Subcommittee prior to action on the plans by the full City Council. Bond and pay-asyou-go funded capital projects, debt service, and operating and maintenance costs of existing services and planned capital projects are all provided for in these multi-year rate plans. If necessary, user fee rate changes are typically implemented in March of each year to support the updated plans. The Phoenix Convention Center enterprise fund receives most of its resources from earmarked sales taxes. To support a significant expansion and renovation of the Phoenix Convention Center, completed in 2008, an extensive multi-year forecast was developed to establish pay-as-you-go, bond and related debt service, and operations and maintenance cost capacities without a tax rate increase. The capital and financial plan was critical to securing $600 million in bond funding split equally between the city and state of Arizona to expand and modernize the facility. The Capital Construction fund was established in 1998-99 and provides about $12 million each year for critical infrastructure improvements in the rightof-way. Citizen input from a series of public meetings supported using these funds for neighborhood street rehabilitation, sidewalks and wheelchair ramps, traffic safety and traffic calming projects, and neighborhood traffic mitigation projects. Funds are programmed in these project categories for each year of the Capital Improvement Program. Individual projects will be determined during the first year of the program based on traffic engineering data and neighborhood input. Parks and Preserves Funds In September 1999, the voters approved a 10-year, one-tenth of one percent sales tax to purchase state trust lands for the Sonoran Desert Preserve, and for the development and improvement of regional and neighborhood parks. This tax was renewed by voters in May 2008 for 30 years. The 2015-20 Capital Improvement Program includes $97.1 million of these funds, which are programmed for regional, community and neighborhood parks, and Sonoran Preserve land acquisition. Land acquisitions are planned and timed to take advantage of state grant funding opportunities. Table of Contents Transit 2000 Funds Five-Year Streets Plan Programming of Impact Fees The voters approved Proposition 2000 on March 14, 2000. This initiative authorized a four-tenths of one percent sales tax for a period of 20 years to implement the Transit 2000 plan. The plan provides funding for light rail, buses, right of way improvements, passenger facilities and related operating costs. The 2015-20 Capital Improvement Program includes $21.1 million of these funds, which are programmed for: Each year the Street Transportation Department updates its five-year plan and funding for major street and storm drain construction. This program is primarily funded through Arizona Highway User Revenue (AHUR) including state-shared revenue from gas taxes and vehicle license taxes. The update begins with the Budget and Research Department providing an updated current year and five-year forecast of AHUR revenue, and requirements for AHUR to support operating expenditures and debt service to determine the amounts available for pay-as-you-go capital projects. Also included in the plan are any needed updates to voter-approved bond projects as well as projects funded through intergovernmental partnerships. In 1987, the City Council adopted an ordinance requiring new development in the city’s peripheral planning areas to pay its proportionate share of the costs associated with providing public infrastructure. The impact fee program is also regulated by state law. The impact fee program was developed to address projected infrastructure requirements within several planning areas. Impact fees collected for a specific planning area must be expended for capital infrastructure in the plan for that area and may not be used for any other purpose. In addition, impact fee-funded projects must directly benefit the parties that paid the fees. Only impact fee revenues that have been collected are budgeted in the Capital Improvement Program. Operating costs for impact fee-funded projects are included in the rate planning process for Water, Wastewater and Solid Waste. Operating costs for the other impact fee programs are identified in the Capital Improvement Program and are funded through the annual operating budget as costs for operating and maintaining new capital projects. Budget and Research staff has worked with the Planning and Development Department as well as operating department staff to appropriately program $117.0 million in available impact fees in the 2015-20 Preliminary Capital Improvement Program. Additional impact fees will be programmed in future capital improvement programs as these fees are collected. n n n n n n Bus and vehicle acquisitions ($1.2 million) Passenger and other transit facilities ($11.6 million) Bus pullouts ($2.4 million) Technology and communications upgrades ($4.5 million) Light rail, bus rapid transit, planning and related support services ($0.9 million) Contingencies ($0.5 million) 157 Table of Contents SUMMARY OF 2015-20 CAPITAL IMPROVEMENT PROGRAM By Program (In Thousands of Dollars) Program Arts and Cultural Facilities Aviation Economic Development Energy Conservation Facilities Management Finance Fire Protection Historic Preservation Housing Human Services Information Technology Libraries Neighborhood Services Parks, Recreation and Mountain Preserves Phoenix Convention Center Police Protection Public Transit Regional Wireless Cooperative Solid Waste Disposal Street Transportation and Drainage Wastewater Water Total 158 2015-16 1,118 $ 581,133 9,414 1,235 7,180 207 9,395 1,261 33,094 630 57,859 1,143 4,708 $ 2016-17 - $ 67,493 7,901 1,200 6,056 7,738 6,175 12,950 200 25 2017-18 - $ 51,669 5,301 1,200 1,040 5,758 30 12,860 200 25 2018-19 - $ 53,341 4,601 1,200 1,000 6,608 8,830 200 25 2019-20 376 $ 34,092 20,653 1,200 7,721 15,724 1,453 8,020 12,632 6,239 13,470 6,898 Total 1,494 787,728 47,870 6,035 22,997 207 32,857 2,714 59,655 13,292 98,738 15,213 11,681 86,637 26,248 3,211 104,957 22,218 28,406 23,250 3,330 47,391 6,000 7,531 7,154 4,266 50,286 6,000 3,405 7,000 8,159 34,051 6,000 18,635 26,028 10,871 22,755 29,776 6,000 22,825 150,069 52,874 25,966 266,461 46,218 80,802 176,371 115,072 209,033 1,480,530 89,888 85,712 125,152 497,992 83,345 96,304 135,771 464,614 71,827 79,364 154,801 455,642 86,776 124,662 157,393 615,563 508,207 501,114 782,150 3,514,342 $ $ $ $ $ Table of Contents SUMMARY OF 2015-20 CAPITAL IMPROVEMENT PROGRAM By Source of Funds (In Thousands of Dollars) 2015-16 Funds Operating Funds: General Neighborhood Protection - Fire Public Safety Enhancement - Fire Public Safety Expansion - Fire Parks and Preserves Transit 2000 Court Awards Development Services Capital Construction Arizona Highway User Revenue Regional Transit Community Reinvestment Other Restricted Funds Grant Funds Enterprise Funds: Aviation Water Wastewater Solid Waste Convention Center Total Operating Funds Bond Funds: Property Tax Supported: 1988 Various Purpose 2001 Various Purpose 2006 Various Purpose Nonprofit Corporation Bonds: Aviation Water Wastewater Solid Waste Convention Center Other Total Bond Funds Other Capital Sources: Impact Fees Passenger Facility Charge Other Cities' Share in Joint Ventures Solid Waste Remediation Capital Grants Federal, State and Other Participation Capital Reserves Parks Capital Gifts Other Capital Total Other Capital Sources TOTAL $ $ $ $ $ 6,779 52,883 7,398 1,692 448 13,901 57,136 26,498 4,586 14,590 68,778 68,744 175,298 73,534 28,562 4,169 604,996 1,401 16,836 323,390 2,215 2,675 441 20,449 78,963 446,370 73,965 146,431 44,518 1,450 80,866 $ 52,921 9,470 808 18,735 429,164 $ 1,480,530 2016-17 $ $ $ $ $ 8,849 1,290 1,290 1,290 23,200 4,164 119 11,460 63,561 5,910 3,501 4,750 33,633 31,052 104,353 62,478 13,910 1,110 375,920 30 230 16,061 96 86 10,204 26,707 12,918 19,335 22,558 22,013 $ 18,441 100 95,365 $ 497,992 2017-18 $ $ $ $ $ 3,825 7,000 3,122 119 12,234 57,164 7,067 3,501 2,049 39,166 27,984 116,503 68,564 3,509 3,166 354,973 25 30 17,056 9,381 40 10,113 36,645 1,225 8,117 26,651 700 17,606 $ 18,597 100 72,996 $ 464,614 2018-19 $ $ $ $ $ 8,885 7,000 3,415 119 12,120 44,432 3,838 3,501 1,350 25,868 40,090 134,655 58,612 7,729 6,959 358,573 25 10,674 8,028 9,000 1,084 28,811 4,824 11,351 22,942 4,818 $ 19,923 4,400 68,258 $ 455,642 2019-20 $ $ $ $ $ 2,340 7,000 3,000 12,052 31,935 4,001 2,001 1,950 26,577 26,186 130,371 84,440 6,025 10,231 348,109 2,221 16,385 120,454 12,143 17,000 1,100 169,303 24,025 950 46,899 9,865 Total $ $ $ $ $ 30,677 1,290 1,290 1,290 97,083 21,099 1,692 805 61,768 254,228 47,313 17,090 24,689 194,022 194,057 661,179 347,629 59,735 25,635 2,042,571 2,221 17,786 137,370 323,650 58,150 20,179 26,567 20,449 101,465 707,837 116,957 186,184 163,568 2,150 135,168 $ 16,212 200 98,151 $ 126,094 14,270 808 18,735 763,934 $ 615,563 $ 3,514,342 159 Table of Contents 160 Table of Contents 2015-20 Capital Improvement Headline Program Highlights The Capital Improvement Program (CIP) totals $3.5 billion over the next five years. As shown in the pie chart below, funding for the 2015-20 program comes from five main sources: $0.2 billion in 1988, 2001 and 2006 voter-approved bond funds, $1.9 billion in pay-as-you-go operating funds, $0.1 billion in Transit 2000 and Parks and Preserve Initiative funds, $0.6 billion in various enterprise bonds, and $0.8 billion in other capital funds. The $0.8 billion in other capital funds includes $163.6 million in payments by other cities and agencies for participating in joint ventures, $135.2 million in capital grants, $117.0 million in development impact fees, $186.2 million in Passenger Facility Charges, $126.1 million in government and other participation, $14.3 million in capital reserves, $2.2 million in Solid Waste Remediation funding, $0.8 million in Parks Capital Gifts and $18.7 million from miscellaneous capital sources. Projects in the first year total $1.5 billion and are funded from pay-as-you-go operating funds ($605.0 million), bond funds ($446.4 million) and other capital financing ($429.2 million). A financial organization chart at the end of this section presents a visual overview of the first year by source of funds and additional schedules summarize the 2015-20 Capital Improvement Program by source of funds and the 2015-16 Capital Improvement Program by fund group and program. A brief overview of the five-year plan for each program follows. 2015-20 Capital Improvement Program Sources of Funds Pay-As-You-Go $1.9 Billion Property Tax Bonds $0.2 Billion Transit 2000 and Parks and Preserves $0.1 Billion Various Bonds $0.6 Billion Other $0.8 Billion Arts and Cultural Facilities Aviation The Arts and Cultural Facilities program totals $1.5 million and is funded with 2001 and 2006 General Obligation Bond and other restricted funds. The Arts and Cultural Facilities program through various projects seeks to preserve and expand the enjoyment of the arts and culture within the City of Phoenix. General Obligation Bond funded projects total approximately $1.45 million, of which $0.4 million is being delayed indefinitely due to property tax revenue reductions. The Aviation program totals $787.7 million and is funded with Aviation operating revenue, capital grants, Aviation nonprofit corporation bonds and Passenger Facility Charge funds. The program includes projects for Phoenix Sky Harbor International Airport and satellite airports including Phoenix Deer Valley, Phoenix Goodyear and Phoenix-Mesa Gateway. Major improvements for Sky Harbor International Airport include: n General Obligation Bond funded projects that are delayed indefinitely include: n n n Hispanic Cultural Center (a portion of the project budget) Study to renovate Santa Rita Hall for use as a cultural center n n n Modernize Terminal 3 with updated infrastructure Restore, modify or expand ramps, roadways, aprons, pavement areas, taxiways and utility access points Acquire and maintain properties for the Community Noise Reduction Program Conduct various studies and provide assessment, monitoring and remediation services Design and construct various Terminal 4 infrastructure improvements including restroom remodels, terrazzo floor installation and international space modernization 161 Table of Contents n n n Expand the communications and emergency operations center Improve and expand air cargo infrastructure Provide for contingency project funding and debt service payments The Aviation program also includes ramp, runway and infrastructure improvements and land acquisition to enhance the protection of people and property within runway protection zones at the Phoenix Goodyear and Phoenix Deer Valley airports and support for development projects at Phoenix-Mesa Gateway Airport. Economic Development The $47.9 million Economic Development program is funded with Downtown Community Reinvestment funds, 2006 General Obligation Bond funds, Arizona Highway User Revenues, Water revenues and other restricted funds. Major projects include: n n n Downtown Redevelopment Area project facilitation and assistance Arizona State University Center for Law and Society development assistance Phoenix Biomedical Campus maintenance, improvements and repair $17.0 million in projects utilizing 2006 General Obligation Bond funding are delayed indefinitely due to reductions in property tax revenue. These projects include: n n HOPE VI/Rio Salado Downtown Connectors n State Fair Redevelopment n Downtown Land Acquisition n Life Science Research Park n n 162 West Phoenix Revitalization Phoenix Biomedical Campus Improvements ASU Post Office Improvements n Downtown infrastructure improvements to sidewalks, landscaping and lighting General Obligation Bond funded projects that are delayed indefinitely include: n n n Artist Storefront Program Public infrastructure improvements for retail development n n Energy Conservation The $6.0 million Energy Conservation Program is funded with General, Solid Waste, Water and Wastewater operating funds. The Energy Conservation Program continues the City of Phoenix efforts at energy conservation that have been in place for more than 20 years. The program is designed to focus efforts on energy efficient retrofits, energy efficient design and management, metering for efficient operations and implementation of new technology. Facilities Management The Facilities Management program totals $23.0 million and is funded with 2001 and 2006 General Obligation Bond funds, nonprofit corporation bonds, other capital funds, general and other restricted funds and Solid Waste operating funds. The Facilities Management program includes various projects to remediate contaminated soil from leaking underground storage tanks, make major facility repairs and maintain service centers and city facilities citywide, upgrade CNG fueling sites, and maintain and repair the Phoenix Biomedical Campus. General Obligation Bond funded projects total approximately $6.7 million, which are delayed indefinitely due to reductions in property tax revenue. n Phoenix City Hall System Modernization Brownfields Redevelopment for environmentally-impaired properties Reconfigure Phoenix City Hall to increase work space efficiency Estrella Service Center Unleaded Fuel Site Finance The Finance program totals $0.2 million and is funded with capital reserves and various enterprise operating funds. The program consists of the e-Procurement Transparency project for implementation of an e-Procurement system and budget system replacement. Table of Contents Fire Protection Historic Preservation Housing The $32.9 million Fire Protection program is funded with 2001 and 2006 General Obligation Bond funds, development impact fees, Neighborhood Protection Fire, Public Safety Enhancement - Fire, Public Safety Expansion - Fire, other restricted and general funds. The Fire Protection program includes replacement of the Communications Aided Dispatch (CAD) system. General Obligation Bond funded projects total approximately $13.9 million, all of which is being delayed indefinitely due to reductions in property tax revenue. The Historic Preservation program includes four grant programs that provide matching funds to property owners to rehabilitate their historic properties. The Historic Preservation program totals $2.7 million and is funded with 2001 and 2006 General Obligation Bond funds, of which $1.5 million is being delayed indefinitely due to property tax revenue reductions. The Housing program totals $59.7 million and is funded primarily by federal grants and program income, as well as 2006 General Obligation Bond, Water and other restricted funds. General Obligation Bond funded projects that are delayed indefinitely include: n n General Obligation Bond funded projects that are delayed indefinitely include: n n n n n New Station 55 near the borders of the Deer Valley and North Gateway villages along the I-17 corridor New Station 59 in Estrella Village New Station 74 in West Ahwatukee Foothills Station 62 in Southwest Phoenix – right-of-way improvements Training technology and driver education facility improvements Rehabilitation of historic buildings at South Mountain Park Matthew Henson HOPE VI project The Housing program provides for the purchase and modernization of housing units for low-income families throughout the city. Grant-funded modernization projects are planned based on the availability of these funds. The program includes repair and renovation work for the East public housing properties, Foothills Village, Fillmore Gardens, Sunnyslope Manor, Maryvale Terrace, Washington Manor, Pine Tower, Santa Fe Springs, Victory Place, and Virginia housing sites. The Housing program also administers the Frank Luke Addition, Affordable Housing Development, HOME Community Housing Development Organization, HOME Multifamily and Special Project Loan programs and provides for single family public housing units. General Obligation Bond funds provide $1.2 million in funding for one project, United Methodist Outreach Ministries New Day Center homeless shelter for families, which is delayed indefinitely due to reductions in property tax revenue. 163 Table of Contents Human Services Information Technology Libraries The $13.3 million Human Services program is funded with 2001 and 2006 General Obligation Bond funds, Wastewater funds, and other restricted funds. The Human Services program includes various projects to improve senior and family service centers citywide, as well as renovate a portion of the Family Advocacy Center to enhance services provided to the community. General Obligation Bond funded projects total approximately $13.2 million, $12.6 million of which is delayed indefinitely due to reductions in property tax revenue. The $98.7 million Information Technology program is funded with General Obligation 2001 and 2006 bonds, Water, Wastewater, Solid Waste Disposal, Development Services and Aviation revenues, Transit 2000 revenues, capital reserves, nonprofit corporation bonds and general funds. The Information Technology program includes replacing the dated telephone system and data network, enhancement of the City's business intelligence and business analysis capabilities, and replacing FCC mandated equipment with 700 MHz radios and consoles. General Obligation Bond funded projects total approximately $5.1 million, all of which are being delayed indefinitely due to reductions of property tax revenue. The Library’s program totals $15.2 million and is funded with 2001 and 2006 General Obligation Bond funds, development impact fees and general funds. The Library’s program includes improvements to libraries to maintain current standards, including Burton Barr Central Library elevator renovation, expanding the Desert Broom library and a new library branch in Estrella. General Obligation Bond funded projects total approximately $6.6 million, of which $5.7 million is being delayed indefinitely due to property tax revenue reductions. General Obligation Bond funded projects that are delayed indefinitely include: n n Construction of 51st Avenue Senior Center Design and construction of Southwest Family Services Center n General Obligation Bond funded projects that are delayed indefinitely due to reductions of property tax revenue include: n n n Land acquisition for 16th Street Senior Center Assistance to co-locate Native American Connections, Phoenix Indian Center and Native Health to provide human services in one central location n n 164 Renovate an existing space for a family services presence in the north valley Renovate a portion of the Family Advocacy Center Integrate e-government telephone and online services Improve the City’s Geographic Information System n Improve accessible voting n Wireless system security n n General Obligation Bond funded projects that are delayed indefinitely include: Future enhancements to business continuity and data center operations n n New libraries in the North Gateway and West Ahwatukee areas Constructing improvements to Ironwood and Burton Barr libraries Various technology improvements including library patron self-service capabilities Table of Contents Neighborhood Services The Neighborhood Services program totals $11.7 million and is funded with 2001 and 2006 General Obligation bond funds, grants, other agency participation and nonprofit corporation bond funds. The Neighborhood Services program includes various projects to reduce blight and improve neighborhood infrastructure by acquiring property for revitalization and partnering with city departments to improve neighborhoods with park development, traffic mitigation, sidewalk, landscaping and lighting enhancements. General obligation bond funded projects total approximately $9.6 million, of which $6.9 million is being delayed indefinitely due to property tax revenue reductions. General Obligation Bond funded projects that are delayed indefinitely include: n n n Roberta Henry Plat infrastructure development Property acquisitions and partnerships with other city departments to reduce blight, enhance and revitalize neighborhood infrastructure Small Phoenix high schools program development focused on high-demand career fields Parks, Recreation and Mountain Preserves The Parks, Recreation and Mountain Preserves program totals $150.1 million and is funded with General Obligation Bond funds, development impact fees, capital reserves, other capital, Parks capital gifts, other restricted funds, nonprofit corporation bond funds, Parks and Preserves Initiative funds, and Wastewater and Wastewater revenue funds. The Parks, Recreation and Mountain Preserves program includes constructing, improving and renovating city parks, trails and pools, installing LED security and sports lighting, improving roads and parking lots, constructing ADA accessible amenities, acquiring land for the Sonoran Preserve and future parks, contingency funding and various other citywide parks and related infrastructure improvements. General Obligation Bond funded projects total approximately $22.4 million, of which $19.0 million is being delayed indefinitely due to property tax revenue reductions. Phoenix Convention Center The $52.9 million Phoenix Convention Center program is funded with Convention Center operating revenue, general funds, and State contributions for Convention Center Expansion bond debt service payments. In addition to the Convention Center, this program includes projects and improvements for the Herberger and Orpheum Theaters, Symphony Hall plus the Regency, Heritage and Convention Center parking garages. Major projects include: n n n n Convention Center Audiovisual Infrastructure Improvements East Garage Elevator Refurbishment North and West Building Lighting Replacement Regency Garage Fire Sprinkler System Replacement General Obligation Bond funded projects that are delayed indefinitely include: n n n n n n n New parks and trails development including a park at 32nd Avenue and McDowell Road HOPE VI Park Development for public recreation use Sports fields lighting La Pradera Community Center construction Heritage Square and Phoenix Center for the Community Arts renovations Land Acquisition for future parks development Various parks renovations including Maryvale, Coronado, and Papago parks 165 Table of Contents Police Protection Public Transit Regional Wireless Cooperative (RWC) The Police Protection program totals $26.0 million and is funded with other restricted funds and 2001 and 2006 General Obligation Bonds, $22.8 million of which is being delayed indefinitely due to reductions of property tax revenue. The Public Transit program totals $266.5 million and is funded with Arizona Highway User revenue, Transit 2000 revenue, 2006 General Obligation Bonds, operating and capital grants and Regional Transportation revenue including the halfcent countywide sales tax. The Regional Wireless Cooperative (RWC) program totals $46.2 million and is funded through the contributions of RWC member cities, other capital funds and a grant. The City of Phoenix’s contribution is funded through excise tax-supported city improvement debt. Phoenix voters approved Transit 2000, a 0.4 percent sales tax, on March 14, 2000, to fund extensive improvements to the city’s public transit system. The Regional Wireless Cooperative program objective is to develop and assist subscriber cities with a FCC mandate requiring 700 MHz infrastructure upgrades for narrow-banding capabilities. Projects delayed indefinitely include: n Aircraft hangar facilities at the Phoenix Deer Valley Airport n Land acquisition for future expansion n Various police facilities renovations Major projects in the Public Transit program include: n n n n n Purchases of buses, Dial-A-Ride and neighborhood circulator vehicles Improve and maintain bus stops, bus pullouts, Park-And-Ride locations and transit centers Construct, equip and develop Laveen/59th Avenue passenger facility and various facility upgrades including the South Transit Facility renovation and infrastructure improvements at the Public Transit headquarters building Implement technology enhancements including bus fleet wireless communication and fare collection systems, fiber optic connectivity and various network hardware improvements Acquire and maintain land, provide for staff charges related to coordination of Light Rail northwest extension and support services for businesses along the rail route General Obligation Bond funded projects total approximately $0.1 million, all is being delayed indefinitely due to property tax revenue reductions. 166 Solid Waste Disposal The $80.8 million Solid Waste Disposal program is funded with Solid Waste operating revenue, Solid Waste Remediation funds, 2006 General Obligation Bond funds, capital reserves and nonprofit corporation bond funds. The Solid Waste Disposal program includes various projects at the city’s landfills and transfer stations. Major projects include a 27th Avenue Transfer Station Composting Facility, improvements at the North Gateway Transfer Station, various cell excavations and lining, methane gas extraction system and monitoring and State Route 85 landfill drainage construction. Table of Contents Street Transportation and Drainage The Street Transportation and Drainage program totals $508.2 million and is funded with Arizona Highway User Revenues and Reserve, General Obligation Bond funds, Capital Construction funds, impact fees, nonprofit corporation bond funds, Water revenues, other restricted funds, and participation from other agencies. The Street Transportation and Drainage program includes major streets and bridge construction, storm drainage, traffic improvement and other street improvement projects such as sidewalks, ramps, dust control, traffic calming, bikeway system improvements, street resurfacing and replacement of highpressure sodium streetlight light bulbs with energy efficient light-emitting diodes (LED). Major projects planned include improvements to the following locations: 7th Avenue: Southern Avenue to the Salt River, Cave Creek Road: Union Hills to Pima Freeway, 32nd Street: Southern Avenue to Broadway Road, 27th Avenue: Lower Buckeye Road to Buckeye Road, Van Buren Street: 24th Street to 40th Street, Broadway Road: 7th Street to 51st Avenue (Avenida Rio Salado), 35th Avenue: Baseline Road to Southern Avenue, 56th Street: Deer Valley Road to Pinnacle Peak Road, Chandler Blvd: 27th Avenue to 19th Avenue, and a Detention Basin at 27th Avenue and South Mountain Avenue. General Obligation Bond funded projects total approximately $31.0 million, of which $26.1 million is being delayed indefinitely due to reductions in property tax revenue. The general obligation funded bond projects which are delayed indefinitely include: n n n Construct a bridge at Riverview Drive between 18th and 22nd streets n n Design and construct traffic calming infrastructure Construct phase II of the Intelligent Transportation System (ITS) fiber optic backbone Wastewater The Wastewater program totals $501.1 million and is funded with Wastewater revenue, development impact fees, Wastewater nonprofit corporation bonds, 2006 General Obligation Bonds, Arizona Highway User Revenues, and other cities' share in joint ventures funds. Major Wastewater projects include: n Implement improvements at wastewater treatment plants Water The Water program totals $782.2 million and is funded with Water, Wastewater and Solid Waste revenue, nonprofit corporation bonds, development impact fees, and other cities’ share in joint ventures. The Water program includes replacement, rehabilitation and/or production improvements to Val Vista, Deer Valley, Lake Pleasant, Union Hills and 24th Street Water Treatment Plants and Cave Creek Water Reclamation Plant, reservoirs, wells, tanks and booster stations including treatment processes, chemical facilities, equipment and facility improvements. Additional major projects include: n n n n n n n n Design and construct SROG Interceptor Capacity improvements n Expand, improve and replace sewer lift stations n Assess, rehabilitate, relocate and/or construct sewers of various sizes and materials throughout the city Improve technology including automatic meter reading, asset management system and billing system upgrade n n n Implement water resiliency program Construct, improve and relocate various water mains Rehabilitate transmission mains Upgrade Customer Care and Billing system Rehabilitate Val Vista Water Treatment Plant equipment Demolish Verde Water Treatment Plant facilities and restore site to original condition Conduct various wastewater management studies, energy management services, provide for staff charges and consultant fees and project contingency funding Improve various odor control facilities throughout the city including the Salt River Outfall and Southern Avenue Interceptor Construct growth-related wastewater infrastructure in impact fee areas Construct Camelback Corridor improvements Construct historic districts streetscape improvements 167 Table of Contents 168 Table of Contents SCHEDULE 6 2015-16 CAPITAL IMPROVEMENT PROGRAM BY PROGRAM AND SOURCE OF FUNDS (In Thousands of Dollars) Program Arts and Cultural Facilities Aviation Economic Development Energy Conservation Facilities Management Finance Fire Protection Historic Preservation Housing Human Services Information Technology Libraries Neighborhood Services Parks, Recreation and Mountain Preserves Phoenix Convention Center Police Protection Public Transit Regional Wireless Cooperative Solid Waste Disposal Street Transportation and Drainage Wastewater Water Total $ $ Total Program 1,118 $ 581,133 9,414 1,235 7,180 207 9,395 1,261 33,094 630 57,859 1,143 4,708 Pay-AsYou-Go 2001 Misc. Operating Bonds 44 $ 1,074 $ 67,169 9,098 1,235 3,954 114 7,708 73 46 15,473 30 8,191 200 17 1,904 47 86,637 26,248 3,211 104,957 22,218 28,406 53,365 5,799 1,692 85,975 23,565 176,371 115,072 209,033 1,480,530 71,438 69,311 178,731 604,996 $ - $ 144 1,401 $ Nonprofit 2006 Corporation Bonds Bonds $ $ 323,390 315 76 1,613 1,215 2 600 48,868 926 2,561 20 Other Capital Sources 190,575 3,150 93 17,619 800 176 3,368 1,519 19 32 20,449 421 29,873 18,982 22,218 4,402 4,698 16,836 30,351 2,400 2,127 428,133 69,741 43,361 28,174 429,164 $ $ 169 Table of Contents RESOURCES AND EXPENDITURES BY CAPITAL FUND 2015-16 CAPITAL IMPROVEMENT PROGRAM (In Thousands of Dollars) RESOURCES Projected Revenue 1 Beginning Balance Capital Fund FUND BALANCES EXPENDITURES Estimated Expenditures Total Ending Fund Balance Projected Funds Resources Available Beyond 15/16 2 Beyond 15/16 BONDS AND RELATED FUNDS 2006 Bonds Libraries, Senior & Cultural Centers Education Affordable Housing & Neighborhoods Parks and Open Spaces Police, Fire & Homeland Security Police, Fire & City Technology Street and Storm Sewer Improvement 2001 Bonds Affordable Housing & Homeless Shelter Educational, Youth & Cultural Facilities Environmental Improvement & Cleanup Fire Protection Facilities & Equipment Neighborhood Protection & Senior Centers New & Improved Libraries Parks, Open Space & Recreation Police Protection Facilities & Equipment Police, Fire & Computer Technology Preserving Phoenix Heritage Storm Sewers Street Improvements 1989 Historic Preservation 1988 Bonds Freeway Mitigation, Neighborhood Stabilization, Slum & Blight Elimination Parks, Recreation & Mountain Preserves Police Protection Nonprofit Corporation Bonds Aviation Phoenix Convention Center Solid Waste Wastewater Water Other $ (2,277) $ (4,556) 6,752 5,089 2,506 707 6,798 - $ (2,277) (4,556) 6,752 5,089 2,506 707 6,798 1,053 (108) 261 73 4,896 3,461 (334) (523) (51) (177) (26) (457) 2 - 1,053 (108) 261 73 4,896 3,461 (334) (523) (51) (177) (26) (457) 2 845 413 27 - 845 413 27 $ 1,526 2 4,122 3,368 2,502 631 4,685 $ 1,074 73 93 17 144 - (3,803) $ (4,558) 2,630 1,721 4 76 2,113 1,053 (1,182) 261 4,803 3,444 (334) (523) (51) (177) (26) (601) 2 - 845 413 27 27,190 8,090 17,795 13,685 36,700 4,790 27,495 $ 23,387 3,532 20,425 15,406 36,704 4,866 29,608 1,700 630 800 2,355 900 4,425 1,115 615 795 50 2,225 - 1,053 518 891 800 7,158 4,344 4,091 592 564 618 24 1,624 2 1,000 - 1,845 413 27 (23,012) 9,643 1,845 547 625 (26,868) 7,600 20,449 - (15,412) 30,092 1,845 547 625 (26,868) 323,390 20,449 441 2,675 2,215 78,963 (338,802) 9,643 1,404 (2,128) (1,590) (105,831) 538,020 75,000 405,000 525,000 182,345 199,218 9,643 76,404 402,872 523,410 76,514 120,092 97,062 1,651 5,695 (27,718) (58,040) 308 323,655 29,197 97,500 40,780 80,866 52,921 250 1,514 12,299 120,092 194,562 42,431 5,695 53,148 (5,119) 558 325,169 41,496 73,965 146,431 44,518 1,450 80,866 52,921 808 9,470 18,735 46,127 48,131 (2,087) 4,245 (27,718) (58,040) (250) 315,699 22,761 2,087 27,718 58,040 250 - 46,127 48,131 4,245 315,699 22,761 OTHER FINANCING Impact Fees Passenger/Customer Facility Charge Other Cities' Participation in Joint Ventures Solid Waste Remediation Capital Grants Federal, State & Other Participation Capital Gifts Capital Reserves Other Capital TOTAL $ 479,056 $ 314,179 $ 793,235 $ 875,534 $ (82,299) $ 1,965,815 1 Includes bond proceeds, excluding anticipated but unrealized proceeds, and funds which "pass through" bond funds such as grants, land sales and other agency and private participation. 2 Includes bonds authorized and available for sale, pledged resources and cost recovery for projects billed and/or reimbursed on a cash flow basis. 170 $ 1,883,516 Table of Contents 2015-16 Capital Improvement Program Organizational Chart 171 Table of Contents 172 Table of Contents Headline Operating Costs for New Capital Facilities C apital facilities include the police and fire stations, senior centers, parks, swimming pools, libraries, cultural facilities and customer service centers needed to deliver services to our residents. Capital improvements also include investment in infrastructure, commercial and neighborhood development, redevelopment and revitalization. Since these types of capital projects are assets with a multi-year life, issuing bonded debt is an appropriate way to pay for these expenses. It allows the initial costs to be repaid over the years the investment is used. The service delivery costs and dayto-day operating expenses such as staff salaries or supplies are not capital assets. These costs are not funded with bonded debt and must be paid from the city's annual operating funds. New Facilities Funding and Their Operating Costs In accordance with Bond Committee recommendations and property tax policy adopted by the City Council in December 2011, the primary property tax levy is maximized to ensure its stability as a source of General Fund revenue and to help pay for operation and maintenance of capital facilities. On March 14, 2006, Phoenix voters approved an $878.5 million bond program. Estimated General Fund expenditures to operate bond funded projects are updated annually. For enterprise fund operations, multi-year rate planning processes are used to provide the City Council with the effects new capital facilities will have on future rate-payers. Each year, the City Council considers the impact of future capital facilities as it sets annual utility rates. Finally, for more than 20 years, the energy conservation program has generated annual cost savings in excess of the funds invested. This program provides for energy efficient retrofits, energy efficient design and metering for efficient operations. Identifying Operating Costs Each fall, departments are asked to review all capital projects, their estimated completion dates, any costs associated with operating new facilities and systems, and the funding source(s) for these costs. These costs are reviewed by the Budget and Research Department. The 2015-16 budget includes $1,938,000 in new operating and maintenance costs for new facilities and systems. The funding sources for 2015-16 operating costs are the General Fund, Phoenix Parks and Preserve Initiative Fund, Transit 2000 Fund, and Solid Waste Fund. The schedule on the next page provides project operating and maintenance costs for 2015-16, the fullyear operating and maintenance costs for 2016-17, and the source of funds that will be used for these costs. OPERATING COSTS FOR NEW CAPITAL FACILITIES Project Name and Operating Fund Source Parks and Recreation Coffelt-Lamoreaux Public Housing Complex (General Fund) # of FTEs 1.9 2015-16 Costs Add part-time staff to provide recreation services at the newly renovated Coffelt-Lamoreaux Recreation Center opening April 2016. 14,000 2016-17 Costs 54,000 173 Table of Contents OPERATING COSTS FOR NEW CAPITAL FACILITIES (continued) Project Name and Operating Fund Source # of FTEs 2015-16 Costs 2016-17 Costs Parks and Recreation Trailhead Services (Phoenix Parks and Preserve Initiative Fund [PPPI]) — Add contract costs for janitorial services at three new major trailheads: Apache Wash, Desert Vista and Desert Hills. — Add funding to operate the expansion of light rail services from the current end-of-line at 19th Avenue and Montebello to 19th Avenue and Dunlap Avenue. — Add funds necessary to operate and maintain the new composting facility scheduled to open in July 2016. Funding may be used to hire contract staff to operate the facility or used to hire City staff depending on the results of a competitive bidding process. 100,000 126,000 1,200,000 2,500,000 624,000 2,285,000 $1,938,000 $4,965,000 14,000 54,000 Public Transit Light Rail Expansion (Transit 2000 Fund) Public Works Composting Facility (Solid Waste Fund) Net Total Costs Source of Funds General Fund Phoenix Parks and Preserve Initiative (PPPI) 100,000 126,000 Transit 2000 Fund 1,200,000 2,500,000 Solid Waste Fund 624,000 2,285,000 $1,938,000 $4,965,000 Total Source of Funds 174 Table of Contents 175 Table of Contents 176 Table of Contents Summary Schedules 177 Table of Contents 178 Table of Contents  !"# #!$%& #'(# ! # )& *    +  ,           /                           , . % !"#$ % !&!"!'# % !"()# % #($"'!            % % *)"&* % ))!" )& % )!"') % + &"( * $# #$"#** + )*" *# )*" *# + ' "'(* '& + !")#& ''"$$* ''"'! + )"#!* ! + &"#(' '")') !"#$ % '$")# % !")( % (&)"*! 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"# "# 183 Table of Contents SCHEDULE 3 1 EXPENDITURES BY DEPARTMENT (In Thousands of Dollars) 2013-14 Actual Program General Government Mayor City Council City Manager Government Relations 2 Communications Office City Auditor Equal Opportunity Human Resources Phoenix Employment Relations Board Regional Wireless Cooperative Retirement Systems Law Information Technology City Clerk and Elections Finance Budget and Research 2015-16 Budget Percent Change from 2014-15 Budget Estimate $ 1,628 $ 3,345 2,481 1,094 2,525 2,294 2,586 10,406 58 4,428 4,696 34,037 5,236 21,452 2,996 1,831 $ 3,536 2,599 1,296 2,410 2,410 2,926 11,446 93 4,718 4,783 39,622 4,875 21,200 2,956 1,831 $ 3,536 2,535 1,009 2,335 2,370 2,822 11,313 76 5,316 4,888 37,386 4,492 20,322 2,897 1,831 3,536 2,536 1,064 2,293 2,440 2,811 11,018 84 5,004 4,843 37,509 5,070 33,347 3,057 (2.4%) (17.9%) (4.9%) 1.2% (3.9%) (3.7%) (9.7%) 6.1% 1.3% (5.3%) 4.0% 57.3% 3.4% 5.5% (1.8%) 3.0% (0.4%) (2.6%) 10.5% (5.9%) (0.9%) 0.3% 12.9% 64.1% 5.5% Total General Government $ 99,262 $ 106,701 $ 103,128 $ 116,443 9.1% 12.9% Public Safety Police Fire Emergency Management $ 555,422 $ 286,383 464 570,434 $ 304,088 472 559,288 $ 304,527 803 572,949 312,745 649 0.4% 2.8% 37.5% 2.4% 2.7% (19.2%) Total Public Safety $ 842,269 $ 874,994 $ 864,618 $ 886,343 1.3% 2.5% $ 35,909 $ 15,135 4,788 41,837 $ 16,190 4,982 40,251 $ 14,746 4,967 40,705 15,196 5,081 (2.7%) (6.1%) 2.0% 1.1% 3.1% 2.3% Total Criminal Justice $ 55,832 $ 63,009 $ 59,964 $ 60,982 (3.2%) 1.7% Transportation Street Transportation Aviation Public Transit $ 68,085 $ 223,936 229,716 72,010 $ 234,708 252,959 68,942 $ 234,233 247,870 71,444 236,851 263,299 (0.8%) 0.9% 4.1% 3.6% 1.1% 6.2% Total Transportation $ 521,737 $ 559,677 $ 551,045 $ 571,594 2.1% 3.7% Criminal Justice Municipal Court City Prosecutor Public Defender 184 2014-15 Budget Estimate Table of Contents SCHEDULE 3 (continued) 1 EXPENDITURES BY DEPARTMENT (In Thousands of Dollars) Program Community Development Planning and Development Housing Community and Economic Development Neighborhood Services PCDIC 2014-15 Budget Estimate 2013-14 Actual 2015-16 Budget Percent Change from 2014-15 Budget Estimate $ 37,950 $ 75,913 25,209 44,516 - 46,762 $ 88,591 24,678 59,206 - 45,163 $ 86,454 29,156 34,705 - 46,258 89,697 29,497 56,192 776 (1.1%) 1.2% 19.5% (5.1%) - 2.4% 3.8% 1.2% 61.9% - $ 183,588 $ 219,237 $ 195,478 $ 222,420 1.5% 13.8% $ 106,770 $ 34,080 43,179 57,387 1,397 111,181 $ 36,063 46,169 60,440 1,542 104,639 $ 35,745 43,872 62,699 1,570 107,016 35,778 45,667 62,030 3,968 (3.7%) (0.8%) (1.1%) 2.6% 157.3% 2.3% 0.1% 4.1% (1.1%) 152.7% $ 242,813 $ 255,395 $ 248,525 $ 254,459 (0.4%) 2.4% $ 251,419 $ 111,041 18,679 1,045 - 267,018 $ 133,802 25,034 1,330 - 257,370 $ 114,540 23,113 1,094 - 266,725 121,013 22,323 1,113 293 (0.1%) (9.6%) (10.8%) (16.3%) - 3.6% 5.7% (3.4%) 1.7% - Total Environmental Services $ 382,184 $ 427,184 $ 396,117 $ 411,467 (3.7%) 3.9% Contingencies $ - $ 93,768 $ - $ 139,900 49.2% - $ 2,327,685 $ 2,599,965 $ 2,418,875 $ 2,663,608 2.4% 10.1% Total Community Development Community Enrichment 3 Parks and Recreation Library Phoenix Convention Center Human Services Office of Arts and Culture Total Community Enrichment Environmental Services Water Solid Waste Management Public Works Environmental Programs Office of Sustainability GRAND TOTAL 1 2 For purposes of this schedule, department budget allocations include Grants and City Improvement debt service payments. Formerly known as the Public Information Office. 3 Golf is included with Parks and Recreation. In prior years, Golf was classified as an Enterprise Fund and was shown as a separate department. 185 Table of Contents SCHEDULE 4 2015-2016 EXPENDITURES BY DEPARTMENT 1 BY SOURCE OF FUNDS (In Thousands of Dollars) Total Program General Government Mayor City Council City Manager Government Relations 2 Communications Office City Auditor Equal Opportunity Human Resources Phoenix Employment Relations Board Regional Wireless Cooperative Retirement Systems Law Information Technology City Clerk and Elections Finance Budget and Research Special Revenue Funds1 Enterprise Funds $ 1,831 $ 3,536 2,536 1,064 2,293 2,440 2,811 11,018 84 5,004 4,843 37,509 5,070 33,347 3,057 1,831 $ 3,536 2,235 1,064 1,947 2,440 2,322 9,742 84 4,843 34,822 5,054 22,795 3,057 - $ 53 861 2,244 - 248 346 489 1,276 5,004 1,826 16 8,308 - Total General Government $ 116,443 $ 95,772 $ 3,158 $ 17,513 Public Safety Police Fire Emergency Management $ 572,949 $ 312,745 649 477,616 $ 259,566 14 - $ - 95,333 53,179 635 Total Public Safety $ 886,343 $ 737,196 $ - $ 149,147 $ 40,705 $ 15,196 5,081 27,542 $ 14,223 5,081 - $ - 13,163 973 - Total Criminal Justice $ 60,982 $ 46,846 $ - $ 14,136 Transportation Street Transportation Aviation Public Transit $ 71,444 $ 236,851 263,299 19,221 $ 17,940 - $ 52,223 236,851 245,359 Total Transportation $ 571,594 $ 37,161 $ 236,851 $ 297,582 Criminal Justice Municipal Court City Prosecutor Public Defender 186 General Funds Table of Contents SCHEDULE 4 (continued) 2015-2016 EXPENDITURES BY DEPARTMENT 1 BY SOURCE OF FUNDS (In Thousands of Dollars) Total Program Community Development Planning and Development Services Housing Community and Economic Development Neighborhood Services PCDIC Enterprise Funds Special Revenue Funds1 $ 46,258 $ 89,697 29,497 56,192 776 4,330 $ 54 4,629 12,362 - - $ 568 - $ 222,420 $ 21,375 $ 568 $ 200,477 $ 107,016 35,778 45,667 62,030 3,968 90,559 $ 35,280 1,384 18,171 3,830 - $ 43,643 350 - 16,457 498 640 43,509 138 $ 254,459 $ 149,224 $ 43,993 $ 61,242 $ 266,725 $ 121,013 22,323 1,113 293 - $ 14,834 660 293 264,868 $ 121,013 242 - 1,857 7,489 211 - Total Environmental Services $ 411,467 $ 15,787 $ 386,123 $ 9,557 Contingencies $ 139,900 $ 46,400 $ 34,500 $ 59,000 GRAND TOTAL $ Total Community Development Community Enrichment 3 Parks and Recreation Library Phoenix Convention Center Human Services Office of Arts and Culture Total Community Enrichment Environmental Services Water Solid Waste Management Public Works Environmental Programs Office of Sustainability 1 General Funds 2,663,608 $ 1,149,761 $ 41,928 89,643 24,300 43,830 776 705,193 $ 808,654 2 For purposes of this schedule, department budget allocations include Grants and City Improvement debt service payments. Formerly known as the Public Information Office. 3 Golf is included with Parks and Recreation. In prior years, Golf was classified as an Enterprise Fund and was shown as a separate department. 187 Table of Contents "$% &'( ")*+$, - +&)" . )/0) 12"/&)$/33&- " - . /3, - +&) {?_QR@!|                            !"       #'     #      +;<'     =#     =>       ?@>;     HK        H>O>?"OH'Q'       <>      <"RVR'     X'QKQR#Z>>       #[Z\O]">"         #Q^       # R"_Q        ##     #K='        #K_         >R`!"          >>+         >H'Q\@'    `+              | {  | } ~~X"@"VR       VR?                                  ` ;\R"     {         #" ?R]Q  !"#  188       Table of Contents "$% &'( ")*+$, - +&)" . )/0) 12"/&)$/33&- " - . /3, - +&){R| {?_QR@!|    " 3        ]"'R >R;#";_^      >"   ~      ='    _          HK; } }   } }       }            >R`          `+       `                               `+  } } `    } #';Q'       "\    }                           ;?" ]Q]"' "R  >K]"'R          "R X"@"VR >K"R " 3   ?; #'K@"" RQRKRQ+R  \@@@;\R"R>R;#";_^@~]K'VRRK @RKR  >@@RQ+@@@;\R"RR@Q"R'>R;#";_^H;  \@@@"@R;?" 189 Table of Contents SCHEDULE 6 CAPITAL IMPROVEMENT PROGRAM FINANCED FROM OPERATING FUNDS (In Thousands of Dollars) Program Arts and Cultural Facilities Aviation Economic Development Energy Conservation Facilities Management Finance Fire Protection Housing Human Services Information Technology Libraries Neighborhood Services Parks, Recreation and Mountain Preserves Phoenix Convention Center Police Protection Public Transit Solid Waste Disposal Street Transportation and Drainage Wastewater Water Total Source of Funds General Funds: General Library Total General Funds Special Revenue Funds: Parks and Preserves Transit 2000 Court Awards Development Services Capital Construction Sports Facilities Arizona Highway User Revenue Regional Transit Community Reinvestment Other Restricted Funds Grant Funds Total Special Revenue Funds Enterprise Funds: Aviation Water Wastewater Solid Waste Convention Center Total Enterprise Funds Total Operating Funds 190 2013-14 Actual 208 $ 21,577 3,222 4,759 4,314 4,009 0 11,402 82 764 114 983 15,230 2,740 6,330 18,236 2,990 72,904 31,951 137,546 339,361 $ 2014-15 Estimate 8 $ 18,020 7,566 1,320 3,334 1,047 150 7,282 20 4,572 513 1,344 15,467 4,740 1,490 71,159 22,964 61,644 40,840 118,397 381,877 $ 2015-16 Budget 44 67,169 9,098 1,235 3,954 114 7,708 15,473 30 8,191 200 1,904 53,365 5,799 1,692 85,975 23,565 71,438 69,311 178,731 604,996 1,797 $ 114 1,911 $ 2,345 $ 514 2,859 $ 6,579 200 6,779 15,150 $ 6,940 5,305 43 18,959 1,207 54,215 7,789 1,097 3,456 19,750 133,911 $ 14,637 $ 17,763 1,090 500 16,854 1,292 44,626 14,179 5,179 3,191 48,476 167,787 $ 52,883 7,398 1,692 448 13,901 57,136 26,498 4,586 14,590 68,778 247,910 $ 23,614 $ 137,529 33,713 7,150 1,533 203,539 $ 19,001 $ 120,039 42,329 26,900 2,962 211,231 $ 68,744 175,298 73,534 28,562 4,169 350,307 $ 339,361 $ 381,877 $ 604,996 $ $ $ $ $ $ $ Table of Contents  )*+! %                     !  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" !# "!# ,! ,!  ! ! !     -21(-'& -21%('& *)(',+ (',    ! ,! ! -21-('& 193 Table of Contents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able of Contents Glossary Accrual Basis Accounting – The most commonly used accounting method, which reports income when earned and expenses when incurred, as opposed to cash basis accounting, which reports income when received and expenses when paid. For the city's Comprehensive Annual Financial Report (CAFR), Phoenix recognizes grant revenues on a modified cash basis. Generally Accepted Accounting Principles (GAAP) recognizes grant revenues on an accrual basis. Appropriation – An authorization granted by the City Council to make expenditures and to incur obligations for purposes specified in the appropriation ordinances. Three appropriation ordinances are adopted each year: 1) the operating funds ordinance, 2) the capital funds ordinance, and 3) the re-appropriated funds ordinance. Arizona Highway User Revenue (AHUR) – Various gas tax and vehicle licensing fees imposed and collected by the state and shared with cities and towns. This revenue must be used for street or highway purposes. Balanced Budget – Arizona law (Title 42 Arizona Revised Statutes) and the City of Phoenix Charter (chapter XVIII) require the City Council to annually adopt a balanced budget by purpose of public expense. State law defines this balanced budget as “the primary property tax levy, when added together with all other available resources, must equal these expenditures.” Therefore, no General Fund balances can be budgeted in reserve for subsequent fiscal years. Instead, an amount for contingencies is included in the budget each year. The charter further requires that “the total of proposed expenditures shall not exceed the total of estimated income and fund balances.” Base Budget – Funding for ongoing expenditures for personnel, commodities, contractual services and replacement of existing equipment previously authorized. The base budget provides funding to continue previously authorized services and programs. Block Watch Fund – This fund is the Block Watch portion of the Neighborhood Protection Fund. This fund is a portion of a voter-approved 0.1 percent sales tax increase approved in October 1993. Grant funds are awarded to communities for innovative methods to deter crime-related problems in their neighborhoods. The city disburses these funds through an annual application process. Bonds – Debt instruments that require repayment of a specified principal amount on a certain date (maturity date), along with interest at a stated rate or according to a formula for determining the interest rate. Bond Rating – An evaluation of a bond issuer's credit quality and perceived ability to pay the principal and interest on time and in full. Two agencies regularly review city bonds and generate bond ratings - Moody's Investors Service and Standard and Poor's Ratings Group. Budget – A plan of financial operation for a specific time period (the city of Phoenix's adopted budget is for a fiscal year July 1 – June 30). The budget contains the estimated expenditures needed to continue the city's operations for the fiscal year and revenues anticipated to finance them. Capital Budget – See Capital Improvement Program. Capital Funds – Resources derived from issuance of bonds for specific purposes, related federal project grants and participation from other agencies used to finance capital expenditures. Capital Improvement Program (CIP) – A plan for capital expenditures needed to maintain and expand the public infrastructure (for example, roads, sewers, water lines or parks). It projects these infrastructure needs for a set number of years and is updated annually to reflect the latest priorities, cost estimates or changing financial strategies. The Annual Capital Budget is included in the first year of the five-year Capital Improvement Program. Capital Outlay – Items that cost more than $5,000 and have a useful life of more than two years. Capital Project – New facility, technology system, land acquisition or equipment acquisition, or improvements to existing facilities beyond routine maintenance. Capital projects are included in the Capital Improvement Program and become fixed assets. Carryover – Expenditure originally planned for in the current fiscal year, but because of delays, is postponed to the following fiscal year. CDBG – See Community Development Block Grant. Central Service Cost Allocation – The method of distributing expenses for general staff and administrative overhead to the benefiting activity. CIP – See Capital Improvement Program. City Connection – Weekly employee newsletter containing information about the organization, news about employees, and personnel and benefits updates. City Manager’s Budget – See Preliminary Budget. City of Phoenix Employees’ Retirement Systems (COPERS) – A pension plan for fulltime employees who retire from service with the city of Phoenix. 195 Table of Contents Civic Improvement Corporation (CIC) – Non-profit corporation established in 1973 as the main financing arm of the city of Phoenix to issue debt obligations secured by enterprise fund revenues or excise tax pledges. Commodities – Consumable goods such as office supplies, repair and replacement parts, small tools and fuel, which are not of a capital nature. Debt Service – Payment of principal and interest on an obligation resulting from the issuance of bonds. Depreciation – The decline in the value of an asset due to general wear and tear or obsolescence. government to the city of Phoenix to use for the prevention and removal of slum and blight, and to benefit low- and moderate-income persons. The city disburses these funds through an annual application process open to all nonprofit organizations and city departments. Comprehensive Annual Financial Report (CAFR) – Official annual report of the city of Phoenix which includes statements of revenue, expenditures and changes in fund balances. Contingency – An appropriation of funds to cover unforeseen events that occur during the fiscal year, such as flood emergencies, federal mandates, unanticipated one time expenses and similar eventualities. Contractual Services – Expenditures for services performed by firms, individuals or other city departments. purchase orders, contracts or other funding commitments that are yet to be fulfilled. The budget basis of accounting considers an encumbrance to be the equivalent of expenditure. Enterprise Funds – Funds that are accounted for in a manner similar to a private business. Enterprise funds usually recover their costs (including depreciation) through user fees. The city has four such self-supporting funds: Aviation, Water, Wastewater, and Solid Waste. In addition, the Phoenix Convention Center Fund, which is primarily supported by earmarked excise taxes, uses enterprise fund accounting to provide for the periodic determination of net income. Estimate – The most recent prediction of current year revenue and expenditures. Estimates are based upon several months of actual expenditure and revenue information and are prepared to consider the impact of unanticipated costs or other economic changes. Council-Manager Form of Government – An organizational structure in which the Mayor and City Council appoint an independent city manager to be the chief operating officer of a local government. In practice, a City Council sets policies and the city manager is responsible for implementing those policies effectively and efficiently. Court Awards Fund – Revenues provided by court awards of confiscated property under both the federal and state organized crime acts. These funds are used for additional law enforcement activities in the Police and Law departments. Cycle Time – The amount of time, from the customer’s perspective, it takes to complete a defined task, process or service. Fund – An independent governmental accounting entity with a self-balancing group of accounts including assets, liabilities and fund balance, which record all financial transactions for specific activities of government functions. Fund Balance – As used in the budget, the excess of resources over expenditures. The beginning fund balance is the residual funds brought forward from the previous fiscal year. GAAP – See Generally Accepted Accounting Principles. General Obligation Bonds (G.O. Bonds) – Bonds that require voter approval and finance a variety of public capital projects such as streets, buildings, parks and improvements. The bonds are backed by the “full faith and credit” of the issuing government. General Funds – Resources derived from taxes and fees that have unrestricted use, meaning they are not earmarked for specific purposes. Generally Accepted Accounting Principles (GAAP) – Uniform minimum standards of Excise Tax Fund – This fund is used to account for tax revenues ultimately pledged to pay principal and interest on various debt obligations. This fund includes local sales taxes, state-shared sales taxes, state-shared income taxes and sales tax license fees. financial accounting and reporting that govern the form and content of basic financial statements. The city's Comprehensive Annual Financial Report (CAFR) outlines adjustments needed to convert Phoenix's budget basis of accounting to a GAAP basis. Expenditures – Refers to current cash operating expenses and encumbrances. GFOA – Government Finance Officers Association Expenditure Limit – See State Expenditure Goal – A statement of broad direction, purpose or intent based on the needs of the community. A goal is general and timeless; that is, it is not concerned with a specific achievement in a given time period. Limit. Fiduciary Funds – Funds used to account for assets held by the city of Phoenix as a trustee or agent. These funds cannot be used to support the city’s own programs. Fiscal Year – The city’s charter designates July 1 to June 30 as the fiscal year. 196 Full-Time Equivalent Position (FTE) – A position converted to the decimal equivalent of a full-time position based on 2,080 hours per year. For example, a part-time clerk working for 20 hours per week would be equivalent to one half of a full-time position or 0.5 FTE. DBE – Disadvantaged Business Enterprise Encumbrance – A reservation of funds to cover Community Development Block Grant (CDBG) – Grant funds allocated by the federal FTE – See Full-Time Equivalent Position. G. O. Bonds – See General Obligation Bonds. Table of Contents Grant – A contribution by one government unit or funding source to another. The contribution is usually made to aid in the support of a specified function (e.g., library materials or drug enforcement, but it is sometimes for general purposes). HUD – U.S. Department of Housing and Urban Development. Infrastructure – Facilities that support the daily life and growth of the city, for example, roads, water lines, sewers, public buildings, parks and airports. Impact Fees – Fees adopted by the City Council in 1987 requiring new development in the city's outlying planning areas to pay its proportional share of the costs associated with providing necessary public infrastructure. Improvement Districts – Special assessment districts formed by property owners who desire and are willing to pay for mutually enjoyed improvements such as streets, sidewalks, sewers and lighting. In Lieu Property Taxes (or In Lieu Taxes) – An amount charged to certain city enterprise and federally funded operations that equal the city property taxes that would be due on plant and equipment if these operations were forprofit companies. This includes the Water, Wastewater, Solid Waste and Public Housing funds. Levy – See Tax Levy. Mandate – Legislation passed by the state or federal government requiring action or provision of services and/or programs. Examples include the Americans with Disabilities Act, which requires actions such as physical facility improvements and provision of specialized transportation services. M/W/SBE – Minority, Women and Small Business Enterprise. Modified Accrual Basis – Method under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period the associated liability is incurred. Most government accounting follows this method. Neighborhood Protection Fund – This fund, also referred to as Proposition 301, is used to account for the funds generated by the 0.1 percent increase in the sales tax approved by voters in October 1993. The funds are to be used for the expansion of police, fire, and block watch programs. The breakdown of funding is as follows: Police 70 percent, Fire 25 percent and Block Watch 5 percent. Net Direct Debt Ratio – The ratio between property tax-supported debt service and secondary-assessed valuation. The Net Direct Debt Ratio is one way to gauge the ability of a local property tax base to support general obligation debt service. Objective – Desired output-oriented accomplishments that can be measured and achieved within a given time frame, and advance the activity and organization toward a corresponding goal. Operating Funds – Resources derived from continuing revenue sources used to finance ongoing operating expenditures and “pay-as-yougo” capital projects. Ordinance – A formal legislative enactment by the City Council. If it is not in conflict with any higher form of law, such as a state statute or constitutional provision, it has the full force and effect of law within the boundaries of the city. Outstanding Bonds – Bonds not yet retired through principal and interest payments. Parks and Preserves Fund – This fund is used to account for the funds generated by the 0.1 percent increase in the sales tax approved by voters in 1999 and reauthorized in 2008. The funds are to be used for the purchase of state trust lands for the Sonoran Desert Preserve Open Space, and the development of regional and neighborhood parks to enhance community safety and recreation. Pay-As-You-Go Capital Projects – Capital projects whose funding comes from day-to day city operating revenue sources. Percent-for-Art – An ordinance that allocates up to 1 percent of the city's capital improvement budget to fund public art projects. Personal Services – All costs related to compensating city employees including employee benefits costs such as contributions for retirement, social security, and health and industrial insurance. It also includes fees paid to elected officials, jurors, and election judges and clerks. It does not include fees for professional or other services. Plan Six Agreements – Agreements to provide funding to accelerate the construction of the Waddell and Cliff dams, and modification of the Roosevelt and Stewart dams, for the benefit of the city of Phoenix. These benefits include the use of additional unappropriated water, controlling floods, improving the safety of existing dams, and providing new and improved recreational facilities. PLT – See Privilege License Tax. Preliminary Budget – A balanced budget presented to the City Council by the city manager (sometimes referred to as the City Manager's Budget) based upon an earlier Trial Budget, City Council and community feedback and/or changing economic forecasts. Any City Council changes to the Preliminary Budget are incorporated into the final adopted budget. Primary Property Tax – A tax levy that can be used to support any public expense. Privilege License Tax (PLT) – The city of Phoenix's local sales tax, made up of more than 14 general categories. Privilege License Tax Fees – Includes fees charged for Privilege License Tax (PLT) licenses and the annual fee per apartment unit on the rental of non-transient lodging. Fees recover the costs associated with administering an efficient and equitable system. A PLT license allows the licensee the privilege to conduct taxable business activities and to collect and remit those taxes. 197 Table of Contents Program – A group of related activities performed by one or more organizational units. Property Tax – A levy upon each $100 of assessed valuation of property within the city of Phoenix. Arizona has two types of property taxes. Primary property taxes support the city's General Fund and secondary property taxes pay general obligation debt. Proposition 1 – See Public Safety Expansion Restricted Funds – See Special Revenue Fund. Salary Savings – Budget savings realized through employee turnover or vacant positions. Fund. Secondary Property Tax – tax levy restricted to the payment of debt service on bonded debt. Proposition 301 – See Neighborhood Self-Insurance – Self-funding of insurance Protection Fund. losses. With the exception of airport operations, police aircraft operations, and excess general and automobile liability for losses in excess of $7.5 million, the city is self-insured for general and automobile liability exposures. Public Safety Enhancement Funds – The Public Safety Enhancement funds are used to account for a 2.0 percent increment of the 2.7 percent sales tax on utilities with franchise agreements. The Police Public Safety Enhancement Fund is dedicated to Police and Emergency Management needs and receives 62 percent of the revenues generated. The Fire Public Safety Enhancement Fund is dedicated to Fire needs and receives 38 percent of the revenues generated. Public Safety Expansion Funds – This fund is used to account for the 0.2 percent increase in sales tax approved by Phoenix voters in 2007. The funds will be used to add 500 police personnel and 100 firefighters to the city of Phoenix. The Police Department receives 80 percent of revenues and the Fire Department receives 20 percent. Reappropriated Funds – Funds for contracts entered in a previous fiscal year but which are still in progress. Recoveries – Canceled prior year encumbrances. Regional Wireless Cooperative (RWC) – An independent, multi-jurisdictional organization that manages and operates a regional radio communications network built to seamlessly serve the interoperable communication needs of first responders and other municipal radio users in and around Central Arizona’s Valley of the Sun. RPTA – Regional Public Transportation Authority. 198 Resources – Total amounts available for appropriation including estimated revenues, recoveries, fund transfers and beginning fund balances. Special Revenue Fund – A fund used to account for receipts from revenue sources that have been earmarked for specific activities and related expenditures. Examples include Arizona Highway User Revenue (AHUR) funds, which must be used for street and highway purposes, and secondary property tax, which is restricted to general-bonded debt obligations. Sports Facilities Fund – A special revenue fund established to account for revenue raised from a designated portion of the hotel/motel tax and tax on short-term motor vehicle rentals. These funds pay the city's portion of the debt service and other expenditures related to the downtown sports arena. State Expenditure Limit – A limitation on annual expenditures imposed by the Arizona Constitution as approved by the voters in 1980. The limitation is based upon a city's actual 1979-80 expenditures adjusted for interim growth in population and inflation. Certain expenditures may be exempt by the State Constitution or by voter action. State-Shared Revenues – Revenues levied and collected by the state but shared with local governments as determined by state government each year. In Arizona, a portion of the state's sales, income and vehicle license tax revenues are distributed on the basis of a city's relative population percentage. Supplemental – Resources to provide new or enhanced programs or services over the base budget allocation. Tax Levy – The total amount to be raised by general property taxes for purposes specified in the Tax Levy Ordinance. Technical Review – A detailed line-item review of each city department's budget conducted by the Budget and Research Department. Transit 2000 Fund – This fund is used to account for the 0.4 percent sales tax dedicated to transit approved by voters on March 14, 2000. Also included in this fund are fare box collections. Trial Budget – A budget developed in early spring that presents a proposed balanced budget for discussion by the City Council and the community before the city manager submits the Preliminary Budget in late spring. User Fees or User Charges – A fee paid for a public service or use of a public facility by the individual or organization benefiting from the service. Zero Base Budgeting – A process whereby a budget is developed at the program level, and starting from zero the next year’s budget is estimated assuming only those costs necessary to provide the currently approved level of service. This initial estimate is referred to as the “base budget.” The estimated cost for providing each program is reviewed and justified on an annual basis. The process includes the identification of potential reductions and additions, which are ranked in priority order. Presentation of the budget also is provided on a program basis.