2023-2024 PHOENIX S U M M A RY BUDGET Printed on Recycled Paper 100 August 2023 67TH AVE. 75TH AVE. JENNY LIN RD. CAREFREE HWY. 64TH ST. NEW R IV ER 7TH AVE. JOY RANCH CLOUD RD. 19TH AVE. ANTHEM WAY 43RD AVE. JOY RANCH RD. CIRCLE MOUNTAIN RD. RIV NEW ER RD . Mayor Kate Gallego 602-262-7111 mayor.gallego@phoenix.gov City of Phoenix Council Members and District Boundaries WANDER LN. DOVE VALLEY 56TH ST. 40TH ST. 67TH AVE. P. A. C. Ann O’Brien 602-262-7444 council.district.1@phoenix.gov JOMAX C. A JOMAX Jim Waring 602-262-7445 council.district.2 @phoenix.gov .P. 7TH ST. PINNACLE PEAK BELL SCOTTSDALE RD. Debra Stark 602-262-7441 council.district.3@phoenix.gov UNION HILLS CAVE CREEK 51ST AVE. 19TH AVE. BEARDSLEY GREENWAY 56TH ST. THUNDERBIRD 24TH ST. OAK McDOWELL 56TH ST. 48TH ST. 7TH ST. 51ST AVE. 59TH AVE. Kesha Hodge Washington 602-262-7493 council.district.8@phoenix.gov ELLIOT ESTRELLA I-10 N A N IO DI T IN RVA SE RE DOBBINS CENTRAL BASELINE BASELINE PECOS iii VAN BUREN BUCKEYE BROADWAY RAY Kevin Robinson 602-262-7491 council.district.6 @phoenix.gov SALT RIVER SOUTHERN Vice Mayor Yassamin Ansari 602-262-7492 council.district.7@phoenix.gov 64TH ST. OSBORN 3RD ST. MCDOWELL 64TH ST. GLENROSA SR51 7TH ST. 7TH AVE. 43RD AVE. 51ST AVE. 71ST AVE. 27TH AVE. 19TH AVE. Betty Guardado 602-262-7446 council.district.5@phoenix.gov VAN BUREN NORTHERN MISSOURI THOMAS I-10 MOUNTAIN VIEW McDONALD BETHANY HOME I-10 107TH AVE. BUCKEYE 67TH AVE. McDOWELL OSBORN 75TH AVE. THOMAS 83RD AVE. INDIAN SCHOOL CAMELBACK 35TH AVE. 99TH AVE. EL MIRAGE BETHANY HOME BUTLER 40TH ST. NORTHERN Laura Pastor 602-262-7447 council.district.4@phoenix.gov TATUM DUNLAP 15TH AVE. BUTLER CACTUS CITY OF PHOENIX Mayor and City Council Management Staff Kate Gallego Mayor Jeff Barton City Manager Yassamin Ansari Vice Mayor District 7 Lori Bays Assistant City Manager Ann O’Brien District 1 Jim Waring District 2 Debra Stark District 3 Laura Pastor District 4 Betty Guardado District 5 Kevin Robinson District 6 Kesha Hodge Washington District 8 Mayor’s Office Willa Altman-Kaough, Interim Chief of Staff City Council Office Stephanie Bracken Council Chief of Staff John Chan Interim Deputy City Manager Inger Erickson Deputy City Manager Gina Montes Deputy City Manager Mario Paniagua Deputy City Manager Ginger Spencer Deputy City Manager Alan J. Stephenson Deputy City Manager Rita Hamilton City Librarian Troy Hayes Water Services Director Kini Knudson Street Transportation Director Julie Kriegh City Attorney Donald R. Logan Equal Opportunity Director Christine Mackay Community and Economic Development Director Chad Makovsky Director of Aviation Services Titus Mathew Housing Director Department Heads David Mathews Human Resources Director Cynthia Aguilar Parks and Recreation Director Frank McCune Government Relations Director Denise Archibald City Clerk Jesús Sapien Public Transit Director Joshua Bednarek Planning and Development Director Spencer Self Neighborhood Services Director John Chan Phoenix Convention Center Director Michael Duran Fire Chief Marchelle F. Franklin Human Services Director Eric Froberg Interim Public Works Director Kathleen Gitkin Chief Financial Officer Steen Hambric Chief Information Officer iv Michael Sullivan Interim Police Chief Ross Tate City Auditor Amber Williamson Budget and Research Director Dan Wilson Communications Office Director Chief Presiding Judge B. Don Taylor III CITY OF PHOENIX ORGANIZATIONAL CHART PUBLIC Budget and Research MAYOR AND CITY COUNCIL MUNICIPAL COURT City Auditor Communications Office CITY MANAGER Jeff Barton Finance Law Government Relations Covid Response/ARPA ASSISTANT CITY MANAGER Lori Bays Alan Stephenson DEPUTY CITY MANAGER Gina Montes DEPUTY CITY MANAGER Ginger Spencer DEPUTY CITY MANAGER Inger Erickson DEPUTY CITY MANAGER John Chan INTERIM DEPUTY CITY MANAGER Mario Paniagua DEPUTY CITY MANAGER Environmental Programs Heat Response and Mitigation City Clerk Arts and Culture Community and Economic Dev. Aviation Planning and Development Housing Diversity, Equity and Inclusion Citywide Volunteer Program Innovation Public Transit Street Transportation Human Services Accountability and Transparency Phoenix Convention Center Light Rail Police CMO Bond Program Liaison Homeless Solutions Water Services Public Health Freeway Coordination Neighborhood Services Water Strategy Rio Reimagined Affordable Housing Strategies Fire (Homeland Security and Emergency Management) Human Resources Healthcare Task Force State Land Key Department / Function Initiative / Project Strategic Initiatives City Council Mtg. Function Community Assistance Program Industrial Development Authority / Phoenix Community Development and Investment Corp Effective: March 13, 2023 v COPERS/ Retirement Equal Opportunity Court Liaison Information Technology Public Defender Liaison Library Major Events Public Works Sustainability Advance Phoenix Parks and Recreation Infrastructure Youth and Education PERB Liaison 311 Project vi 2023-24 SUMMARY BUDGET TABLE OF CONTENTS Community Development Budget Document Overview .................................................1 Planning and Development ............................................... 128 Housing .............................................................................. 130 Community and Economic Development ......................... 131 Neighborhood Services ..................................................... 132 Distinguished Budget Presentation Award ............................3 City Manager's Budget Message ............................................5 Strategic Planning And Community Involvement .................9 Phoenix Strategic Plan ..........................................................11 Community Enrichment Strategic Plan 2022-23 Major Accomplishments ...............17 Parks and Recreation......................................................... 136 Library ................................................................................. 138 Phoenix Convention Center ............................................... 139 Human Services ................................................................. 140 Phoenix Office of Arts and Culture ................................... 142 Our Commitment To Excellence .........................................23 Community Proile And Trends .............................................31 BUDGET OVERVIEW Resource and Expenditure Summary ..................................35 Financial Organizational Chart – Operating Budget ...........42 Services to the Community ..................................................45 Budget Process, Council Review and Input, Public Hearings and Budget Adoption ........................................63 Environmental Services Water Services ................................................................... 144 Public Works - Solid Waste Management ........................ 145 Public Works - Support Services ....................................... 146 Environmental Programs ................................................... 147 Sustainability ...................................................................... 148 General Budget and Financial Policies ................................69 REVENUE OVERVIEW Revenue Estimates ...............................................................77 General Funds .......................................................................79 Special Revenue Funds.........................................................89 Enterprise Funds ...................................................................94 Contingencies .................................................................... 149 COVID-19 Funding Summary ............................................. 151 Debt Service ...................................................................... 155 CAPITAL IMPROVEMENT PROGRAM DEPARTMENT/FUNCTION PROGRAM SUMMARIES Overview of Capital Improvement Program Process ...... 161 Capital Improvement Program Highlights ........................ 165 Financial Organizational Chart – Capital Improvement Program ..................................... 175 Operating Costs for New Capital Facilities ...................... 177 General Government Mayor .....................................................................................98 City Council............................................................................98 City Manager .........................................................................99 Regional Wireless Cooperative ............................................99 Government Relations ....................................................... 100 Communications Office ..................................................... 100 City Auditor ......................................................................... 101 Equal Opportunity .............................................................. 102 Human Resources.............................................................. 103 Phoenix Employment Relations Board ............................. 104 Retirement Systems........................................................... 104 Law...................................................................................... 105 Information Technology .................................................... 106 City Clerk............................................................................. 107 Finance ............................................................................... 108 Budget and Research......................................................... 109 SUMMARY SCHEDULES 1. Resources and Expenditures by Fund 2021-22 Actual ............................................................ 180 2022-23 Estimate ........................................................ 181 Municipal Court .................................................................. 118 Public Defender .................................................................. 119 2023-24 Budget ........................................................... 182 2. Revenues by Major Source ............................................ 183 3. Operating Expenditures by Department ....................... 185 4. Operating Expenditures by Department by Source of Funds.......................................................... 187 5. Debt Service Expenditures by Source and Use of Funds and Type of Expenditure ................................. 189 6. Capital Improvement Program Financed by Operating Funds ......................................................... 191 7. General Fund Interfund Transfers ................................. 192 8. Positions by Department ............................................... 194 9. Operating and Capital Resources and Expenditures by Fund Category 2021-22 Actual ............................................................ 196 2022-23 Estimate ........................................................ 197 2023-24 Budget ........................................................... 198 Transportation GLOSSARY ......................................................................... 200 Public Safety Police .................................................................................. 112 Fire ...................................................................................... 114 Homeland Security and Emergency Management .......... 115 Criminal Justice Street Transportation ......................................................... 122 Aviation ............................................................................... 124 Public Transit...................................................................... 125 vii Table of Contents viii Table of Contents BUDGET DOCUMENT OVERVIEW 2023-24 BUDGET OVERVIEW This overview outlines the 2023-24 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, TTY: use 7-1-1. To request this in alternate formats (large print, braille, audio cassette or compact disc), please contact the Budget and Research Department. The budget overview provides a description of the city’s budget process as well as the major assumptions included in the preparation of the 2023-24 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 summary budget contains a narrative description of Phoenix programs and services planned for 2023-24. Also included is a narrative description of all revenue sources and a description of major financial policies. 2023-24 REVENUE OVERVIEW 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. 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. Finally, the 2023-28 Capital Improvement Program provides Phoenix’s planned construction program by project and detailed sources of funds. DEPARTMENT PROGRAM SUMMARIES 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. A more detailed description of the 2023-24 Phoenix summary budget follows. CITY MANAGER’S BUDGET MESSAGE CAPITAL IMPROVEMENT PROGRAM 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. This section provides a description of the Capital Improvement Program process and an overview of the 2023-28 Capital Improvement Program. SCHEDULES PHOENIX STRATEGIC PLAN 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. This section provides the city’s mission statement, complete Phoenix strategic plan, strategic plan goals, and strategic plan major accomplishments. OUR COMMITMENT TO EXCELLENCE GLOSSARY This section provides an overview of the city’s various programs that contribute to our overall pursuit of excellence. Included is our mission statement, values and focus areas highlighting initiatives and accomplishments all designed to ensure the City of Phoenix is sustainable, and a great place to live, work and visit. 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. COMMUNITY PROFILE AND TRENDS This section includes key demographic, financial and infrastructure profile measures. Estimates or projections are provided for 2022-23 and 2023-24 as well as actual results for recent and historical periods. 1 Table of Contents 2 Table of Contents DISTINGUISHED BUDGET PRESENTATION AWARD GOVERNMENT FINANCE OFFICERS ASSOCIATION Distinguished Budget Presentation Award PRESENTED TO City of Phoenix Arizona For the Fiscal Year Beginning July 01, 2022 Executive Director 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, 2022. 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 The 2023-24 GF Budget includes $15 million in service additions that will continue to move the City forward in addressing several key priorities. To develop these additions, the City actively engaged residents to ensure the budget reflects community input. The supplemental additions totaling $15 million provide needed resources in the following areas: • Continuity of Services for Vulnerable Populations $7.6 million • Enhanced Public Safety Responsiveness and Criminal Justice Support - $3.8 million • Healthy Neighborhoods and Community Enrichment - $3.6 million Community Engagement The City of Phoenix budget process encourages community participation to guide decision making. In order to facilitate feedback, a total of twelve budget hearings were held from April 3, 2023 to April 15, 2023. The proposed budget additions were also made available on the City’s website and in the FundPHX tool available at phoenix. gov/budget. Residents also communicated priorities via email at budget.research@phoenix.gov and by calling 602-262-4800. In total, we received 720 comments from 362 individuals. Jeff Barton City Manager TO THE HONORABLE MAYOR AND CITY COUNCIL: Consistent themes of resident input included: This letter transmits the balanced 2023-24 City of Phoenix Budget required by City Charter. • Preserve existing services provided by the City. • Requests for new cricket fields. The 2023-24 City of Phoenix Budget includes critical additions to build the Phoenix of tomorrow and reflects City Council and community priorities. As a result of the growing and diversified Phoenix economy, along with strategic actions taken by City Council and City Management, the budget remains balanced with an optimistic outlook. The planned use of resources will improve City programs and invest in our employees, our most important asset, to ensure we continue to provide exceptional service to our residents. • Additional funding for park improvements and security. • Support for arts and culture grant funding. • Resources to address homelessness and affordable housing. • Support for public safety additions. • Additional funding for roadway, bike and pedestrian safety projects. As reflected in the 2023-24 General Fund (GF) Status, the $134 million projected surplus is allocated to employee compensation increases and to a variety of critical service areas. The majority of the surplus is earmarked for honoring the City Council approved labor agreements and provides the resources necessary to competitively pay our employees. The City has experienced significant hiring challenges due to the competitive labor market and the investment of $114 million in our employees is crucial to attract and retain the best talent who do the work every day to serve the community. The remaining $20 million of the surplus is allocated to a variety of programs and services with $5 million earmarked for the General Fund contingency fund, or “rainy day” fund, to ensure resources are available in the event of an economic downturn in the future. • Requests for additional street and bus stop cleaning. • Support for the Gated Alley Program. • Support for employee compensation increases. Public participation demonstrated a variety of opinions and priorities of residents. While not all input could be directly accommodated in the budget, resident feedback was shared with the City Council and is extremely important to set budget and policy discussions for the future. 5 Table of Contents Overview of 2023-24 Budget vacant positions and retain existing employees. Estimated costs for implementing the study have been accounted for in the projected expenditures for 2023-24 for all City funds. General Fund Budget: The proposed balanced 2023-24 GF budget is $2,028.7 million. This is a $249.2 million increase or 14.0 percent from the adopted 2022-23 GF Budget of $1,779.4 million. The increase accounts for the proposed additions detailed earlier and higher costs associated with employee salaries and fringe benefits, including health insurance and pension, increased costs for vehicle replacements and Fire apparatus, cost increases in capital equipment and expected pay-asyou-go projects, estimated costs for implementation of the classification and compensation study, and a higher contingency amount to achieve 4.5 percent of operating costs. Inflation has also dramatically impacted several expenditure categories including commodities and contractuals such as fuel, compressed natural gas, electricity, motor vehicle parts, plumbing supplies, custodial and security services, machinery and equipment repair, and facility maintenance costs. Continuity of Services for Vulnerable Populations - $7.6 million To ensure vulnerable populations can continue receiving vital services at risk due to expiring or reduced funding, $7.6 million is allocated to support the Low-Income Home Energy Assistance Program (LIHEAP), the Victims of Crime Act, and to expand the Behavioral Health Engagement Teams contract. These programs are essential in the continuation of outreach to areas of the City experiencing high instances of substance abuse, behavioral health issues and homelessness, as well as managing domestic violence and sexual assault referrals while maintaining acceptable response times. The funds will also expand the PHX Community Action Response Engagement Services (C.A.R.E.S.) Outreach Program and continue operations at several shelters across the City. Additional funding and partnerships with the state, county and non-profit organizations are being actively pursued to increase collaboration and resources to help individuals experiencing homelessness. In addition, one-time funding of $250,000 is included for the New Leaf Phoenix Day Early Childhood Education Center to retain and expand teaching staff and provide additional training opportunities. The center provides affordable day care and early education opportunities to a diverse and inclusive population. The center is on pace to increase enrollment and achieve financial sustainability by 2024. The increase also accounts for higher costs for public safety pensions, detailed in the Trial Budget report and presented to City Council on March 21, 2023. Projected GF resources are estimated at $2,028.7 million and includes the estimated beginning balance of $204.0 million, estimated revenue of $1,830.9 million and net interfund transfers and recoveries of -$6.3 million, which include interfund transfers for central services, inlieu property taxes, capital equipment and projects, debt service, infrastructure repayment agreements, resources to support the Public Safety Specialty Funds and Pension Reserve Fund. GF revenues of $1,830.9 million represent annual growth of 10.3 percent over 2022-23 and is largely due to growth in state shared income tax, which is based on collections from two years prior and is artificially high because of the State's decision to increase the percentage share with cities and towns from 15 to 18 percent to mitigate impacts from reducing the individual income tax rate. Revenue growth also includes estimated increases in City and state sales taxes. Additional detail on the 2023-24 GF Budget is provided in the Resources and Expenditure section of this document. Enhanced Public Safety Responsiveness and Criminal Justice Support - $3.8 million The services, programs and positions reflected in this area are dedicated to ensuring public safety response is appropriate, efficient and seamless. To help improve emergency response times across the City, an investment of $3.5 million is included for the Phoenix Fire Department to add 31 new sworn positions to fully staff a new Fire Station 74 to be located at 19th Avenue and Chandler Boulevard, and to hire additional firefighters and support staff. In addition, as part of the Phoenix Police Department’s focus on civilianization efforts, new positions are included for civilian investigators and police assistants within the department. Additional positions are also included for crime scene specialists, police research analysts, criminal intelligence analysts, and civilian law enforcement training specialists. These additions will provide support to the investigative process, training and civilian response. All new positions for the Police Department will be absorbed within the existing operating budget for the Police Department, using sworn vacancy savings and therefore require no additional costs for 2023-24. However, over time as vacancies are filled, additional budget capacity will be required in a future fiscal year. This category also includes conversion of expiring grant fund positions in the Law Department to the GF to assist victims of crime with navigating the judicial system, and six additional positions in Law to be offset with Police vacancy savings for next fiscal year to facilitate and coordinate immediate and ongoing needs related to the Department of Justice (DOJ) investigation. General Fund Additions: The 2023-24 budget preserves existing programs and will positively impact employees and the community. Additions totaling $134.0 million by City Council and community priority areas include: Employee Compensation - $114.0 million The City is experiencing significant vacancies across all departments due to a combination of the competitive labor market and below-market salaries for many job classifications. The current vacancy rate as of March 2023 for all City funds is 17 percent. Vacancies can impact service delivery to residents and cause existing employees to carry the burden for unfilled positions. Because of this, the GF budget allocates 85 percent of the surplus, or $114 million, to increase employee compensation. This amount includes $20 million to be set-aside for potential employee compensation increases in 2024-25 and beyond. Additionally, the City Council approved the recommendations from the recently completed Classification and Compensation study to fill 6 Table of Contents Healthy Neighborhoods and Community Enrichment $3.6 million Other Funds: Important and critical services to the community are also provided through non-General Fund resources. This includes Special Revenue funds like voter-approved Public Safety Specialty funds and the Transportation 2050 fund, the Arizona Highway User Revenue fund, and Enterprise Funds like Aviation, Solid Waste, Water and Wastewater. Additions to the 2023-24 budget for other funds totaling $1.5 million include: $0.9 million in resources for Aviation for additional security positions and vehicles; $0.5 million for the Planning and Development Department for additional staff to manage the SHAPE PHX land-based planning system; increased funding for the Regional Wireless Cooperative for a new position to assist with managing financial responsibilities relating to the public safety radio network; and increased funding for the Public Transit Department to provide resources for additional bus stop cleaning and maintenance. The services, programs and positions reflected in this area will enhance the City’s ability to develop and maintain healthy, vibrant and safe neighborhoods throughout the city. Included is $571,000 for the Neighborhood Services Department to expand the Gated Alley Program, providing for a total of 77 gated alley segments each fiscal year, and restore two grant-funded Neighborhood Inspector positions. By restoring these two positions, the department can provide more grant-funded opportunities to low-and moderate-income residents. Additional funding of $250,000 for the Community Arts Grants Program is included to increase the City’s efforts toward equity in arts to support renters at Herberger Theater Center and other local venues such as the Black Theatre Troupe, Phoenix Center for the Arts’ Third Street Theater, Phoenix Theatre, and Valley Youth Theatre. A Project Manager position is also included to help manage and coordinate the Office of Arts and Culture’s model for involving artists in designing and building a better city. The cost of this position will be offset by charging various Capital Improvement Projects. Also, in an effort to increase park security and resident safety, $2 million is allocated for the Parks and Recreation Department to hire 14 Park Rangers and one Park Manager position to create a third shift for Park Rangers. The addition of a third shift will provide coverage 24 hours per day, seven days per week at City parks. The proposed funds will also add five staff to expand tree planting and shade canopy efforts citywide and hire a Volunteer Coordinator to assist in the coordination of volunteer efforts throughout City parks. Additional funding for the Parks and Recreation Department totaling $250,000 is included to create cricket field opportunities at up to three locations and to explore development of partnerships to expand more sites in the future, and $125,000 for improvements at Sueño Park located at 4401 W. Encanto Blvd., and other park sites around the city. Resources are also proposed for two new Municipal Security Guards for the Library Department to provide additional security at Burton Barr Library at a cost of $130,000. Finally, additional funding of $100,000 is included to purchase a street sweeper dedicated to cleaning bike lanes, and $150,000 for maintenance of three additional washes per year and to clean medians. For all funds, which includes General, Enterprise and Special Revenue funds such as grants, and all debt service and pay-as-you-go capital costs, the proposed 2023-24 budget is $6,750.0 million. This budget represents the commitment of the City Council to allocate resources responsibly and strategically to reward employees and provide the best possible programs and services to Phoenix residents. More information on the budget can be found at phoenix.gov/budget. Thank You for Your Commitment to Phoenix I want to acknowledge and thank the Mayor and City Council for your leadership and dedication to the budget process. I also want to thank our residents who provided their input about the proposed budget, and finally our employees without which the City could not deliver the vast array of services the community deserves. I continue to be grateful for the people I work with and the Phoenix residents we serve every day. In addition to the above GF additions, $5.0 million is allocated to the Contingency Fund. In March 2010 the City Council agreed to gradually increase this fund to achieve five percent of GF operating expenditures. Achieving this goal will improve the City’s ability to withstand future economic declines and is considered to be a financial best practice. The 2023-24 total GF Contingency is $81.2 million and is 4.5 percent of operating expenses. Jeff Barton 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 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 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 The Strategic Plan continues to evolve, and the study areas consistently develop new priorities and strategies to fulfill their objectives. Documents included in this section: • Phoenix Strategic Plan • Strategic Plan 2022-23 Major 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. 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. 3. Revitalize the urban areas of Phoenix. 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. 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. 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 Phoenix Financial Excellence Strategic Plan 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, policies, and structures or systems that allow flexibility to address challenges. An entity with a long-term outlook and that has 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 the significant downturn from the Great Recession in the state, local, and national economy and the associated impact on revenues, the financial capacity to fund and finance additional capital projects has been 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. 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. Establish and enhance 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, stormwater, and garbage and diversion (recycling, reducing, reusing) services. 4. Construct and manage public facilities. Provide safe, efficient, sustainable, cost-effective, well-maintained 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. 12 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 City must also remain dedicated to developing and seeking continuous improvements in business processes and maintaining a culture of innovation and efficiency. Priorities 1. Infuse a mindset focused on innovation and efficiency into the City of Phoenix organizational culture. An “innovation and efficiency” way of thinking must become a much more prevalent part of the organization’s core value system and continues to be integrated into the way everyday 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 be driven from the top to 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 seek 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 arts and culture infrastructure, and an accessible and quality library system. 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. 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 systems 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. 13 Table of Contents PHOENIX TEAM 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. Priorities 1. Establish pay and benefits and a workplace culture that attracts, retains, and motivates a highly qualified workforce. Given the current state of the economy, the community has expressed interest in the current 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 limited resources 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 becomes even more critical to manage and coordinate the available human resources effectively to provide leadership and ongoing quality services to the community. 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 Public Safety Study Area includes members of and services provided by the Police Department, Fire Department, Municipal Court, Prosecutor’s Office and Office of Emergency Management. Working together, these departments strive 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. 14 Table of Contents 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. 2. Enhance the quality of life for low-income 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. SUSTAINABILITY The City of Phoenix is committed to securing environmental and economic livability for future generations in the region. 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 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. 15 Table of Contents 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. The Phoenix Strategic Plan’s Technology Area leverages technology to drive key actions that fundamentally enhance the way Phoenix connects to information. 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. 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, organizationwide 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 the opportunity to conduct business on-line versus waiting in line. 4. Create a shared common infrastructure. Consolidating technological infrastructure around common 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 should create a comprehensive program to protect data and technology infrastructures, secure systems and assets, mitigate threats and provide a mechanism for business continuity in emergencies. 16 Table of Contents STRATEGIC PLAN 2022-23 MAJOR ACCOMPLISHMENTS ECONOMIC DEVELOPMENT AND EDUCATION 1. Super Bowl LVII – In February, Arizona hosted Super Bowl LVII. Although the game was played in Glendale, many of the official events were held in Phoenix. Downtown Phoenix was at center stage as staff created 1,300 pieces of social media content and hosted 6,000 members of the media. The Super Bowl Experience at the Phoenix Convention Center, Super Bowl Opening Night, the National Football League Honors Annual Awards Show, Super Bowl Music Fest, and the Super Bowl Experience at Hance Park drew nearly 300,000 residents and visitors to official Super Bowl events in Downtown Phoenix. All events achieved a Zero Waste to Landfill designation, with 92.6%of material, equivalent to 101 tons, diverted from landfills. The light rail system served 250,000 residents and visitors at no cost for event attendees. 5,300 riders downloaded a mobile fare app to utilize public transit in attending Super Bowl events. 200,000 visitors came through Sky Harbor International Airport, setting a record for the busiest day ever with 150,000 passengers in a single day. TSA wait times never exceeded 22 minutes. 2. Digital Divide – Community and Economic Development staff fully implemented the Phoenix Digital Education Connectivity Canopy (PHX DECC), also known as the Digital Divide project, in the proof-of-concept area that is bound by Camelback and Thomas Roads between 43rd and 59th Avenues, in partnership with the Phoenix Union High School District, its feeder elementary schools, and the Maricopa County Community Colleges District. 3. Small Business Virtual Connection Platform – Community and Economic Development staff launched PHXbizConnect by HUUB, a small business platform to help businesses through the COVID-19 pandemic using $2 million in American Rescue Plan Act (ARPA) funds. This bilingual platform has been expanded with access to grant resources, on-demand trainings, and technical assistance from private sector consults with more than 700 small business participating on the virtual platform. 4. Metrocenter Mall Redevelopment – Following eight years of outreach by staff to 25 developers, the former Metrocenter Mall is now in escrow to be redeveloped as a $1 billion signature mixed-use project along light rail. In a public/private partnership, Community and Economic Development staff worked to bring a redevelopment agreement and Government Property Lease Excise Tax (GPLET) forward to ensure that this redevelopment opportunity breathes new life into the North Mountain Redevelopment Area. 5. Innovation 27 – To create educational and training opportunities in Maryvale, Community and Economic Development staff led efforts to acquire the former Kmart building at I-17 and Northern Avenue. Now known as Innovation 27, this site will be home to a strategic partnership between the City, Maricopa County Community College District, Arizona State University, and West-MEC. FINANCIAL EXCELLENCE 1. Strategy Plan for the Second Tranche of American Rescue Plan Act (ARPA) Funds – The City of Phoenix was awarded $396,080,366 in Coronavirus State and Local Fiscal Recovery Fund (SLFRF) from ARPA. The second tranche strategic plan was approved on June 7, 2022. In total, the City of Phoenix APRA Strategic Plan of $396 million includes 65 programs spanning areas such as COVID-19 testing and vaccine efforts, homelessness and mental health services, business assistance, family financial assistance, youth sports and education, technology and wireless network improvements, and food insecurity. As of October 31, 2022, nearly $138 million of ARPA funds had been spent. Most spending had occurred in COVID-19 testing and vaccination, homelessness services programs such as summer heat respite, arts and culture grants, food resiliency programs, premium pay, and administrative oversight. A website created last year to track actuals and performance measures for all ARPA programs has continued to be updated for the past 12 months. As a result of these efforts, the City has received praise and accolades from the White House, the U.S. Treasury, and the Government Finance Officers Association (GFOA). 2. Balanced and Responsive 2022-23 City Manager’s Trial Budget that Thoroughly Addressed Council and Community Priorities – Staff developed the preliminary General Fund Budget Status and Five-Year Forecast, which is a financial bestpractice and provides a fiscal outlook to ensure the General Fund remains structurally balanced. By projecting available resources and identifying potential ongoing budget surpluses or funding gaps, City management and Council are able to develop strategic plans to ensure the continuation of City operations and optimize services to the community. 3. Distinguished Budget Presentation Award –The 2021-22 annual budget earned the Government Finance Officers Association (GFOA) Distinguished Budget Presentation Award. This is the 34th consecutive award for Phoenix. Additionally, the Triple Crown designation recognizes governments that have received GFOA’s Certificate of Achievement for Excellence in Financial Reporting, Popular Annual Financial Reporting Award, and the Distinguished Budget Presentation Award for a fiscal year. The City of Phoenix was one of just 317 governments that received the Triple Crown for FY 2020. These awards reaffirm the City’s success in communicating its finances and budget information in a clear, transparent, and professional manner. 17 Table of Contents 4. Elevation of the City’s Credit Rating – In addition to adopting a balanced and responsive budget, the City’s dedication to financial excellence was highlighted by the elevation of its credit rating by Moody’s from a negative to stable outlook. This was the result of meaningful increases in pension contributions, likely decreasing long-term liabilities. As a result, all the City’s credit ratings are investment grade. 5. November 2023 General Obligation (GO) Bond Program – For the first time since 2006, the City is preparing for a General Obligation Bond Program. Last year, the City committed to creating a bond program that includes no increase to the Secondary Property Tax rate, provides a basis for regular and reoccurring bond programs every five to seven years, and properly aligns with available resources needed for ongoing operation and maintenance associated with new facilities. Throughout the past year, the City organized and led a Citizen’s GO Bond Committee process in preparation for a 2023 GO Bond election that keeps these commitments. INFRASTRUCTURE 1. Financially Responsible and Flexible Plan to Renovate 100 W. Washington – After the City closed on the historic opportunity to acquire 100 W. Washington St., City Council approved the issuance of Excise Tax Bonds to purchase and renovate the property. As a result of the City’s excellent bond ratings, staff financed $151 million at a low interest rate of 3.79% to fund improvements needed to achieve this goal. 2. Roadway Safety Action Plan – The Phoenix City Council unanimously approved a comprehensive Vision Zero Road Safety Action Plan and the allocation of $10 million in annual funding for its implementation. The $10 million in annual funding approved to implement the plan comes from $3 million allocated from the City's General Fund, $2 million from Transportation 2050 (T2050) resources, and $5 million from the Highway User Revenue Fund (HURF). The goal of the Plan is to reduce the number of traffic fatalities and serious injuries in Phoenix to zero by 2050 and connects with the Vision Zero philosophy that those types of incidents are preventable. In addition to its 41 strategies, the Road Safety Action Plan also identifies a series of 31 performance measures linked to meeting the 2050 goal of zero traffic fatalities. Those benchmarks include a 25 percent reduction in traffic deaths by 2027 and a 65 percent reduction by 2035. 3. Northwest Valley Transportation Improvements Project – Over the past two years, Street Transportation staff has worked on the Northwest Valley Transportation Improvements Project, which supports the Taiwan Semiconductor Manufacturing Company (TSMC) facility and the surrounding community. Staff collaborated with the TSMC site team to construct three miles of roadway improvements along Dove Valley Road and 51st Avenue. 4. Consolidated Rail Infrastructure and Safety Improvements – The Federal Railroad Administration recently announced a $7.1 million Consolidated Rail Infrastructure and Safety Improvements grant to support proposed upgrades to the railroad crossings at 43rd Avenue and Camelback Road and 19th Avenue and McDowell Road. The City offered a 30 percent match toward the projects. Improvements include the installation of gate arms, signalization, and increased sidewalk width for Americans with Disabilities Act compliance. 5. Rio Salado Bike and Pedestrian Bridge – In August 2022, the City received $25 million in federal funding to improve the bike and pedestrian bridge over the Rio Salado along the 3rd Street alignment. Proposed improvements include adding low-emitting solar lights along the existing asphalt pathway. INNOVATION AND EFFICIENCY 1. Additional Units of Low-Income Housing – In 2022, Housing staff completed a Call for Interest (CFI) process and awarded $1 million each to eight projects. These projects are financed in conjunction with the Low-Income Housing Tax Credit (LIHTC) program, representing an innovative financing solution to increase the number of housing units created. Five of the eight CFI-awarded projects received LIHTC allocations and, when completed, will provide an additional 471 affordable housing units in the community: Acacia Heights III, Garfield II, Reserve at Thunderbird Phase II, Osborne Pointe, and Pueblo Apartments. In addition to these projects, 223 units were completed, and another 901 units at 10 HOME-assisted developments are under construction, bringing the total number to 1,595 units assisted by Housingmanaged HOME funding. 2. Facilities Operations Building Solar Array – In September, solar installation at the Facilities Operations Building was completed and energized. The 540kW solar array produces an average of 769,335 kWh of power annually over a 25year period which is equivalent to the electricity needed to power approximately 72 homes per year. The 25-year power purchase agreement allows for the power to be purchased at $.08 per kWh with no escalator. Additionally, the project reduces greenhouse gas emissions by 400 metric tons annually. 3. Sky Harbor Security Checkpoint Apple Wallet – Sky Harbor Airport became the first airport in the country to launch mobile drivers licenses and identification verification at security checkpoints through Apple Wallet. Authentication using a mobile ID eliminates the need to hand over identification or a boarding pass to a TSA agent to process through security, improving wait times. 4. Vision Zero Road Safety Action Plan – City Council unanimously approved a comprehensive Vision Zero Road Safety Action Plan (RSAP) and the allocation of $10 million in annual funding for its implementation. The RSAP utilizes a data-driven decision-making process to identify and prioritize transportation safety improvements. Developing and implementing this Plan is the top priority for Street Transportation staff. The Plan aims to reduce traffic fatalities to zero by 2050. The Plan also incorporates the Five E's of Traffic Safety: Evaluation, Engineering, Enforcement, Education, and Equity. 18 Table of Contents 5. Crime Gun Intelligence Unit – The Police Department’s Violent Crimes Bureau (VCB) Crime Gun Intelligence Unit (CGIU) was recognized nationally as the “Phoenix Model” by expert reviewers from the United States Department of Justice (DOJ) National Institute of Justice (NIJ). Reviewers highlighted the CGIU as an evidence-based model that had been accepted into CrimeSolution, an evidence-based repository that serves as a valuable clearinghouse of information about what works and what is promising in justice programs and practices. NEIGHBORHOODS AND LIVABILITY 1. Housing Phoenix – Housing staff has achieved 50% of the Housing Phoenix Plan’s goal to create or preserve 50,000 units by 2030 by preserving or creating more than 25,000 housing units since the Plan’s approval in June 2020. Quarterly progress reports highlighting the advancements of the nine policy initiatives and actions were published on the City website. 2. Public Housing Occupancy – Housing staff increased Public Housing occupancy from 78% in January of last year to more than 98% occupied. The team managed the waitlist, conducted multiple recruitments extensive outreach to more than 4,000 applicants, and efficiently reviewed applications to house eligible low-income seniors in senior housing sites. 3. Development of New Parks – Staff is in the process of developing three new parks located in the southwest part of the City. The last time Parks and Recreation staff constructed three new parks in the same year was 1993. The future park sites are located at 55th Avenue and Samantha Way (Harvest Park); 71st Avenue and Meadow Loop Road (Laveen Heritage Park); and 87th Avenue and Lower Buckeye (Farmland Park). Staff is in various stages of design and permitting for each of these sites. The parks are estimated to be completed by the end of 2024. 4. Crosswalk Repair and Restriping – Street Transportation staff identified 83 school crosswalk locations across the City needing repair and restriping. Staff repaired paving conditions at 71 locations to ensure the striping team could safely restripe as many locations as possible before the start of the new school year. Despite staffing and equipment challenges, staff from multiple divisions completed the project. 5. Household Hazardous Waste Home Collection – Last year, Public Works staff established the Household Hazardous Waste (HHW) home collection as a permanent program. Since then, Public Works has received over 4,400 online and phone reservations. This program assists solid waste residential customers with the proper and safe disposal of their household hazardous waste items. Single-family residential customers can schedule one home collection per year through this program. In October, staff expanded the program’s convenience by enabling residents to request HHW home collections through the MyPHX311 mobile application. 6. Heat Response Plan – Heat Response and Mitigation staff led efforts to produce the City’s first-ever Heat Response Plan, which went into effect for the 2022 summer season after being unanimously passed by City Council in March of last year. The Plan included 30 different initiatives led by a wide range of City departments that contribute to the protection of public health and quality of life during Phoenix’s hot summers. The Plan also provides a framework for systematically evaluating the City’s portfolio of heat response initiatives to facilitate continuous improvement. 7. Gated Alley Program – Planning and Development staff collaborated with Neighborhood Services and other City staff on the Gated Alley Program (GAP). GAP allows residents to gate alleys throughout the city that are targets of dumping and illegal encampments. In September 2022, City Council approved expanding GAP citywide, allocating $500,000 in funding to gate 43 alley segments. Staff developed a streamlined process to manage all GAP applications for self-funded gates and new resources to outline neighborhood options, clarify the application process, and facilitate project tracking. PHOENIX TEAM 1. Paid Parental Leave – On July 1, the City Council unanimously approved providing paid parental leave of up to 480 hours (12 weeks) for the birth, adoption, or foster care placement of a child during a 12-month period. This action provides employees with the opportunity to take leave to bond with and care for a new child, without exhausting their accrued leave time. This investment in City employees and the community is one of the most generous parental leave packages offered by any local government. The City has received numerous stories from employees on the positive impact of this program on their families. 2. Classification and Compensation Plan – Staff has conducted a comprehensive job evaluation and market analysis. The goals of this project include: ensuring the City’s job classifications are accurate and up to date, an equitable and market-based compensation structure exists, better definition of career paths and training opportunities, and that all classifications meet legal compliance. This year, the City made progress on the classification and compensation of several critical functions throughout the City. These include Solid Waste Equipment Operators, as well as Police, Central Procurement, and Water and Wastewater staff. Phase I of the Classification and Compensation Study will be completed in 2023. 3. Process Improvements – Staff have been asked to identify and adopt specific metrics to ensure that effectiveness and progress can be measured for each Council-approved strategic plan, program, and initiative. This effort is designed to ensure that staff have the necessary resources and support to implement successful programs and perform thorough and routine programmatic evaluations on all major aspects of City initiatives. Moving forward, staff will continue to meet with the executive sponsors of all City initiatives to ensure that the City is achieving the goals identified in all newly approved and previously adopted plans, programs, and initiatives. 19 Table of Contents 4. All-American City – The City was selected as one of 20 finalist cities to participate in a presentation and question-andanswer session, culminating in Phoenix being named one of 10 winning All-American Cities. This marks the sixth time Phoenix has been given this prestigious distinction. This eight-month process included weekly meetings, sessions with All-American City representatives, and coordination of multimedia elements, including videos, photos, and social media campaigns. The City’s theme was Housing as a Platform for Early Childhood Education Recovery and Success. 5. PHX You – In April 2022, Information Technology Services Project Management, eCHRIS, and Human Resources staff launched a new, comprehensive, and innovative employee training system, PHX You. This was the first phase of the City's enterprise-wide Learning Management System (LMS). The COVID-19 pandemic highlighted the importance of providing centralized eLearning, training materials, certifications, and other critical employee services virtually. The PHX You approach promises improved, comprehensive, and user-friendly training opportunities for City staff, ultimately resulting in better service to customers. 6. Employee Cancer Screenings – Human Resources staff began a cancer screening program for employees who are at risk for developing cancer due to occupational exposure. This program helps identify early-stage cancers, resulting in better outcomes. PUBLIC SAFETY 1. Master Planning of the New 911 Call Center and Police Headquarters – Throughout the past year, progress has continued for the conversion of the former Wells Fargo offices to the City’s new 911 Call Center and Police Headquarters. Staff has master-planned the facility to meet the Phoenix Police Department’s program needs for the next 20 years and began procuring information technology, fire alarm, and 911 equipment necessary for the facility. Infrastructure repairs, general contractor agreements, and sustainability improvements have been engineered to ensure that the facility is ready for Police functions and staff to begin a phased move-in starting in late 2023, with substantial completion anticipated by late 2024. 2. Enhanced Community Safety by Expanding Mental and Behavioral Health Services – Over the past 12 months, the City has focused on enhancing many forms of community safety including improvements to traditional police and fire models as well as expanding mental and behavioral health services. Aspects of community safety were identified for improvement including stabilizing staffing of the Police and Fire departments; implementing the Office of Accountability and Transparency (OAT); supporting the Community Assistance Program (CAP); maximizing civilianization efforts; cooperating with the Department of Justice (DOJ) investigation; and developing strategies to address homelessness. Additionally, this year the City welcomed both a new Fire Chief and Interim Police Chief to help modernize safety in the community. 3. Police Hiring and Compensation – During the past several years, the Phoenix Police Department has experienced attrition challenges, with the number of new recruits lagging behind the number of retirements and other separations. However, this year the Police Department will have hired 175 applicants, a substantial increase from 91 hires in 2021. Several Council-supported initiatives aim to continue to close this attrition gap. These include the implementation of efficiency improvements to onboarding software and hiring processes, participation in the Department of Defense SkillBridge program, and, with City Council approval, an increase to compensation for positions throughout the department. The compensation increase resulted in the Phoenix Police Department becoming the highest paid law enforcement agency in the State of Arizona. The City also focused on staffing for the Phoenix Fire Department. This year the City Council supported action to add 109 sworn positions between FY 2022-23 and FY 2023-24. These positions included sworn staffing for Fire Station 62, positions for the 24-hour operation of Rescue 19, and authorization for the continuation of SAFER Grant-funded positions. 4. Community Assistance Program and Behavioral Health Units – In 2022, staffing for community safety expanded beyond the traditional police and fire models. This expansion included the Community Assistance Program and Behavioral Health Units. This year, Community Assistance Program (CAP) staff conducted a citywide survey for expanded services, executed contracts to hire peer support specialists, and received City Council approval to participate in a second year of the Harvard Kennedy School’s Government Performance Lab. Staff also launched the first Behavioral Health Unit (BHU1) in August, which is designed to identify 911 callers who would benefit from a behavioral health professional respond in lieu of police or fire staff or as a co-responder. The BHU1 operates in partnership with Neighborhood Outreach Access to Health (NOAH) at the Desert Mission Health Center. HBU2 was launched in November at Phoenix Fire Station 56. 5. Civilianization Efforts – Throughout the past year staff focused on community safety, mental and behavioral health services, and maximizing civilization efforts. The Police Department, with City Council approval, added additional Police Assistants as well as created the Civilian Investigator position to alleviate time demands and other workload constraints on sworn staff. Likewise, the Fire Department expanded hiring of civilian fire inspectors to assist with prevention efforts. 6. Implementation of the Office of Accountability and Transparency – A key focus of the past year for community safety included oversight through the implementation of the Office of Accountability and Transparency (OAT). In June, the Arizona State Legislature passed House Bill (HB) 2721, which created conditions affecting OAT’s investigative jurisdiction. As a result, OAT began monitoring Police and critical incident investigations and started receiving complaints within the parameters established by state law. OAT staff participated in more than 150 meetings with various community leaders and organizations. Along with community outreach, OAT has increased its direct engagement with the Phoenix Police Department. OAT has presented a proposed memorandum of understanding with the Police 20 Table of Contents Department, which is currently being finalized. Additionally, OAT has begun monitoring the investigations of all critical incidents involving Phoenix Police Officers. OAT is currently monitoring 25 cases, including 20 officer-involved shootings, two deaths in custody, two uses of non-lethal force, and one detention. 7. Department of Justice Investigation – The Department of Justice (DOJ) initiated a pattern and practice investigation on August 5, 2021. Since that time, Law Department and Police staff have worked with the DOJ under the guidance and direction of the City Manager. To date, the City has provided the DOJ over 80,000 documents, facilitated six site visits, and coordinated over 130 panel and individual staff interviews. The City has obtained the resources of an outside legal counsel firm, an eDiscovery tool for document production, established and maintained a website with weekly updates, and continued recruitments for in-house staff assistance. SOCIAL SERVICE DELIVERY 1. Establishment of the Office of Homeless Solutions – The Office of Homeless Solutions (OHS) was officially established in October 2022. Homeless Solutions is a function of the City Manager’s Office and reflects the priority of the City to increase transparency and direct outreach to the community on the issue of homelessness. City Council approved the addition of nine new positions bringing the total number of OHS staff to 22. 2. Washington Relief Center – The City of Phoenix allocated $6.3 million to transform a City-owned vacant building into a habitable space to provide shelter for people experiencing homelessness. The City funded building and rehabilitation expenses and partnered with Maricopa County, who contracted with St. Vincent de Paul to operate the shelter. The Washington Relief Center opened in May 2022 and now shelters 200 people per night, providing guests three meals per day, on-site case management, employment services, and behavioral health services. 3. Residential Cleanups – Neighborhood Services staff doubled residential cleanup efforts. In 2022, staff organized more than 75 neighborhood cleanup activities compared to 39 in 2021. In October 2022, Neighborhood Services received a $4.7 million grant from the U.S. Department of Housing and Urban Development. The grant funds community outreach and education regarding lead poisoning, prevention, and lead testing for children through the Maricopa County Department of Public Health. 4. Weatherization Projects – Over the last year, Neighborhood Services staff completed a weatherization project on a 70-unit apartment complex to improve air quality and energy efficiency for residents ages 55 and older at the Sand Dollar Apartments located at 27th Avenue and Union Hills. Staff replaced HVAC units, electric furnaces, and thermostats with high-efficiency models, while windows and arcadia doors were shielded with sunscreens. Staff also sealed air conditioning ducts and applied new weather-stripping. The estimated post-weatherization assistance savings for these 70 units is $40,452, a savings of nearly $3,400 per month. 5. Family Advocacy Center Referrals – Compared with the previous year, the number of persons referred to the Family Advocacy Center in 2022 increased by 456 (14%) and the number of persons accepting services increased by 484 (53%). These increases are attributed to resuming face to face services and hiring new staff. 6. Rent and Utility Assistance Online Application Portal and Case Management System – In August 2022, Human Services staff contracted with Vision Link to develop and implement an online application portal and case management system to serve Phoenix residents in need of rent and utility assistance and access to community resources. Residents can now upload eligibility documents, book online appointments, and schedule follow-up appointments through the new online portal. 7. Free Mobile Healthcare Screenings – In 2021, Housing staff partnered with CVS to provide free mobile healthcare screenings through CVS’s Project Health initiative at all senior and multifamily public housing sites. Due to the program’s success, the program continued in 2022, resulting in 69 clinics and more than 1,550 persons receiving free healthcare screenings. SUSTAINABILITY 1. Heat Response Plan – Approved by the City Council in March 2022, the Heat Response Plan established three goals, including a reduction in heat-associated deaths, fewer heat-related services calls, and evaluation of 100% of heat response programs and services. It also utilized $2.6 million in American Rescue Plan Act (ARPA) funding to support a new shelter at 2739 E. Washington St. Additionally, in January 2023 the Phoenix City Council voted to receive up to $500,000 from American Forests and to disburse the funds through nonprofit partners. Trees will be planted equitably with a focus on neighborhoods most impacted by rising temperatures. 2. Heat Relief Supply Distribution – Heat Response and Mitigation, Volunteer Programs, and Finance staff launched a new heat relief supply distribution program for summer 2022. Through this program, 50 local nonprofit and charitable organizations received more than 38,000 individual heat relief items that were distributed to community members in need. Items distributed included insulated water bottles, hats, cooling towels, personal misters, water jugs, evaporative coolers, and insulated backpacks. 21 Table of Contents 3. Transportation Electrification Plan – Approved by the City Council in June, this plan prepares the City for more electric vehicles (EV), charging infrastructure, and e-mobility equity. The plan’s three focus areas include: prioritizing equity, accelerating public adoption of EVs, and the City of Phoenix leading by example. Goals include launching a robust public education and awareness campaign to help meet the Climate Action Plan goal of 280,000 electric vehicles registered in the City of Phoenix by 2030; installing at least 500 public EV charging stations on City properties or rights-of-way (ROW) by 2030, with an emphasis on equity; installing new EV charging ports on City property/ROW to reach 300 charging stalls in the ROW by the end of 2025; purchasing 200 light-duty EVs in the City fleet across all departments by 2030; installing light-duty EV charging infrastructure at City facilities to support the charging of 200 City fleet vehicles by 2030; and installing a minimum of 100 new chargers and the associated electrical and infrastructure upgrades at City facilities, with capacity for additional charging capability in the future. This effort also includes building out EV charging infrastructure for City employees to use at the workplace to meet employees’ current charging needs by 2025 based on ongoing employee EV surveys. 4. Cool Corridors – Parks and Recreation, in partnership with American Forests, Heat Response and Mitigation, Public Works and Street Transportation staff, created the first “Cooling Corridor” project in Arizona. This project became a national event with leaders from American Forests in Washington, D.C. joining Mayor Gallego to celebrate. The cooling corridor included the planting of 259 Arizona ash and Chinese elm trees in a single week at Cesar Chavez Park along both sides of the sidewalk from 35th to 39th Avenues. 5. Tree and Shade Master Plan – Parks and Recreation staff planted a total of 1,500 trees throughout the City in 2022. These plantings were planned and coordinated as a part of the City’s Tree and Shade Master Plan to support heat mitigation efforts. 6. Tree City of the World – Phoenix was recognized as a Tree City of the World for the second consecutive year. This award is on behalf of the Arbor Day Foundation and the Food and Agriculture Organization of the United Nations and celebrates dedication in leading urban and community forestry efforts. TECHNOLOGY 1. Revised and Updated City Manager’s Performance Dashboard – The new City Manager’s Performance Dashboard launched in 2022 to enhance transparency, highlight City achievements, and identify potential areas for improvement. The dashboard serves as a comprehensive and easy-to-understand resource on services and programs provided to the Phoenix community and encompasses more than 130 metrics from 28 City departments. Staff redeveloped the City’s existing performance report, which had not been updated for 10 years and included only 27 metrics. This effort was a citywide collaboration to develop new metrics and enhance existing metrics. Staff also helped design a user-friendly interface in the Esri ArcGIS system and marketed this resource to the community. The dashboard, now administered by the newly created Office of Innovation, was featured by the Bloomberg Cities Network as an example of a smart strategy and innovative solution for local governments. Since the Dashboard launched, it has received nearly 30,000 views from over 5,000 individual users, with visitors from 33 countries worldwide. 2. Phoenix Municipal Court Case Management – The Prosecutor’s Office completed a major transition to manage over 30,000 misdemeanor cases a year at the Phoenix Municipal Court. Staff procured PROSECUTOR by Karpel to provide better caseload management, streamline data entry operations, and provide more information and better accountability for staff and attorneys. 3. Unmanned Aircraft Systems – On June 12, 2022, Phoenix Fire proudly began drone operations through the department's Unmanned Aircraft Systems (UAS) Program. Since the launch, the UAS team has been busy training and responding to emergency incidents across the City. The phased-in approach has allowed the group to successfully work through implementation obstacles. As a result, the UAS team has conducted a total of 363 flights with a total of 55.7 hours in the air. During those flights, the team has responded to a total of 31 incidents, including first alarm fires, brush fires, and mountain rescues. With a group of nine Federal Aviation Administration (FAA) certified pilots, drone team leadership has initiated communications with the FAA, Sky Harbor Operations, Sky Harbor Tower, Phoenix Police, and Phoenix Fire Special Operations. 4. Police Employment Services Bureau – The Police Department’s Employment Services Bureau procured a new hiring software system to process applicants more efficiently. Using the old system, there were 515 applicant files processed in a seven-month period. Within one month of installation of the new system, there were 434 new applicant files processed, significantly increasing efficiency and helping staff hire new employees at a markedly faster pace. 5. SHAPE PHX – Planning and Development staff made substantial progress on the rollout and integration of the new SHAPE PHX portal software program. SHAPE PHX gives internal and external customers seamless communication with staff on planning, plan review, permitting, and building inspections. Staff continues to expand service levels by providing users with the latest technology that can assist in accessing and navigating the development process. 6. Digital Literacy Training Program – Housing staff partnered with AVID Consulting to develop a digital training curriculum. Housing staff’s Digital Literacy Training Program has trained nearly 200 senior residents at eight senior sites. The four-week course covers basic tablet functions, including email, internet safety, social media, navigating the internet, and downloading applications. Housing staff presented at the 2022 United States Department of Housing and Urban Development (HUD) ConnectHomeUSA virtual conference and Digital Equity Institute’s Digital Inclusion Summit on the success of the program. 22 Table of Contents OUR COMMITMENT TO EXCELLENCE The mission of the City of Phoenix is to improve the quality of life in Phoenix through efficient delivery of outstanding public services. Our vision is to make Phoenix a great place to live, work and visit by fostering a dynamic and sustainable environment with exceptional public services. Delivering quality, efficient, and cost-effective services to Phoenix residents is the cornerstone of our commitment to public service. Our approach fulfills the evolving needs and expectations of our residents while considering how what we do today can have impacts years, or even decades, down the road. We Keep Our Residents Informed and Involved The City of Phoenix is committed to helping residents understand how their tax dollars are spent and to engage residents in the annual budget development process. We strive to make information accessible and easy to understand. As part of efforts to advance transparency and further engage the community 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 Budget and Research Department provides information and reports throughout the fiscal year to ensure the public and City Council has access to valuable information about the City’s budget. Information is available online at phoenix.gov/budget and includes annual budget documents such as the Summary Budget Book, Detail Budget Book, the Capital Improvement Program and the Inventory of Programs document that includes program level detail of all City programs and services. The 2021-22 annual budget earned Phoenix the Government Finance Officers Association Distinguished Budget Presentation Award. This is the 34th consecutive award for Phoenix. To increase community participation and accessibility we designed and implemented City Council hybrid meetings, allowing the public to participate in Council meetings either in person or online. Each year, we host several budget hearings around the city, providing residents the opportunity to provide input directly to decision makers. Additionally, in the fall of each fiscal year, an online budget tool “FundPHX”, is updated with the most recent adopted General Fund budget and made accessible in English and Spanish online at phoenix.gov/fundphx. The tool allows residents to see how the General Fund budget is allocated and to submit recommendations about the budget. Information collected in the tool is then shared with the City Council and management so it may be considered ahead of budget decision making each fiscal year. For the first time since 2006, voters will be given the opportunity to approve a General Obligation (GO) Bond Program to address critical infrastructure and rehabilitation needs of city facilities, such as parks, libraries, fire and police stations, affordable housing, streets, and storm drains, and to do so without an increase to the City’s secondary property tax rate. In June 2022, the City Council appointed a citizen’s GO Bond Committee, and we implemented the GOPHX online tool, which encouraged and coordinated public input in English and Spanish to evaluate and prioritize proposed projects and develop recommendations. On November 7, 2023, Phoenix voters will be able to decide in a special election whether the City should issue GO bonds to fund those improvements. The City of Phoenix firmly believes that transparency in government encourages efficiency, as well as accountability to residents. More importantly, the availability of city data supports innovation that can be applied to make Phoenix an even better place to live, work and visit. The Phoenix Open Data Portal (phoenixopendata.com) provides the public with access to important information about the City’s planning and performance, including: • The City Manager’s Performance Dashboard, which allows the public to drill into programs to see how well departments are meeting the needs and expectations of residents and businesses. • Information about plans for using $396 million awarded to the City as part of the federal American Rescue Plan Act (ARPA), passed by Congress in March 2021. The website lists ARPA funded programs and is updated continuously with expenditure reports, key performance indicator data, and additional program information. • Access to other information the public identified as being important, showcasing the most popular information toward the top of the site. 23 Table of Contents We Are Continuing to Make City Services More Accessible The Center for Digital Government (CDG) named the City of Phoenix a 2021 Digital Cities Survey Winner for the '500,000 or More Population Category' for its overall technology programs and plans, including cybersecurity, digitization of services, data transparency, and community engagement. The CDG recognizes cities for putting technology to good use toward improving the lives of constituents and strengthening the relationships cities have with both public and private partners. Our Information Technology Department successfully launched a new MyPHX311 app, which allows residents to pay their city services bill, report quality-of-life issues, and request city services. The Planning and Development Department implemented and is improving a SHAPE PHX portal, helping our residents find information about and successfully apply for various kinds of building permits. With Arizona State University and Amazon Web Services, Phoenix developed a virtual assistant chatbot prototype for its website, phoenix.gov, which supports English and Spanish queries as well as providing voice assistance for the visually impaired. We implemented phoenix.gov/informacion, a new section of our website where Spanish-speaking residents can learn about services, learn where to report problems, or participate in City Council meetings. We Are Improving the Safety of Our Community This year, we have focused on enhancing the many forms of community safety including stabilizing staffing of our Police and Fire departments, implementing the Office of Accountability and Transparency (OAT, supporting the Community Assistance Program (CAP), maximizing civilianization efforts, cooperating with the Department of Justice (DOJ) investigation, expanding mental and behavioral health services, expanding our Gated Alley Program, and formulating a Road Safety Action Plan. Additionally, this year we welcomed both a new Fire Chief and Interim Police Chief to help modernize safety in our community. Education is Essential Our Strategic Plan (phoenix.gov/strategicplan) highlights the importance of ensuring that we are prepared to meet the challenges of the 21st Century as educated, productive and engaged residents. In furtherance of this part of our mission, we developed the Phoenix Promise Program using $5 million in ARPA funds to provide financial aid to college students to attend Maricopa Community Colleges; we launched a Tuition and Wraparound Services Program with Maricopa Community College District to help Phoenix residents adversely impacted by the COVID-19 pandemic with tuition, books, stipends, career navigation, and employment; we are creating literacy hubs in local school libraries to improve literacy skills; we are collaborating with the Phoenix Union High School District to provide College Depot, college planning and scholarship sessions during the school day; we are launching Innovation 27, which is located in a former Kmart building at I-17 and Northern Avenue, and will become a home for educational and training opportunities in the Maryvale area. The City’s commitment to improving digital equity and collaborating with Phoenix residents in underinvested areas and public housing communities led to Phoenix being named as the winner of the 2022 All-America City Award by the National Civic League and Campaign for Grade-Level Reading. During the pandemic, the City distributed more than 12,000 laptops to 15 Phoenix school districts, along with 1,600 tablets and Wi-Fi connectivity to students and seniors for at-home learning, telemedicine and more. We Are Working to Reduce Homelessness and its Impacts The city has a growing homeless, immigrant and refugee population in need of assistance. Private businesses are also impacted by homeless encampments that result in incidents of trespassing, blight, liter, and hazardous waste. During the past year, • Our Human Services Department provided emergency rental assistance to 6,979 households representing 17,477 residents to help prevent homelessness; established an Eviction Assistance Line to provide emergency appointments to households in imminent danger of eviction preventing eviction for 1,260 residents; is working with a contractor to implement an online application portal and case management system to help Phoenix residents needing rent and utility assistance, and access to community resources; and, expanded shelter options and renovated shelter facilities. • Our Neighborhood Services Department applied $4 million of the Coronavirus Aid, Relief, and Economic Security Act funding to help Community Bridges Inc. acquire a new neighborhood shelter. They also provided $1.2 million of facility improvement funds to the Human Services Campus to accommodate 130 additional beds in time for the summer heat. We Are Creating More Opportunities for Success The City of Phoenix was one of 15 cities awarded $1 million dollars in the 2021-22 Bloomberg Philanthropies Global Mayors Challenge, helping to pay for a data-directed Mobile Career Unit (MCU) that helps unemployed residents connect with hiring employers right in their neighborhoods. The City awarded $7.5 million in ARPA Resiliency Grants to help micro and small businesses located in qualified areas. Our Community and Economic Development Department launched PHXbizConnect to provide businesses with expanded access to grant resources, on-demand training, and private-sector technical assistance. They have also facilitated numerous business entrances, grand openings and expansions, and have been front and center in city revitalization projects. 24 Table of Contents We have been working to improve our infrastructure in Northwest Phoenix in support of the development of two Taiwan Semiconductor Manufacturing Company (TSMC) Arizona fabrication laboratories. This development project has employed 10,000 construction workers and once completed is estimated to create 10,000 high-paying tech jobs. TSMC’s investment in Phoenix will fortify the U.S. computer chip supply chain, while providing for an on-site industrial water reclamation plant to achieve near zero liquid discharge. We are also extending assistance to small businesses along light-rail expansions with our Small Business Financial Assistance Program. We Are Improving Opportunities for Recreation and Travel Super Bowl LVII was a great success, for which Phoenix delivered a Super Bowl Experience Outdoor Festival, the National Football League Honors Award Show hosted by Symphony Hall, and three days of concerts hosted at the City-owned Footprint Center leading up to the big game in Glendale. Our Parks and Recreation Department made improvements to Margaret T. Hance Park, now featuring an urban garden with shrubs, succulents, shade trees and flowers; Cholla Trail at Camelback Mountain trailhead relocation with a chilled drinking fountain, restrooms, bike racks and an improved hiking experience; West Plaza Park, with a new playground, basketball court and sand volleyball court, a WalkPHX path and exercise equipment; Cielito Park with a new parking lot, additional trees, resurfaced basketball and mini pitch courts, and improvements to irrigation, grading, drainage and accessibility; South Mountain Environmental Education Center, helping visitors gain a deeper understanding of the plants, wildlife and culture in the South Mountain Park and Preserve; and a new disability-accessible fishing dock at Papago Park. The Cesar Chavez Community Center opened its doors to the public March 30, 2023. Located in Laveen, the 34,000 squarefoot Center features a fitness facility, gymnasium, outdoor movie theater, a lobby with a pool table, air hockey table and foosball table, a sensory room where individuals with special needs can enjoy an accommodating space, and hosts youth programs. Our Aviation Department launched two new airport security features for passengers: a PHX Reserve Virtual Queue pilot project, allowing passengers in Terminals 3 and 4 to reserve a time to go through security checkpoint through a dedicated lane; and passenger identification verification using mobile driver licenses and Apple Wallet. Aviation also enhanced travel at the airport, with an additional segment of the PHX Sky Train that links the airport’s core terminal to a new 1,600-space parking lot and to the Rental Car Center, and the ability to use an autonomous Waymo vehicle to travel to and from Phoenix Sky Harbor International Airport. We Are Working to Achieve a More Sustainable Future The City of Phoenix recognizes that we must focus on the well-being of residents, a strong economy and a healthy environment, and embrace a full approach to sustainability. It is our responsibility to provide leadership and demonstrate our commitment through innovative and efficient policies that assure clean land, air and water, and improve working and living environments. The following are seven 2050 Environmental Sustainability Goals the City Council adopted in April 2016, and the City’s efforts over the past year to fulfill those goals. 1. Transportation Our goal by 2050 is to make walking, cycling, and transit commonly used and enjoyed in every Phoenix neighborhood. This goal will result in 90 percent of the population living within one-half mile of public transportation and 40 percent of the population choosing to commute by walking, biking, or using public transportation. We will accomplish this by: a. Tripling the amount of light rail miles to 60. • We are currently expanding light rail, with a Northwest extension from 19th Avenue and Dunlap to 25th Avenue and Mountain View Road; a South-Central extension and Downtown hub, extending light rail from downtown to South Mountain Village Core on Central Avenue and 1st Avenue; a Capitol Mall extension from downtown to the Arizona State Capitol; and plans for an Interstate 10 West extension, connecting the greater West Valley to the Valley Metro Rail system. b. Allowing 90 percent of the population to be a 10-minute walk from transit through the expansion of routes and service frequency (and shaded bus stops). • The Public Transit Department implemented Council-approved bus service changes to connect several neighborhood routes, including a neighborhood circulator operating in Maryvale; a service route in the Estrella Village area between Roosevelt and Fillmore Streets and 59th and 63rd Avenues; and an extension of Route 43 from Buckeye Road to Lower Buckeye Road to provide added transit coverage to the industrial area. With public input, the City Council unanimously approved the Bus Rapid Transit (BRT) Program for the initial corridor of 35th Avenue and Van Buren Street. • The Public Transit Department, in coordination with Valley Metro, launched a new mobile app on July 1 that allows transit riders to plan trips with step-by-step navigation, track bus and light rail locations in real-time, view transit trip total travel time, save favorite routes and stops, and receive service alerts and updates. 25 Table of Contents c. Creating 300 miles of walkable bike paths, greenways and vibrant urban canal paths, and encouraging walking and biking and expanding the bike share system. • We improved and are continuing to improve bicycle and pedestrian corridors downtown, along the Rio Salado, and in various other locations around the city, featuring more protected bike lanes, bicycle/ pedestrian bridges, sidewalks, intersection pavement markings, signage, street lighting, traffic calming applications, improved drainage, and improved crossings. d. Lowering the carbon intensity of the current transportation system by 80 percent, encouraging environmentally friendly transportation modes and providing infrastructure for electric vehicles and low carbon fuel vehicles. • In June 2022, the City Council approved a Transportation Electrification Plan to prepare the city for a future filled with more electric vehicles (EV), charging infrastructure, and e-mobility equity. The plan focuses on prioritizing equity, accelerating public adoption of EVs, and having the City of Phoenix lead by example. Goals include improving public education and awareness, installing public EV charging stations and charting ports on city properties or rights-of-way, and purchasing light-duty EVs in the City fleet across all departments. • We received a $16.3-million Federal Transit Administration Low-No Emission Grant for new hydrogen and battery-electric buses. • In November 2022, the City's Transportation, Infrastructure, and Planning Subcommittee approved a heavy-duty zero-emissions fleet transition. Public Transit staff is identifying a cooperative to purchase low and no-emissions technology buses that includes green transit technology, including battery-electric, hybrid-electric, and fuel-cell electric buses. • Phoenix was recognized as one of 123 cities on the 2022 Carbon Disclosure Project Cities A-list for its ambition, leadership, and transparency on climate action. e. Developing 15 vibrant compact complete centers throughout the city to provide the majority of services residents need within their local community. • Community and Economic Development staff worked over a two year period with the City Council Offices and City Manager’s Office to create new government property lease excise tax (GPLET) policies for the central business district and 19 redevelopment areas in Phoenix. These new policies will provide a solid redevelopment tool to assist in the revitalization of challenged areas of Phoenix. 2. Waste In 2050, Phoenix will create ZERO WASTE through participation in the "Circular Economy." To move toward Zero Waste by 2050, three key actions are needed: a. Increasing the number of products that are recyclable by incubating local businesses to capture new products from the waste stream. • In September, the City’s compost processor, WeCare Denali, LLC installed a food de-packager at the 27th Avenue Compost Facility to divert additional food waste from the landfill. The de-packager removes large pieces of food packaging and increases the yield of high-quality compost. • In October, the City Council awarded Balcones Resources the contract to operate the City’s North Gateway and 27th Avenue Materials Recovery Facilities, which includes processing materials from the City’s curbside recycling program, city facilities, and other municipalities to meet market specifications and creating economic value by marketing, selling, and shipping the recyclable material to various markets. b. Supporting the transition to a Circular Economy and encouraging the retail industry to provide products that are either 100 percent recyclable or able to be repurposed at end of life. • The Aviation Department opened the eighth and final concourse for Terminal 4, which included several innovative sustainability elements such as electrochromic glazing for glass to provide more temperature control and a better passenger experience, and a baffle ceiling constructed of materials from recycled water bottles, which adds sustainable elements to concourse architecture. c. Expanding the current recycling program to remove commonly recycled products from the waste stream (and reducing the number of non-recyclable products from the recycle bins) through public education and awareness campaigns and new programs that increase access to recycling services for residents and businesses. 26 Table of Contents 3. Water Stewardship The 2050 goal, essentially a perpetual one, is to provide a clean and reliable 100-year supply of water. The City of Phoenix has been proactive over the last century, building the necessary infrastructure and systems to provide a clean and reliable supply of water for the foreseeable future, and focusing on water conservation programs. The three action areas of which it has been a long-established national leader are: a. Groundwater Management: • Supported by the nation-leading Groundwater Act of 1983, we are a net-positive contributor to groundwater using only 2/3 of our allocation from the Colorado River and diverting the other 1/3 toward groundwater recharge. • The Law Department concluded negotiations on water conservation agreements to help stabilize water levels at Lake Mead, and our Water Services Department is joining other western states participating in a memorandum of understanding focused on finding a collective solution to the Colorado River shortage. • We have almost completed our Drought Pipeline, which will carry water from the Salt River and Verde River to parts of Phoenix currently exclusively served from our allocation of Colorado River water. • Our Office of Environmental Programs awarded six Resilient and Sustainable Agriculture grants totaling $245,000 provided to COVID-impacted farms to aid in installing or enhancing water-efficiency practices. b. Wastewater Management: • We recycle an amazing 89 percent of our wastewater for uses such as irrigation and cooling for the Palo Verde Nuclear Plant. We also capture methane emissions from wastewater treatment and partnered with Ninety-First Avenue Renewable Biogas, LLC to build a facility that generates renewable natural gas from the wastewater treatment for use in vehicles. • This year, the 91st Avenue Wastewater Treatment Plant (WWTP) was awarded the Gold Award for no permit exceedances in the year. The 23rd Avenue WWTP was awarded the platinum award for the 13th consecutive year. The platinum award is for no permit exceedances for 5 years. c. Water and Wastewater Innovation: We are an established leader in water innovation and were recognized for three innovative projects; the $6 million annual Colorado Water Resiliency Fund, the “Tucson-Exchange” where we store water resources underground in Tucson to be used during low water years, and the Tres Rios Wetlands, where treated wastewater undergoes a final polishing through constructed wetlands creating a vibrant ecosystem. We are continuing to find ways to conserve water: • We are working with developers to ensure they fulfill EPA WaterSense standards in new homes. • We are informing residents of their water use compared to others in their neighborhoods, and ways they can conserve water while maintaining attractive landscaping. • We are looking at City government water usage and are replacing inefficient plumbing fixtures in City buildings. 4. Buildings and Land Use All new buildings will be "net-positive" in terms of energy and materials, meaning they will produce more energy than they consume. This can be accomplished through employing passive design principles, such as highly insulated wall assemblies and on-site renewable energy. This goal will apply to all new construction after 2050. Buildings exist today that already meet this standard, like those that meet the Living Building Challenge 3.0. At the community scale, the goal will be to establish 15 vibrant compact complete centers where most services needed by each community are provided locally; residents will be able to live, work, and play all within walking distance. 5. Parks, Preserves and Open Spaces More than many cities, Phoenix residents have a strong connection to the natural eco-system around them; most identify strongly with living in a desert. The 2050 goal is to have all residents within a five-minute walk of a park or open space. a. Part of our goal is to add 150 miles of paths, greenways, and bikeways throughout the city, and transforming an additional 150 miles of canals into vibrant public spaces. In August 2022, the City received $25 million in federal funding to improve the bike/pedestrian bridge over the Rio Salado along the 3rd Street alignment across the Rio Salado. Proposed improvements include adding a low-emitting solar light along the existing asphalt pathway. b. Reducing urban heat-island through green-infrastructure (such as "cool roofs", permeable pavement, and stormwater capture) as well as doubling the current tree and shade canopy to 25 percent by 2030. Structured shade and trees facilitate increased walking and biking, increase property values, and, most importantly, can be used to create great public gathering spaces in communities. • In March 2022, City Council approved the Heat Response Plan, which aims to reduce heat-associated deaths, reduce heat-related services calls, to evaluate 100% of heat-response programs and services, and to support a new shelter at 2739 E. Washington St. with $2.6 million in ARPA funding. 27 Table of Contents • In August 2022, Phoenix was one of 10 winners of the Let’s Talk About Heat Challenge for its strategies to raise awareness of extreme heat risks and to protect public health, especially in underserved communities. Additionally, in January 2023, the City Council voted to receive a total of up to $500,000 from American Forests, and to disburse the funds through nonprofit partners to promote shade equity by planting trees in neighborhoods most impacted by rising temperatures. • The City is creating Arizona’s first Cooling Corridor Project, which includes planting shade trees at Cesar Chavez Park along both sides of the sidewalk from 35th to 39th Avenues. The Parks and Recreation Department planted a total of 1,500 trees throughout the city in 2002 as part of the City’s Tree and Shade Master Plan for heat mitigation, and Public Transit installed 112 transit shade structures throughout the city as part of continued efforts to mitigate heat impacts and increase transit comfort and access. • We are continuing to expand our “We’re Cool” Heat Relief Program, launched in 2017 to make cooling centers, hydration stations and heat-mitigation supplies (hats, umbrellas, water, et al) available during times of extreme heat. • Our Street Transportation Department implemented Phase II of our Cool Pavement Program, which applies a coating to streets that reflects a higher portion of sunlight that hits it, reducing heat absorption and heat radiation. The program received a first-place environmental excellence Crescordia Award in Climate-Action Solutions from Arizona Forward, an organization that brings business and civic leaders together to promote cooperative efforts to improve the environmental sustainability and the economic vitality of Arizona and local regions. • Parks and Recreation Department efforts led Phoenix to be recognized by the Arbor Day Foundation and the Food and Agriculture Organization of the United Nations as a Tree City of the World, celebrating leadership in urban and community forestry, for the second consecutive year. 6. Clean Air By 2050, Phoenix will achieve a level of air quality that is healthy for humans and the natural environment. This includes outperforming all federal standards and achieving a visibility index of good or excellent on 90 percent of days or more. As previously noted, in November 2022, the City's Transportation, Infrastructure, and Planning Subcommittee approved a heavy-duty zero-emissions fleet transition. Public Transit staff is identifying a cooperative to purchase low and noemissions technology buses that includes green transit technology, including battery-electric, hybrid-electric, and fuelcell electric buses. 7. Local Food Systems Phoenix is increasing community access to fresh and healthy food by creating a vibrant food system. Many residents live in "food deserts" where they are more than one mile from fresh and healthy food. Increasing neighborhood access to fresh and healthy food improves community health and reduces diet-related disease. By 2050, we want to establish a sustainable, healthy, equitable, local food system by eliminating food deserts, increasing urban agriculture, establishing farmers markets in each of the city's urban villages, and significantly reducing the rates of hunger, obesity, and dietrelated disease. Phoenix is working with Arizona Fresh Holdings LLC to redevelop the Del Rio Landfill into the Arizona Fresh Agri-food Innovation Center, which will feature a wholesale produce distribution center, retail food market, community park, and education and research facilities related to food and agriculture. This year, our Office of Environmental Programs implemented numerous programs as part of the Phoenix Resilient Food Systems Initiatives funded by ARPA, including a backyard garden program that installed 92 garden systems for residents with another 90 residents selected for garden installations; an urban agriculture fellowship program that placed nine fellows with Phoenix-based farms for one year; two food systems training cohorts held through the Food Systems Worker Cooperative Training program with 23 people completing the program and two cooperatives established; Agri-Food Tech innovation grants totaling $500,000 awarded to businesses, non-profits, and an educational institute to advance technological improvements to the food system and increase capacity for access to healthy food; a total of $500,000 awarded to various non-profit and business entities to improve farms, provide food to COVID-impacted residents, enhance school and community gardens, and create a new community garden at Homestead Park; continuation of the Feed Phoenix program, providing healthy meals to social service organizations serving COVID-impacted residents through the purchase of produce from local farmers used in meals prepared by small, local restaurants and caterers with more than 130,000 meals delivered in 2022; and continuation of the Funds to Feed Phoenix program, with community and grassroots organizations and school districts providing meals to COVIDimpacted residents with a total of more than 132,000 meals delivered. We Are Intent on Attracting, Keeping and Developing the Best and Brightest The City is completing a comprehensive job evaluation and market analysis to make the City of Phoenix a destination employer for future generations, and to attract and retain the best talent available to deliver programs and services to the community. The Class & Comp Study aims to ensure job classifications are accurate and up to date and that an equitable and market-based compensation structure exists, to better define career paths and training opportunities. 28 Table of Contents Our Public Works Department established apprentice programs for HVAC, fleet services and plumbing, and expanded its programs for electricians and solid waste equipment operators to provide on-the-job training and education leading to a greater supply of tradespeople for the City and within the Phoenix area in general. On July 1, 2022, the City Council unanimously approved providing paid parental leave of up to 480 hours (12 weeks) for the birth, adoption, or foster care placement of a child during a 12-month period, enabling employees to bond with and care for a new child without exhausting their accrued leave time. The City also launched PHXYou, a new, innovative, centralized employee learning management system, facilitating online training and professional development planning. We Have a Strong Financial Outlook The City of Phoenix's credit ratings for GO and excise tax bonds remain investment grade. The ratings for GO bonds are as follows: Fitch Ratings (AAA), S&P Global Ratings (AA+) and Moody's Investor Service (Aa1). The ratings for excise tax bonds are: Fitch Ratings (AA+), S&P Global Ratings (AAA) and Moody’s Investor Service (Aa2). All ratings have a stable outlook. Phoenix’s strong credit ratings reduce the overall cost to the City when borrowing money for critical public projects. Moody’s Investors cited that “Phoenix’s economic and tax base growth outperformed other parts of the U.S. Finances remain in a healthy position, supported by prudent budget management and revenue growth driven by the city's strong economy." Phoenix serves as the economic hub for the broader metropolitan statistical area, which has experienced strong and sustainable growth in recent years. These ratings are a testament to the elected officials and City Management who work diligently to make hard decisions that will ensure a strong financial position for the City. Our Values Guide Our Approach We are committed to delivering excellence through: • 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. • 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. • 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. • 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. • 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. • Consistent Professionalism We work to the highest standards of proficiency and expertise. We are accountable to ourselves, to the city and to the public. • 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. City of Phoenix employees not only follow these guiding principles in their workplace, they also demonstrate care for their community by contributing their time and money. • In 2022, employees raised nearly $680,000 for the Valley of the Sun United Way Mighty Change Campaign. Since the campaign began in 1980, employees have raised more than $27 million, with most of the recipient organizations providing services in Maricopa County. • 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. • City employees also support each other, with more than $57,000 in contributions to the City’s Helping Other Phoenix Employees (HOPE) Fund, designed to offer eligible employees financial assistance for basic household or unanticipated expenses. We work very hard to earn our reputation as a well-run city. We strive to be leaders in our professions. Each day, our mission and vision, which look to the needs and expectations of our residents, are at the core of everything we do. 29 Table of Contents PHOENIX GROWTH PHOENIX GROWTH 1881 Area - .5 Sq Mi Population - 1,708 1920 1930 1940 1950 Area - 5.0 Sq Mi Population - 29,053 Area - 6.3 Sq Mi Population - 48,118 Area - 9.5 Sq Mi Population - 65,414 2023 2020 Area - 17.1 Sq Mi Population - 106,818 1960 Area - 519.7 Sq Mi Population - 1,608,139 Area - 187.6 Sq Mi Population - 439,170 Area - 520.2 Sq Mi Population - 1,674,000 2010 Area - 519.1 Sq Mi Population - 1,447,128 2000 Area - 477.6 Sq Mi Population - 1,321,045 1980 1990 Area - 424.6 Sq Mi Population - 983,403 30 Area - 325.1 Sq Mi Population - 789,704 1970 Area - 248 Sq Mi Population - 584,303 Table of Contents COMMUNITY 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‘s 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 2022 Census recorded Phoenix population at 1,644,409. The City currently encompasses 520.2 square miles. Today, Phoenix is the fifth most populous city in the United States, state capital of Arizona and 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 and receives an average rainfall of 7.25 inches annually. The Phoenix metropolitan area employment mix is well diversified and fairly similar to that of the United States as a whole. An exception is construction and financial employment, which 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 than 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 (15%); government (10%); financial activities (9%); construction (7%); and manufacturing (6%); Major employers of the Phoenix metropolitan area include Banner Health, State of Arizona, Wal-Mart Inc., Amazon.com, Inc., Fry’s Food Stores, Wells Fargo & Company, Maricopa County, Intel Corporation, Arizona State University, and City of Phoenix. The top ten property taxpayers, based on secondary assessed valuation, are Arizona Public Service Company, Southwest Gas Corporation, CenturyLink Inc., Esplanade Owner L.P., Phoenix Plaza P.T. L.L.C., Host Kierland L.P., Target Corporation, United Services Automobile Association, Biltmore Center Owner L.L.C., and Epic Apollo L.L.C. These taxpayers make up 5.7 percent of total assessed valuation. 31 Table of Contents DEMOGRAPHICS AND ECONOMIC STATISTICS The following statistics are presented to provide an overview of Phoenix residents, the City’s financial condition and infrastructure. Actual Estimated Projected 1990-91 2000-01 2010-11 2020-21 2021-22 2022-23 2023-24 DEMOGRAPHIC PROFILE Population1 995,896 1,350,435 1,453,462 1,608,139 1,630,195 1,644,409 1,674,000 Percent of Population by Age Under 5 8.5 8.5 8.3 7.0 5-19 21.6 21.5 23.0 21.3 20-44 42.9 42.8 37.2 37.2 45-64 17.3 17.3 23.1 23.5 65+ 9.7 9.8 8.4 11.0 Percent of Population by Race 1 Caucasian 71.9 55.8 65.9 49.7 Black/African American 4.9 4.8 6.5 7.8 American Indian/Alaska Native 1.6 1.6 2.2 2.6 Asian 1.5 1.9 3.2 4.1 Native Hawaiian/Other Pacific Islander2 N/A 0.1 0.2 0.2 Other 20.1 35.8 22.0 35.6 Hispanic/Latino (of Any Race)3 20.0 34.1 40.8 41.1 Not Hispanic or Latino (of Any Race)3 80.0 65.9 59.2 58.9 CITY ECONOMIC PROFILE Median Household Income4 $30,797 $40,856 $42,260 $61,529 $68,435 $73,499 $78,938 Personal Income Growth (Metro Phoenix)5 4.6% 6.7% 3.0% 8.2% 5.3% 4.3% 6.2% Secondary Net Assessed Valuation (‘000s)6 $5,700,825 $7,573,211 $16,092,308 $19,889,714 $21,780,881 $23,045,115 $28,939,043 Full Cash Value (Millions)7 N/A N/A $144.772 $198.012 $215,742 $232,424 $292,924 Employment Growth Rate8 (3.0)% 3.7% (2.1)% 2.4% (1.2)% 5.4% 2.3% Unemployment Rate 4.9% 2.7% 9.1% 6.1% 3.5% 3.3% 3.3% Value of Residential10 Construction (Billions) $0.42 $1.16 $0.28 $1.00 $1.10 $1.10 $1.10 9 Value of Commercial10 $0.46 $1.33 $2.60 $5.00 $8.10 $8.20 $8.00 Construction (Billions) CITY FINANCIAL PROFILE Total Budget (‘000s) Total GF Budget (‘000s)11 Total Employees $1,026,545 $1,946,013 $3,020,690 $4,163,128 $4,488,849 $4,911,713 $6,750,037 $591,021 $953,324 $954,795 $1,371,152 $1,470,251 $1,627,796 $2,028,668 11,388 14,352.0 15,002.8 14,980.9 15,495.2 15,901.9 15,946.9 Total Employees per 1,000 population12 11.4 10.6 10.3 9.2 9.5 9.7 9.5 Non-Enterprise Employees per 1,000 population N/A 8.6 8.0 7.2 7.5 7.7 7.6 Enterprise Employees per 1,000 population13 N/A 2.0 2.3 2.0 2.0 2.0 2.0 Property Tax Rate per $100 Net Assessed Value 1.79 1.82 1.82 2.13 2.12 2.11 2.10 Aa1/AA+/ AAA Aa1/AA+/ AAA N/A 210,779 211,000 211,000 2.3% 2.3% 2.3% G.O. Bond Rating (Moody’s/S&P/Fitch)14 Aa/AA+ Aa1/AA+ Aa1/AAA Aa1/AA+/ AAA Number of PLT Licenses15 43,756 51,000 56,460 200,845 City Retail Sales Tax Rate16 1.2% 1.8% 2.0% 2.3% 32 Table of Contents Actual 1990-91 2000-01 2010-11 2020-21 2021-22 Estimated Projected 2022-23 2023-24 INFRASTRUCTURE PROFILE Area (Square Miles) 427.1 483.5 519.1 519.8 519.9 520.2 520.2 Police Major Crimes17 Dispatched Calls for Service 18 Authorized Sworn Police Officers19 110,961 97,666 70,108 63,710 64,977 58,220 57,520 895,117 862,769 666,116 655,459 666,908 624,440 639,420 2,047 2,810 3,281 3,271 3,271 3,271 3,271 Fire Fire Stations20 45 45 57 59 59 59 59 Fires and All Other Calls 26,281 28,369 19,335 27,323 33,467 34,000 36,000 Emergency Medical Calls21 75,112 101,396 136,163 190,669 214,339 216,000 224,000 Authorized Sworn Firefighters19 1,042 1,315 1,661 1,723 1,722 1,798 1,835 Building Inspections Total Number of Inspections22 176,909 261,184 131,600 271,758 277,742 277,000 277,000 Streets Total Miles 3,800 4,299 4,825 4,858 4,864 4,867 Miles Resurfaced and Sealed23 250 220 127 582 340 308 4,872 219 Total Miles of Bikeway24 250 472 615 1,528 1,492 1,523 1,553 Traffic Control and Lighting Signalized Intersections 761 906 1,092 1,163 1,164 1,173 1,183 Street Lights 50,825 70,750 89,826 96,828 97,217 97,444 99,444 Traffic Accidents23 28,414 36,500 22,742 27,540 27,979 29,171 30,000 Aviation Passengers Arriving and 22,175,000 35,900,000 40,500,000 26,779,940 43,939,105 46,500,000 47,900,000 Departing Solid Waste Collection Residences Served26 281,392 327,953 392,825 413,010 416,176 420,002 423,863 Tons Disposed at City Landfills27 513,643 1,051,935 1,002,346 986,352 1,013,301 972,257 978,090 Municipal Parks Number of Municipal Parks28 1181 199 225 200 200 200 200 Developed Park Acres29 2,206 3,332 5,071 8,860 8,860 8,860 8,860 Number of Municipally Operated Golf Courses 5 7 6 5 5 5 5 Libraries Material Circulation30 5,962,411 9,151,000 13,839,543 6,833,489 8,452,505 9,400,000 9,500,000 Total Material Stock 1,732,410 2,016,000 1,643,977 4,050,722 3,292,831 3,512,000 3,700,0000 11 13 16 17 17 17 17 31 Number of Library Branches Equipment Management Number of Equipment Units in Fleet32 4,776 6,080 7,612 7,711 7,764 7,876 7,907 Water Connections33 321,996 350,967 397,390 434,743 441,237 444,767 449,215 Production (billions of gallons)34 84.7 109.4 98.6 106.0 101.3 98.2 102.7 Miles of Line 4,246 5,007 6,270 7,035 7,068 7,125 7,155 Wastewater Connections 311,980 327,051 389,978 421,854 423,122 426,507 430,772 Miles of Line 3,661 4,174 4,980 4,952 4,984 5,038 5,060 Population by age and race is only available in census years. Also, racial categories were modified by the Census Bureau in the 2000 Census. Population counts reported for 2022-23 and prior are based on Census Bureau Population Estimate, and the population count for 2023-24 is a projection provided 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. 4 Median Household Income is based on U.S. Census Bureau data for the City of Phoenix geographic area. For the estimate and projection years, the April 2023 greater Phoenix Consumer Price Index (CPI) of 7.4% was applied to the U.S. Census Bureau’s (FactFinder) 2021 American Community Survey 1-year estimates for City of Phoenix Median Household income. The reported data is from April 2023. 1 33 Table of Contents 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 (Full Cash) 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 based on a 12-month change (Q2) in employment rate. Data is based on the Phoenix-MesaScottsdale Statistical Area (MSA) and is obtained from the United States Department of Labor – Bureau of Labor and Statistics website: www.bls.gov. The reported data is from March 2023 and does account for impacts to employment growth from COVID-19. 9 Unemployment rate is reported monthly by the US Bureau of Labor Statistics website: www.bls.gov (LAU – Local Area Unemployment searchable databases) converted to fiscal year by the City of Phoenix Budget and Research Department. Data is based on the Phoenix-Mesa-Scottsdale Statistical Area (MSA). The reported data is from February 2023 and does account for impacts to the unemployment rate from COVID-19. 10 These measures represent the annual estimated value of projects permitted by the City of Phoenix (new construction and remodels). Valuations are trending higher than prior years due to large semi-conductor project and supplier sites in north Phoenix. 11 As of 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 1980-81 and 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 ratings listed in the estimated 2022-23 are the City’s rating at the time of publication. No attempt has been made to project the City’s ratings. 15 As of January 1, 2017, the City of Phoenix no longer has administrative and collection duties over the management of Transaction Privilege (Sales) and Use Tax Licenses (TPT) accounts. This process is administrated by the State of Arizona. Previously, the City allowed businesses to report multiple locations or entities under one license; that is no longer the policy under the State. Although the Arizona Department of Revenue assumed these duties in 2017, it is expected that the State remits the same approximate amount of annual license fee revenues for the same approximate number of (TPT) accounts that have privilege tax liability within the City of Phoenix limits. 16 Voters approved a 0.3 percent increase in most city sales tax categories effective January 1, 2016 to fund a comprehensive transportation plan. This was an increase to and an extension of the 0.4 percent tax that was effective June 1, 2000, resulting in a total tax of 0.7 percent for transportation with a 35-year sunset date. 17 Total violent and property crimes are based on Uniform Crime Reporting (UCR) standards, not based on Arizona Revised Statutes. Counts are based on finalized data through March 2023 and projected data for subsequent months for all crime types. Beginning in January 2014, the rape counts (which are one of the crime types included in the violent crime counts) include incidents that met the updated FBI rape definition. This change is reflected in counts from 2014-15 forward. Similarly, beginning in January 2016, the aggravated assault counts include incidents that met the updated FBI aggravated assault definition. This report reflects that change from 2015-16 forward. 18 The formula that categorizes calls as dispatched was revised in 2017. Counts for 2015-16 and forward have been updated. Call data is based on actual data through April 30, 2023 and projected data for the remaining months. 19 The numbers shown represent the Council authorized sworn position count in Police and Fire. The sworn hiring target for Police is 3,125 based on projected available resources. The sworn hiring target for Fire is 1,819 based on projected available resources. 20 Station 62 is anticipated to open in December 2024. Station 74 is anticipated to open in the first quarter of 2025. 21 Estimated calls are based on historical actual numbers and could be impacted by external factors such as population density, traffic, and hospital wait times. 22 Includes building, electrical, mechanical, plumbing and general inspections. 23 Miles of streets resurfaced or sealed varies year over year and is dependent on actual streets selected and distribution of wide versus narrow. It also varies based on the method of seal used. 2023-24 shows a decrease due to the end of the Accelerated Pavement Maintenance Program (APMP) in 2022-23. 24 City of Phoenix bicycle network consists of bicycle lanes, routes, and paths. The measurement methodology of bikeways records bicycle lanes as bi-directional because of the doubled signage and striping requirements. As part of the ongoing effort to improve the bikeway data, 51 miles of bike routes were reclassified over the last year and they are no longer considered bikeways. 25 Traffic accidents include injury, non-injury, and fatal collisions. 2021-22 represents a pre-final number based on current ADOT data. 2022-23 and 2023-24 figures are projections based on previous years. 26 2022-23 projected service level is based on annualized 9 months of actuals data and assumptions from Business Intelligence (BI) Living Unit report (average 0.69% growth over the last 9 months). Projected households for 2023-24 are based on 0.92% growth from 2022-23 projections. 27 Tonnage includes disposal tonnage collected at City transfer stations and landfill as well as Solid Waste Field Services tonnage sent to contracted private transfer stations and landfills. Projected tonnage for 2023-24 is based on 0.6% growth from 2022-23 projections. For 2022-23, the projection is reduced compared to 2021-22 actuals due to Covid behavioral changes (mostly attributed to people returning to a physical workplace that is not their home). 28 Decrease from prior years resulted from removing undeveloped parcels from the total, therefore reducing the total number of municipal parks. The Municipal Parks include 14 Mountain Preserves. 29 Increase from prior years resulted from the reclassification of park assets in Park’s asset inventory database compared to 2010-11. These numbers include all flatland parks, including four Natural Parks (Cave Buttes Recreation Area, Papago Park I, Reach 11 Recreation Area, and Rio Salado). 30 Measure covers all media including: audio books, e-books, CDs, DVDs, databases, books, and periodicals. 2021-22 data reflects the addition of Kanopy to the catalog. Library locations returned to regular operating hours in 2021-22, resulting in higher than estimated circulation versus the previous year, which was impacted by COVID-19. 31 Total material stock includes digital material available to patrons. 32 Includes vehicle replacements. 33 Water connections have increased due to an increase in customer accounts. 34 Includes water produced for City of Phoenix only. 5 34 Table of Contents RESOURCE AND EXPENDITURE SUMMARY This section provides a broad overview of the resources and expenditures included in the fiscal year (FY) 2023-24 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 importance to our residents as they provide for the most basic services, such as police, fire, parks and streets. Enterprise funds are supported by fees charged for the services provided except for the Convention Center which has earmarked sales taxes as its primary funding source. Special Revenue funds are restricted to statutory and/or voter-approved uses. The FY 2023-24 budget, financed by operating funds, totals $6,750,037,000. As shown in the pie chart below, the General Fund portion of $2,028,668,000 is approximately 30 percent of the total. The Enterprise funds, which include Aviation, Water, Wastewater, Solid Waste and Convention Center, make up another 30 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 40 percent of the total budget. All Sources of Funds Total Resources - $6.75 Billion Enterprise Funds 30% All Sources of Funds Total Expenditures - $6.75 Billion Capital 26% General Funds 30% Debt Service 9% Special Revenue Funds 40% Operation and Maintenance 65% In addition to presenting the budget by funding source, the budget is also 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 pie chart above 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 FY 2023-24 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. 35 Table of Contents Finally, budgeted operating and maintenance 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 operating and maintenance budget on a department-by-department basis. Millions Operating and Maintenance Expenditures by Department 2023-24 General Fund Budget $800 $700 $600 $500 $400 $300 $200 urt Wo rks Cit Res yP our ros ces ecu ter Fin and anc Pub e lic De Str fen eet der Tra nsp Ne ort igh bor atio hoo n dS erv ice Co s mm Cit uni yM ty a Law ana nd ger Eco 's O nom ffic ic D e eve lop me nt Pla nni Cit ng yC and ler k De vel opm ent Off C ity ice Co of A unc rts il and Co mm Cul tur uni e cat ion sO Bud ffic get e &R ese arc Pho h C eni ity xC Au onv dito ent r ion Ce Equ nte al O r ppo rtu nity Ma yor 's O ffic e Hou sing Fun ctio ns* l Co Hum an lic ipa Pub y es vic Ser an nic Mu es rar Lib Hum tion vic rea Rec ogy nd nol Info rma tion Tec h ks a Par Ser ice Pol $0 Fire $100 "Functions include several small offices such as the Environmental Programs and Government Relations. The table below provides a comparison of the FY 2023-24 budget to the FY 2022-23 adopted budget. Actual expenditures for FY 2021-22 are also included. FY 2023-24 Budget Compared to FY 2022-23 Adopted Budget (In Millions of Dollars) 2021-22 Actual Expenditures 2022-23 Adopted Budget Budget 2023-24 Amount Change Percent Change Operating and Maintenance Expenditures Capital Expenditures Debt Service 3,354.2 563.6 571.0 4,028.5 1,337.4 611.9 4,421.6 1,749.2 579.2 393.1 411.8 (32.7) 9.8% 30.8% (5.3)% Total 4,488.8 5,977.8 6,750.0 772.2 12.9% Overall, citywide operating and maintenance expenditures are expected to rise by $393.1 million. Most of the increase is attributable to FY 2023-24 negotiated employee compensation increases, the implementation of the Class and Compensation study, additional staff for programs and services, and higher costs for health insurance and public safety pension. Expenditure growth can also be attributed to additional Section 8 housing assistance payments from HUD and the carryover of several Council-approved American Rescue Plan Act (ARPA) projects that are still in progress; water replacement and water conservation programs; and water treatment plant infrastructure improvements. Increases are also due to higher inflationary and usage costs for credit card fees and banking services, electricity, computer software and components; water treatment chemicals, raw water purchases, and water pumps; telecommunications equipment; gasoline, diesel fuel, liquid petroleum and compressed natural gas (CNG); plumbing, janitorial, and paint supplies; motor vehicle parts; garbage containers; police equipment; reference and education materials; safety and environmental supplies; tools; and clothing and golf merchandise. Pay-as-you-go capital expenditure increases are primarily due to increases in the Aviation, Housing, Information Technology, Non-Departmental Capital, Parks and Recreation, Public Transit, Wastewater, and Water programs. The Capital Improvement Program Budget Book provides project-level detail. Debt service expenditures are anticipated to decrease due to the absence of reserve funds needed to defease debt. 36 Table of Contents FY 2023-24 GENERAL FUND BUDGET OVERVIEW The FY 2023-24 General Fund budget of $2,028,668,000 provides for ongoing operating and maintenance and some pay-as-yougo capital expenditures. The table below compares the FY 2023-24 General Fund budget with the adopted FY 2022-23 budget. FY 2023-24 General Fund Budget Compared to FY 2022-23 Adopted Budget (In Millions of Dollars) 2021-22 Actual Expenditures 2022-23 Adopted Budget Budget 2023-24 Amount Change Percent Change Operating and Maintenance Expenditures Capital Expenditures 1,446.1 24.2 1,731.2 48.2 1,906.8 121.9 175.6 73.7 10.1% +100.0% Total 1,470.3 1,779.4 2,028.7 249.3 14.0% The operating and maintenance expenditures for FY 2023-24 are expected to increase by 10.1 percent overall compared to the FY 2022-23 adopted budget primarily due to FY 2023-24 negotiated employee compensation increases, the implementation of the Class and Compensation study, rising costs for health insurance and public safety pension, and for new positions for expansion of City programs and services. Various departmental increases are also contributing to growing expenditures for reasons such as facility maintenance costs including the operations and maintenance of the new 100 West Washington building; homeless and senior services; continued funding for maintenance and modernization of technology; increases to liability insurance, medical services, credit card fees and banking services, self-insurance charges, and property insurance; crisis response; security services; maintenance and repairs to citywide parks; funding for revenue enforcement; SAP system software agreements; and rental charges for the PPE Warehouse. Commodities will also rise due to higher costs in police equipment and ammunition; safety and environmental supplies; gasoline, diesel fuel, and CNG; plumbing supplies; motor vehicle parts; small tools and equipment; computer software and components; telecommunications equipment; and park supplies such as chemicals, pumps, and accessories for citywide pools along with material to maintain infrastructure, clothing, janitorial supplies, signage, locks, and office furniture. Other reasons for the growth are due to vehicle replacements including one-time funds to replace Fire apparatus, and a General Fund contingency increase. Pay-as-you-go capital expenditure increases are primarily due to funding for Fire Station 74; replacement of the existing Municipal Court Case Management System; Fleet Services facility improvements; increases in Information Technology Plan funding; Roadway Safety Action Program and Cool Pavement Program funding; a new Cold War monument at Steele Indian School Park; local match funding for potential federal grant awards; and set-asides to support the planned 2023 General Obligation Bond Program. The following pie charts show the FY 2023-24 General Fund budget summarized by major programs and major resources. General Funds Total Expenditures - $2.03 Billion General Funds Total Resources - $2.03 Billion User Fees/Other Revenue 8% Other Resources 10% Environmental Services and Other 8% Local Taxes & Related Fees 34% Transportation 1% General Government 12% Property Tax 10% Community Development and Enrichment 14% State Shared Revenue 38% Public Safety and Criminal Justice1 65% When contingency is excluded, Public Safety and Criminal Justice account for approximately 68% of budgeted General Fund expenditures. 1 RESOURCES Resources include beginning fund balances, revenues, recoveries and fund transfers. 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. 37 Table of Contents FY 2023-24 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 FY 2023-24 beginning fund balances totaling $2,431.3 million include $204.1 million in General funds, $1,060.4 million in Special Revenue funds and $1,166.8 million in Enterprise funds. The estimated beginning fund balance for Special Revenue and Enterprise funds include: Transportation 2050 - $376.0 million; Other Restricted - $176.1 million; Parks and Preserves - $115.9 million; Sports Facilities - $79.9 million; Development Services - $70.1 million; Arizona Highway User Revenue - $57.2 million; Grant funds - $46.4 million; 2007 Public Safety Expansion - $44.8 million; Capital Construction - $25.8 million; Neighborhood Protection - $25.6 million; Public Safety Enhancement - $20.5 million; Community Reinvestment - $17.7 million; Aviation - $657.2 million; Wastewater - $225.2 million; Water - $142.9 million; Convention Center - $111.5 million; Solid Waste - $30.0 million and $4.4 million in various other special revenue funds. FY 2023-24 GENERAL FUND ESTIMATED BEGINNING FUND BALANCE (AKA FY 2022-23 GENERAL FUND ESTIMATED ENDING BALANCE) The FY 2023-24 beginning balance mentioned in the previous section is estimated to be $204.1 million, which is also the FY 2022-23 General Fund ending balance, as shown in the following table. This results from a $52.4 million increase in net resources, combined with a $151.6 million reduction in net expenditures estimated in FY 2022-23 compared to the original General Fund budget. General Fund Balance Analysis (In Thousands of Dollars) 2022-23 2021-22 Actuals Budget Estimate Estimate Over (Under) Budget Amount Percent Resources Beginning Balances 283,000 185,378 224,446 39,068 21.1% Revenue 1,495,712 1,587,305 1,660,431 73,126 4.6% Recoveries 3,793 1,000 4,206 3,206 +100.0% Transfers (87,808) 5,747 (57,222) (62,969) -100.0% Total Resources 1,694,697 1,779,430 1,831,861 52,431 2.9% Expenditures Operating Expenditures 1,446,093 1,731,265 1,592,871 (138,394) (8.0)% Capital 24,158 48,165 34,925 (13,240) (27.5)% Total Expenditures 1,470,251 1,779,430 1,627,796 (151,634) Ending Fund Balance 224,446 --- 204,065 204,065 (8.5)% +100.0% The increase in net resources includes a $39.1 million higher beginning balance, a $73.1 million increase in operating revenues, and a $3.2 million increase in recoveries, offset by a $63.0 million decrease in net transfers. The increase to FY 2022-23 projected General Fund revenues is primarily due to the anticipated city and state sales tax increases. The increase in recoveries is because less encumbered expenditures are expected to be liquidated in FY 2022-23. The decrease in net transfers is mainly due to additional transfers from the General Fund to Police and Fire sinking funds for necessary public safety radio replacements and breathing apparatus equipment, and to Public Safety Special Revenue funds to ensure fund sustainability. The decrease in net expenditures includes a $138.4 million decrease in operating expenditures and a $13.2 million decline in payas-you-go capital expenditures. The decrease in FY 2022-23 estimated General Fund operating expenditures from the FY 2022-23 budget is mainly due to unused contingency funds and vacancy savings. The reduction of pay-as-you-go capital expenditures compared with the FY 2022-23 budget is primarily due to a carryover of funds from FY 2022-23 to FY 2023-24. FY 2023-24 ESTIMATED REVENUES Revenues from taxes, fees, interest, grants and other sources provide resources to fund programs and services delivered by the City. Total revenues for FY 2023-24 are estimated at $5,604,941,000. This is $559,351,000 or 11.1 percent higher than the FY 2022-23 estimate of $5,045,590,000. The following table provides a comparison of the FY 2023-24 estimated revenues to FY 2022-23 estimates and FY 2021-22 actual collections. Detailed explanations by category are provided in the FY 2023-24 Revenue Estimates section of this document. FY 2023-24 Estimated Revenues Compared to FY 2022-23 Estimates (In Thousands of Dollars) 2023-24 Fund Types 2021-22 Actuals 2022-23 Estimate Estimate Amount Change Percent Change General Special Revenue Funds Enterprise Funds 1,495,712 1,662,461 1,631,569 1,660,431 1,697,505 1,687,654 1,830,903 2,018,978 1,755,060 170,472 321,473 67,406 10.3% 18.9% 4.0% Total 4,789,742 5,045,590 5,604,941 559,351 11.1% 38 Table of Contents General Fund revenues are estimated at $1,830,903,000, which is $170,472,000 or 10.3 percent more than the FY 2022-23 estimate of $1,660,431,000. The increase is primarily due to the anticipated increases in the state-shared income, sales and vehicle license taxes, and City sales taxes. Special Revenue funds are projected at $2,018,978,000, which is $321,473,000 or 18.9 percent higher than the FY 2022-23 estimate of $1,697,505,000. The estimate for Special Revenue funds includes a $39.3 million increase in Regional Transit funds, an $11.4 million increase in Transportation 2050 funds, a $5.3 million increase in Secondary Property Tax revenues, a $4.6 million increase in Highway User Revenue, a $3.4 million increase in 2007 Public Safety Expansion funds, a $3.0 million increase in Community Reinvestments revenues, a $1.5 million increase in Neighborhood Protection funds, a $1.2 million increase in Regional Wireless Cooperative revenues, a $1.1 million increase in Other Restricted revenues, and a combined increase of $0.4 million in Public Safety Enhancement funds, and Parks and Preserves funds. Furthermore, there is a $312.1 million increase in various grant funds, including Public Housing, Community Development, and Public Transit grants. The increased Special Revenue funds are offset by a $7.3 million decrease in Development Services funds, a $1.0 million decrease in Court Awards, a $0.6 million decrease in Golf Courses funds, and a combined decrease of $0.5 million in Capital Construction revenue, Sports Facilities funds, City Improvement funds, and Impact Fee Program Administration revenue. The reduction of $49.5 million in Human Services grants and $2.9 million decrease in Criminal Justice grants also offset the positive Special Revenue funds. The FY 2023-24 Enterprise funds are expected to be $1,755,060,000, which is $67,406,000 or 4.0 percent more than the FY 2022-23 estimate of $1,687,654,000. The increase includes the impact of the proposed rate increases for Water and Wastewater funds and the additional revenue from the Convention Center fund. The projected revenue increases are offset by the Aviation revenue loss resulting from the discontinuation of the COVID-19 related federal funding in FY 2022-23. FY 2023-24 TRANSFERS TO THE GENERAL FUND 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 FY 2023-24 total $93.2 million. This amount reflects $90.4 million to recoup central service costs and/or payments of in-lieu property taxes, the majority of which is 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 Council-approved policy. Approximately $2.8 million in miscellaneous transfers from other funds is also included. As a result, total transfers to the General Fund exclusive of excise tax-related items are $93.2 million. A transfer of $1,386.6 million from the Excise Tax fund represents the General Fund share of local and state-shared sales taxes, fees and state-shared income taxes. However, this amount is reflected in revenues, rather than a transfer, throughout this section. FY 2023-24 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 FY 2023-24, $81.2 million is included for the General Fund contingency, with an additional $20.0 million set aside for potential employee compensation increases to attract and retain a quality workforce. The set-aside could also be used if needed in the event of an economic downturn or an unexpected reduction in revenues to ensure the General Fund remains balanced upon City Council approval. More detail can be found 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. The contingency fund has remained 100 percent funded for over a decade. 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 FY 2023-24 ending balance of $1,284.2 million includes: Other Restricted - $137.6 million; Sports Facilities - $90.1 million; Transportation 2050 -$59.1 million; Parks and Preserves - $43.6 million; Grant Funds - $30.7 million; 2007 Police Public Safety Expansion - $23.9 million; Development Services - $23.3 million; Neighborhood Protection - $17.9 million; Community Reinvestment - $17.3 million; Public Safety Enhancement - $12.7 million; Capital Construction - $7.2 million; Golf - $4.5 million; Arizona Highway User Revenue - $2.8 million; Aviation - $485.5 million; Convention Center - $127.7 million; Wastewater - $114.4 million; Water - $72.3 million; Solid Waste - $11.4 million; and a combined $2.2 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. Special Revenue fund balances in the aggregate are expected to decrease from $1,060.4 million to $472.9 million. • Transportation 2050 fund balances are decreasing primarily due to planned pay-as-you-go capital spending for light rail extensions; bus rapid transit; new infrastructure for transit facilities; major maintenance to existing pavements and sidewalks; traffic signal improvements; construction of a bicycle and pedestrian bridge across the Rio Salado River; and the installation of citywide mid-block streetlights. • The Phoenix Parks and Preserves fund balance is declining primarily due to planned capital expenditures for preserve land acquisition, park and preserve development, and spider trails revegetation. • The Arizona Highway User Revenue fund balance is diminishing due to intended capital spending for a scope of work study of Happy Valley Road and 35th Avenue to 67th Avenue and for the annual Residential Street Overlay program. Operating expenses will also rise mostly as a result of fewer anticipated vacancies, negotiated employee compensation increases, and the implementation of the Classification and Compensation study. In addition, less anticipated expense recoveries and the 39 Table of Contents discontinuation of the one-time transfer from the General Fund to the Arizona Highway User Revenue fund in FY 2022-23 also contribute to the expected fund balance decline. • Development Services funds are reducing due to projected capital expenditures for the replacement of the KIVA permitting system, the Data Center Modernization project, and for citywide data network technology. Operating costs are also rising due to higher contingency reserves, fewer anticipated vacancies, negotiated employee compensation increases, and the implementation of the Class and Compensation study. Other factors include additional costs for contractual plan review and inspection services and increased facility maintenance costs, increases in work-order charges, office furniture, and computer components. Revenue collections are also declining due to an estimated revenue decrease in building permit fees, building plan review fees, interest earnings and other miscellaneous fees. • Other Restricted fund balances are declining due to increases in public safety pension, funding to address substance abuse and the impacts of the opioid crisis, support for Patrol Divisions officers to support a variety of department efforts, increased contributions to the Community Facilities District (CFD) trust; additional appropriation for affordable housing projects; added costs for Impact Fee studies; support, equipment replacement, and maintenance of the Computer-Aided Dispatch (CAD) system; funding for the new Stormwater Post Construction program; costs for services in the Enhanced Municipal Service District; and for more Strategic Economic Development Fund projects. Increases in planned capital spending include funding for affordable housing projects; improvements to citywide fuel infrastructure; software and equipment for the CAD system; the enhancement of Phoenix Biomedical Campus; and for replacements of HVAC ventilation diffusers at Public Transit headquarters. • The Public Safety Specialty funds, including Neighborhood Protection, 2007 Public Safety Expansion and Public Safety Enhancement, are decreasing primarily as a result of increased personal service expenses due to a significant growth in Police overtime costs compared to prior years and also due to a rise in pension costs, negotiated employee compensation increases, and the implementation of the Class and Compensation study. • Capital Construction fund balances are decreasing due to planned capital expenditures for flood hazard mitigation and street improvements. • Grant fund balances are declining mainly due to anticipated pay-as-you-go capital expenditures originally planned for FY 2022-23 that are now budgeted for FY 2023-24. • A few Special Revenue fund balances are expected to increase primarily due to decreases in total expenditures or increases in revenue. In FY 2023-24, the Enterprise funds ending balances in the aggregate are programmed to decline from $1,166.8 million at the beginning of FY 2023-24 to $811.3 million at year end. • The Aviation balance is declining due to capital spending on increased project contingency funds, infrastructure improvements, land acquisitions, improved technology, LED lighting upgrades, and for the Data Center Modernization project at Phoenix Sky Harbor Airport. • Wastewater funds are diminishing due to planned capital projects for infrastructure improvements to water treatment plants, sewers, lift stations, and technology. Operating expenditures are also expected to grow due to higher contingency reserves; a rise in inflationary and usage costs for chemicals, odor and pest control and other needed services, computer software, materials to maintain infrastructure, electricity, consultants, permit fees, water pumps, and sludge hauling; increases in work-order charges; and increases to personal service costs due to fewer anticipated vacancies, negotiated employee compensation increases, and for the implementation of the Class and Compensation study; and lastly due to vehicle replacements as a result of an aging fleet. • Water funds are decreasing due to additional operating expenditures for water replacement and water conservation programs as part of funds received from the Bureau of Reclamation; higher contingency reserves; a rise in inflationary and usage costs for street pavement contracts, chemicals, computer software and equipment, raw water purchases, electricity, services to maintain infrastructure and other needed services, sludge hauling, and for credit card fees and banking services; increases to personal service costs due to fewer anticipated vacancies, negotiated employee compensation increases, and for the implementation of the Class and Compensation study; and for vehicle replacements as a result of an aging fleet. • Solid Waste funds are decreasing due to negotiated increases in employee compensation and the implementation of the Class and Compensation study; higher contingency reserves and capital replacements; and greater costs for recycling services. Pay-as-you-go capital improvements are forecasted to rise for landfill and transfer station repairs and for upgraded recycling equipment at North Gateway Material Recovery Facility (MRF) station. In addition, the expected decline in the ending fund balance is also caused by a lower beginning fund balance and less anticipated revenue from interest earnings due to the decrease in the beginning fund balance. • The Convention Center fund balance is increasing primarily due to a higher beginning balance, and anticipated revenue growth as the recovery from the pandemic continues. The surplus is offset by increased operating expenditures mostly due to event growth as activities return to pre-pandemic levels; higher contingency reserves; personal service costs for negotiated increases in employee compensation and the implementation of the Class and Compensation study; a rise in inflationary and usage costs such as electricity, air-conditioning chiller services and other needed services; and the result of the conclusion of supplementing costs from ARPA funds. Negative Fund Balances The negative fund balance in Regional Transit is due to the negative interest earnings that have accumulated over the past few years, which is a result of the negative fund balance caused by the timing of reimbursements for project costs from the regional transportation plan. In response to the question of how to accommodate the Valley’s skyrocketing growth, voters cast their ballots in November 2004 in support of Proposition 400, a half-cent sales tax that helps fund projects in the regional transportation plan. This performance-based regional transportation plan provides a broad vision for the regional transportation system for the next two decades, addressing freeways and other highways, streets, transit, airports, bicycle and pedestrian facilities, freight, demand management, system management including intelligent transportation systems (ITS), and safety. The City receives reimbursements from the Regional Public Transportation Authority (RPTA) for the projects in the plan. 40 Table of Contents The Highest S&P Credit Rating of the 5 Largest U.S. Cities 41 Table of Contents CITY OF PHOENIX FINANCIAL ORGANIZATIONAL CHART 2023-24 Operating Budget $6,750,037,000 Operating Expenditures $4,421,605,000 Special Revenue Funds $1,409,833,000 General Funds $1,906,737,000 Enterprise Funds $1,105,036,000 General Fund $1,724,356,000 Arizona Highway User Revenue $94,493,000 Capital Construction $140,000 Community Reinvestment $2,292,000 Aviation $363,769,000 Library $49,528,000 Court Awards $4,671,000 Development Services $95,446,000 Golf $9,288,000 Convention Center $64,859,000 Parks $128,060,000 Neighborhood Protection $60,547,000 Parks and Preserves $7,923,000 Public Safety Enhancement $37,111,000 Solid Waste $174,822,000 Cable Television $4,794,000 Public Safety Expansion $125,877,000 Regional Transit $61,925,000 Regional Wireless Cooperative $6,881,000 Wastewater $150,239,000 Sports Facilities $5,305,000 Transportation 2050 $254,370,000 Other Restricted $101,883,000 Water $351,346,000 Grants $541,680,000 42 Table of Contents CITY OF PHOENIX FINANCIAL ORGANIZATIONAL CHART Pay As You Go Capital $1,749,222,000 Debt Service $579,210,000 City Improvement $78,972,000 Secondary Property Tax $134,892,000 General Fund $114,217,000 Library $2,115,000 Parks $5,600,000 Aviation $104,352,000 Convention Center $17,481,000 Arizona Highway User Revenue $114,864,000 Capital Construction $24,792,000 Community Reinvestment $7,924,000 Solid Waste $9,581,000 Wastewater $86,395,000 Development Services $29,165,000 Golf $1,440,000 Parks and Preserves $120,293,000 Regional Transit $17,839,000 Sports Facilities $2,127,000 Transportation 2050 $454,661,000 Other Restricted $17,059,000 Grants $255,622,000 Aviation $237,893,000 Convention Center $10,617,000 Solid Waste $17,631,000 Wastewater $145,256,000 Water $147,538,000 Water $170,106,000 43 Table of Contents 44 Table of Contents SERVICES TO THE COMMUNITY Phoenix is the core of Maricopa County and the state’s population and economic center. With its attractive climate and recreational opportunities, the city has experienced sustained growth. The local economy continues to make progress and city revenue collections reflect strong growth. The 2023-24 General Fund includes a projected surplus of $134 million of which $15 million is allocated for new or expanded services. The additions address critical community priorities set by the City Council and are grouped into the following categories: continuity of services for vulnerable populations; enhanced public safety responsiveness and criminal justice support; and healthy neighborhoods and community enrichment. A summary of the major programs receiving funding follows below. The continuity of services for vulnerable populations category totals $7.6 million and is intended to ensure vulnerable populations can continue receiving vital services at risk due to expiring or reduced grant funding. This category includes: funding to compensate for the loss of funding from the Arizona Department of Economic Security for the Low Income Home Energy Assistance Program; funding to offset expiring Victims of Crime Act grant funding; funding to expand the Behavioral Health Engagement Teams contract; funding to expand the PHX C.A.R.E.S. Outreach Teams contract; funding needed to continue emergency services for shelter operations throughout the city; and funding for the Phoenix Day Early Childhood Education Center. The enhanced public safety responsiveness and criminal justice support category totals $3.8 million and is intended to help improve emergency response times across the city and enhance public safety service delivery. This category includes: funding to provide dedicated staffing for the new Fire Station 74, located at 19th Avenue and Chandler Boulevard; funding for one new Fire Rescue unit for citywide response needs; funding for a new position to support the processing of payroll and leave transactions in the Fire Department; funding for the Law Department to convert expiring grant funded positions that assist victims of crime with navigating the judicial system. The healthy neighborhoods and community enrichment category totals $3.6 million and is intended to enhance community services. This category includes: funding to expand the Gated Alley Program for a total of 77 gated alley segments each fiscal year; funding to restore two grant-funded Neighborhood Inspector positions; funding for the Community Arts Grants Program to enhance efforts towards greater equity of funds to arts organizations; funding to create a third-shift for Park Rangers which will provide coverage 24 hours per day; funding to create an additional forestry crew to support the Tree and Shade Master Plan; funding for a Volunteer Coordinator position to help manage the citywide parks volunteer program; funding for improvements at up to three existing facilities for new cricket fields and for general park maintenance; funding to provide ongoing security support to library patrons and ensure continuity of security coverage during all library hours; and funding for a street sweeper dedicated to cleaning bike lanes and to clean up washes and medians. Significant services are provided through non-General Fund resources. These include Special Revenue Funds like voter-approved public safety and transit taxes, and Enterprise Funds like Water Services and Solid Waste. The 2023-24 non-General Funds include $1.5 million in new funding for various services. Some of the major programs include: funding to reduce wait times for airport security badging services and to increase the Airport Police Bureau fleet; funding to support the SHAPE PHX technology replacement project; funding to reduce turnaround times for electronic plan reviews; funding to reduce turnaround times for human resources transactions and processing; funding for the Regional Wireless Cooperative to support administrative and accounting responsibility of the VHF (conventional) radio network; and funding to clean-up additional bus stops. The chart that follows indicates how major services provided to Phoenix residents have been adjusted in response to local economic and financial conditions. 45 Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 The 2022-23 budget includes several service enhancements: The 2023-24 budget includes several service enhancements: Additional Civilian Investigator positions were added to continue the Police Department’s civilianization efforts, providing staffing flexibility and enabling optimal deployment of sworn personnel. Additional Civilian Investigators to support the department's ongoing civilianization efforts, which include performing select investigative functions and enhancing investigative capacity, providing staffing flexibility, and enabling optimal deployment of sworn personnel. PUBLIC SAFETY POLICE Personnel Resources: In 2012-13, the Police Department had 3,272 sworn and 1,180.4 civilian employees. Additional staff to better support the Bodyworn Camera Unit, ensuring camera footage is made available by court case deadlines and reducing public records request backlogs. Additional technology-related positions were added to support critical IT infrastructure, help migrate custom-built legacy applications to web-based platforms, address security needs, and provide technical support. Additions in the Lab Services Bureau to increase evidence processing capabilities and provide more comprehensive oversight and response to crime scenes. Additional staff and resources to enable the implementation of the 19th Avenue Corridor Community Safety and Crime Prevention Plan, to work to improve safety and security along the 19th Avenue Corridor. Significant hiring efforts continue in 2022-23, with the planned hiring of 195 police officers. These efforts support the department’s goal of reaching 3,125 filled sworn positions, or approximately 1.89 officers for every 1,000 residents. As of March 2023, there were 2,654 filled sworn positions. Additional staff in the Investigations and Patrol Divisions and the Compliance and Oversight Bureau, providing key analytics and research work to support a variety of department efforts, including work with the Office of Accountability and Transparency and the Professional Standards Bureau addressing community concerns. Additional training staff in the Training Bureau to enhance training capacity, benefitting both new recruits and existing sworn staff. Additional Crime Scene Specialists in the Laboratory Services Bureau to improve the investigative process and processing of crime scenes, helping to keep pace with national standards and best practices. Additional Police Assistants in the Patrol Division and Logistical Resources Bureau to ensure the integrity of chain of custody and preservation of property. The sworn hiring plan continues in 202324, with the planned hiring of 225 police officers. Overall, the 2023-24 budget includes 3,125.0 sworn positions, or approximately 1.89 officers for every 1,000 residents, as well as 1,316.9 civilian employees. Response Time Average: Response time for 201213 Priority 1 emergency calls was not available due to issues with the Police Computer-Aided Dispatch (CAD) system. Due to sworn vacancies in the Police Department, overtime usage has increased to maintain minimum staffing levels within patrol. This has negatively impacted Priority 1 emergency call response times, which are currently 7 minutes and 30 seconds. The department has strived to maintain the percentage of 911 calls answered within 15 seconds in the 90th percentile, per National Emergency Number Association standards; however, hiring and staffing challenges have reduced the percentage to 82% for 2022-23. 46 Due to anticipated continuing challenges to hire and retain sworn personnel, the 2023-24 budget provides for an estimated 7 minute and 30 second average response time for Priority 1 calls. It also plans for 81% of 9-1-1 calls to be answered within 15 seconds. Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 PUBLIC SAFETY FIRE Response Time Average: In 2012-13, the Fire Department maintained an average response time of 4 minutes 37 seconds for all fire and medical emergency calls. Since 2012-13, response times have increased to 5 minutes 5 seconds for all fire and medical emergency calls. The increase in response times is directly related to the significant increase in the demand for service. The overall incident activity level increased 46 percent from 2012-13 to 2022-23. The Fire Department added 15 sworn positions for the permanent staffing of Station 72 located at 33027 N. Cave Creek Rd. This permanent staffing will provide the necessary resources to address coverage deficiencies at other stations and improve overall service delivery. The Fire Department added four Firefighter positions to cover absences at various fire stations citywide which will help alleviate staffing shortages and reduce the need to utilize overtime. The Fire Department added 24 sworn positions for the permanent staffing of Station 62 to be located at 99 Avenue and Lower Buckeye Road. Emergency Transportation: In 2012-13, the City had a total of 22 full-time and 11 part-time ambulances in service. The 2012-13 and 2013-14 budget’s each included adding staff for an additional One and One Ambulance (seven sworn positions) to meet state -mandated response times. This brought the total to 23 full-time and 11 parttime ambulances. The 2016-17 budget included a total of 23 full-time and 14 part-time ambulances in service. The 2017-18 budget included the addition of one dedicated part-time ambulance for emergency response at Sky Harbor Airport. This unit will assure compliance with timely ambulance transportation response. This addition gave the department a total of 23 full-time and 15 part-time ambulances in service. In 2018-19 an additional full-time ambulance was placed into service bringing the total to 24 full-time ambulances and 15 part-time ambulances. The 2019-20 budget includes funding for two additional full-time ambulances, bringing the total to 26 full-time ambulances and 15 part-time ambulances. The first ambulance is for the new Fire Station 55 located at I-17 and Jomax Road. The second ambulance is for Fire Station 58 to improve ambulance response time in the southwest region of the City of Phoenix and will be staffed by approved sworn positions previously unbudgeted. The 2020-21 and 2021-22 budgets have no service changes. The 2022-23 budget included the funding for two additional full-time ambulances. The first ambulance will be for new Fire Station 62 to be located at 99 Avenue and Lower Buckeye Road. The second ambulance will be dedicated to Sky Harbor Airport, replacing the current part-time rescue. 47 The 2023-24 budget recommends retaining current emergency response staffing levels to achieve less than five-minute average response time for all fire and medical emergency calls. The Fire Department added 24 sworn positions for the permanent staffing of Station 74, to be located at 19 Avenue and Chandler Blvd. This permanent staffing will have a positive impact on the overall current resource challenges helping to address coverage deficiencies at other stations and help improve overall service delivery. The 2023-24 budget includes funding for two new fulltime ambulances. The first ambulance will be dedicated to the new Fire Station 74 to be located at 19th Avenue and Chandler Blvd. The second ambulance will be placed into service to provide the necessary resources to cover deficiencies and improve overall service delivery for the City. This will bring the total to 31 full-time ambulances and 15 part-time ambulances. Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 Annual 2018-19 local bus revenue miles are estimated at 20,372,200, Express/RAPID revenue miles are estimated at 850,500 and Dial-a-Ride services hours are estimated at 324,864. Annual 2023-24 local bus revenue miles are estimated at 19,266,700. Express / RAPID revenue miles are estimated at 685,600, and Dial-a-Ride services hours are estimated at 328,141. TRANSPORTATION PUBLIC TRANSIT Service Miles/Hours: In 2012-13, an estimated 15,832,775 bus miles and 264,540 hours of Dial-a-Ride services were provided on weekdays and weekends in the City of Phoenix. In October 2018, Public Transit Department and all jurisdictions under the Valley Metro system restored weekday service levels on Martin Luther King Jr. Day, Presidents’ Day, Veterans’ Day, Day after Thanksgiving, and Christmas Eve. Public Transit Department also made a minor routing change on Route 8 in Downtown Phoenix and Route 106 in Metrocenter Mall. Frequency improvements were completed for Route 41 on Indian School Road. In April 2019, Public Transit Department made several schedule modifications to the SR-51, I-17, I-10 East and I-10 West RAPID by adding or shifting several trips to better serve riders. In addition, a minor routing modification on the South Mountain East RAPID was made to improve route reliability. On April 5, 2020, in response to the ridership decline on RAPID/Express routes due to the COVID-19 pandemic, Public Transit reduced RAPID and Express trips into Downtown Phoenix. In April 2020, Public Transit Department’s service change items include minor route modification on Route 7, Route 60, and the SMART Circulator. On May 4, 2020, in response to ridership decline and operator shortage on local routes, Phoenix-operated fixed route service’s service hours were reduced to weekdays 5am-11pm and weekends 6am-11pm. On May 18, 2020, a reduction in service hours for local routes is applied to RPTA-operated routes in Phoenix. Annual 2019-20 local bus revenue miles with COVID-19 related reduction are estimated at 20,303,300. Express/RAPID revenue miles with COVID-19 related reduction are estimated at 827,400 and Dial-aRide services hours are estimated at 326,966. Annual 2020-21 local bus revenue miles were originally estimated at 20,205,800 but reduced to 18,761,400 due to the COVID-19 pandemic. Express/RAPID revenue miles were originally estimated at 944,300 but reduced to 491,700 due to the pandemic. Dial-a-Ride services hours are estimated at 325,390 and were not reduced due to the pandemic. Annual 2021-22 local bus revenue miles were originally estimated at 20,210,200 but reduced to 18,636,200 due to the pandemic. Dial-a-Ride service hours were estimated at 326,000 Express/RAPID revenue miles were estimated at 948,000 but reduced to 682,600 due to the pandemic. Annual 2022-23 local bus revenue miles were originally estimated at 20,223,500 but reduced to 19,266,700 reflecting actual service scheduled post-pandemic. Dial-a-Ride service hours were estimated at 326,500. In October 2022, Public Transit Department extended Route 43 to Lower Buckeye Road as well as implementing peak hour service on Route 156. In April 2023, Public Transit Department extended Route 28 to 99th Avenue and Route 61 to 51st Avenue. Express/RAPID revenue miles were estimated at 947,700 in 2022-23 but reduced to 685,600 reflecting actual service scheduled post-pandemic. 48 Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 TRANSPORTATION PUBLIC TRANSIT Average Weekday Bus Ridership: In the 2015-16 budget, average weekday ridership is estimated at 125,097. In 2012-13, the average weekday bus ridership was estimated to be 136,857. In the 2016-17 budget, average weekday ridership is estimated at 125,097. In the 2023-24 budget, average weekday ridership is estimated at 53,000. In the 2017-18 budget, average weekday ridership is estimated at 117,000. In the 2018-19 budget, average weekday ridership is estimated at 115,000. In the 2019-20 budget, average weekday ridership is estimated at 89,250, decreasing from the prior year due to the COVID-19 pandemic. In the 2020-21 budget, average weekday ridership was originally estimated at 86,250 but reduced to 46,000 due to the pandemic. In the 2021-22 budget, average weekday ridership was originally estimated at 86,250 but reduced to 53,000 due to the pandemic. In the 2022-23 budget, average weekday ridership was originally estimated at 53,000. The ridership estimate has been revised to 52,000. STREET TRANSPORTATION Major and Collector Street Sweeping and Maintenance: In 2012-13, street sweeping and maintenance was scheduled to occur every 14 days. Residential Street Sweeping: In 2012-13, the city provided street sweeping service four times a year. There were no changes in service from 201314 through 2022-23. Frequency of service remains at every two weeks. The 2023-24 budget includes no changes in service for major and collector sweeping and maintenance; however, it does add funding for a dedicated street sweeper for bike lanes. There were no changes from 2013-14 through 2022-23. Frequency of service remains at four times per year. The 2023-24 budget includes no changes in service for residential street sweeping. 49 Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 TRANSPORTATION STREET TRANSPORTATION Sealcoat: The 2012-13 budget provided for 45 miles of streets to be sealcoated. It also included 20 miles of the FAST program. The 2013-14 budget provided no changes to service levels. The 2023-24 budget includes 109 miles of streets to be sealcoated. The 2014-15 budget provided no changes to service levels. However, the two September 2014 storms diverted attention from sealcoat to repairs. The number of miles sealcoated may vary year over year based on the streets selected and the distribution of wide versus narrow streets treated. It may also vary based on the method of sealcoat used. The 2015-16 budget included 68 miles of streets to be sealcoated. It also included 10 miles of the FAST program and 26 miles of preservative arterial street crack sealing programs. Transportation 2050 funds from passage of Proposition 104, coupled with the availability of improved technology, allowed for revamping of the sealcoat program to increase the level of service. The 2016-17 budget included 297 miles of streets to be sealcoated. New resurfacing treatments were added that included Tire Rubber Modified Surface Seal (TRMSS) and Polymer Modified Masterseal (PMM). The addition of these treatments, and additional Arizona Highway User Revenue (AHUR) funding, allowed the number of miles treated to increase to a total of 360 miles. The 2017-18 budget included 212 miles of streets to be sealcoated. The 2018-19 budget included 200 miles of streets to be sealcoated. The 2019-20 budget included 110 miles of streets to be sealcoated. The 2020-21 budget included 280 miles of streets to be sealcoated. The 2021-22 budget included 39 miles of streets to be sealcoated. The bond funded portion of the Accelerated Pavement Maintenance Program ended in 2020-21, reducing the number of miles per year. The 2022-23 budget includes 200 miles of streets to be sealcoated. 50 Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 TRANSPORTATION STREET TRANSPORTATION Asphalt Overlay: In 2012-13, the budget provided for 106 miles of overlay The 2013-14 budget provided for 100 miles of overlay. The 2023-24 budget provides for 74 miles of overlay. The 2014-15 budget provided no changes to service levels. However, the two September 2014 storms diverted attention from overlay to repairs. The number of miles resurfaced can vary year over year based on the streets selected and the distribution of wide versus narrow streets being treated. The 2015-16 budget provided for 100 miles of overlay. The 2016-17 budget provided for 90 miles of overlay. Additional AHUR funding was added to increase the total to 121 miles. The 2017-18 budget provided for 76 miles of overlay. The 2018-19 budget provided for 187 miles of overlay. This included overlays as part of the Accelerated Pavement Maintenance Program, which started in 2018-19. The 2019-20 budget provided for 261 miles of overlay. The 2020-21 budget provided for 90 miles of overlay. The 2021-22 budget provided for 29 miles of overlay. The bond funded portion of the Accelerated Pavement Maintenance Program ended in 2020-21, reducing the number of miles per year. The 2022-23 budget provided for 57 miles of overlay. 51 Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 COMMUNITY DEVELOPMENT HOUSING Scattered Sites Housing Program: In 2012-13, the Housing Department had 418 units. Affordable Housing Program: In 2012-13, this program consisted of 3,115 units for families and individuals. Federal Assisted Housing Program: In 2012-13, the total inventory of assisted housing units was 1,972 Housing Payment Assistance Program: In the 2012-13 budget, the rental assistance program provided 6,296 units of vouchers for low-income residents in the private housing market. This homeownership program allows eligible tenants the opportunity to purchase a home. At the end of 2022-23, the total projected inventory of 175 units reflects a reduction of 6 units sold in 2021-22 and the projected sale of 5 units in 2022-23 through the Section 18 and Section 32 programs. In the 2023-24 budget, the Scattered Sites program is expected to sell 24 units, reducing its inventory to 151 units. At the end of 2022-23, the Affordable Housing Program is anticipated to consist of 2,681 units for families and individuals. In the 2023-24 budget, the Affordable Housing program is expected to consist of 2,711 units for families and individuals. At the end of 2022-23, the Federal Assisted Housing program consists of 1,173 units for families and individuals, a decrease due to the conversion of Public Housing units to Rental Assistance Demonstration units and the redevelopment of the Edison-Eastlake community into mixed income units through the Choice Neighborhoods Revitalization Grant. In the 2023-24 budget, the total number of units is expected to decrease to 1,097 due to the continued redevelopment of the EdisonEastlake community into mixed income units through the Choice Neighborhoods Revitalization Grant. At the end of 2022-23, the rental assistance program will provide 7,355 vouchers for low-income residents in the private housing market and 390 emergency housing vouchers as part of a new special purpose voucher program. In the 2023-24 budget, the rental assistance program is expected to provide 7,430 vouchers for low income residents in the private housing market and 390 emergency housing vouchers. 52 Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 COMMUNITY DEVELOPMENT NEIGHBORHOOD SERVICES Neighborhood Preservation Case Cycle Time (Days): In 2012-13, the average case cycle time was 50 days. In 2011-12, additional performance standards and quality control measures were initiated, along with ongoing process improvements and some division reorganization, which reduced average case cycle time to 45 days by 2013-14 and to 33 days in 2014-15. The average case cycle time in 202324 is anticipated to increase slightly to 38 days due to the current number of vacant Neighborhood Preservation Inspector I positions. In 2020-21, the average case cycle time increased to 42 days due to COVID-19 safety protocols and regulations. It decreased to 38 days in 2021-22 as processes normalized during the pandemic. The average case cycle time in 2022-23 is anticipated to improve to 37 days as processes have further normalized since the pandemic. ECONOMIC DEVELOPMENT Employment Growth Rate Compared to Other Cities: In 2012, Phoenix’s employment growth rate was as follows: Ft. Worth-Arlington – 4.2% Austin – 4.0% Dallas – 3.5% San Jose – 3.2% San Diego – 2.5% PHOENIX – 2.4% Los Angeles/Long Beach – 2.3% San Antonio – 2.0% Kansas City – .5% The Phoenix Metro area has rebounded from peak COVID-19 pandemic unemployment levels. The Phoenix Metro average unemployment rate in 2022 was 3.4%. This is a 1.2% decrease from 2021 and a 9.2% decrease from peak pandemic unemployment, which occurred in April 2020 at 12.6%. Preliminary data from the Bureau of Labor Statistics (BLS) shows an unemployment rate of 2.9% for March 2023. Based on data from the BLS, Phoenix Metro’s employment growth rate increased to 2.9% in 2022 from 2021. Between 2020 and 2022, the Phoenix Metro area had a 7.9% increase overall. The Phoenix Metro employment growth rate between 2021 and 2022 is in line with growth rates in benchmark metro areas: Las Vegas – 5.2% Austin – 3.9% San Diego – 3.8% Dallas – 3.3% Salt Lake City – 3.3% San Francisco – 3.0% PHOENIX – 2.9% Denver – 2.1% Albuquerque – 1.7% Los Angeles – 1.4% 53 Based on data from the Arizona Commerce Authority Office of Economic Opportunity, the City of Phoenix employment level is expected to increase by 28,531 from 2022 to 2024. Despite economic conditions related to inflation and the decline in spending expected through 2023, the City’s employment is expected to grow by 2.8% between 2022 and 2024. Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 COMMUNITY ENRICHMENT HUMAN SERVICES Head Start Program: In 2012-13, the program served 3,390 children. The program served 3,667 children during 2015-16, of which 845 were included in the Early Head Start Program. The program served 4,321 children during 2016-17, of which 831 were included in the Early Head Start Program. The program served 4,377 children during 2017-18, of which 868 were included in the Early Head Start Program. The program served 4,289 children during 2018-19, of which 765 were included in Early Head Start Program. The program served 4,220 children in 2019-20, of which 745 were included in the Early Head Start Program. The program served 2,632 children in 2020-21, of which 575 were included in the Early Head Start Program. Enrollment was lower than normal due to the COVID-19 pandemic. The program served 3,156 children in 2021-22, of which 575 were included in the Early Head Start Program. In 2022-23 the Head Start program served more than 2,582 children. Of those, 1,920 were full-day Head Start students, and the rest attended part-day programming. The Early Head Start Program will serve more than 473 children. In addition, the Early Childhood Education Expansion (ECEE) will serve 230 children. The ECEE program is funded through ARPA and will end in June 2024. The decrease in projected numbers for 2022-23 is influenced by staffing shortages and ongoing efforts to address declines in enrollment that occurred during the pandemic. 54 In 2023-24, the Head Start program is budgeted to serve up to 3,451 children, representing fully funded enrollment. Of those, 1,920 will be full-day Head Start students, while the rest will continue to attend part-day programming. The Early Head Start Program will serve up to 488 children, representing fully funded enrollment. The Early Childhood Education Expansion is funded to serve 300 children through June 2024. Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 COMMUNITY ENRICHMENT HUMAN SERVICES Senior Nutrition Program: In 2012-13, the program served 655,000 congregate and home-delivered meals. In 2015-16, the program served 538,133 meals. In 2016-17, the program served 494,230 meals. In 2017-18, the program served 448,799 meals. The meals served decreased due to demographics shifting towards attendees joining centers for activities and classes, while not partaking in meal services. In 2018-19, the program served 444,385 meals. The meals served decreased slightly due to the continued demographic shifting towards attendees joining centers for activities and classes, while not partaking in meal services. In 2023-24, the program expects to serve 450,000 meals. The projected increase from 2022-23 is based on more senior center members returning to the centers as the COVID-19 pandemic subsides. In 2019-20, the program served 499,273 meals. The meals served included an additional 44,818 meals funded by C.A.R.E.S. Act COVID-19 funding. In 2020-21 the program served 706,920 meals. This includes 197,220 meals funded by Area Agency on Aging COVID-19 pandemic relief funding. In 2021-22, the program served 625,043 meals. This includes 165,002 meals funded by Area Agency on Aging COVID-19 pandemic relief funding. In 2022-23, the program is projected to serve approximately 400,000 meals. Home Delivered Meals decreased due to Area Agency on Aging COVID-19 pandemic relief funding expiring June 30, 2022. Congregate meal participation was low due to center closures and reduced requests for meal delivery. Although the centers re-opened in June 2022, on-site meals did not restart until August 2022, and some returning members were not yet comfortable participating in the meal program. PARKS AND RECREATION Swimming Pools: In 2012-13, 28 out of 29 pools were open. Cortez Pool was closed indefinitely due to the need for significant structural repairs. In 2014-15, the number of open pools increased to 29 with the re-opening of Cortez Pool. Between 2015-16 and 2018-19, no changes were included in the budget. In 2019-20, all pools were closed during the summer of 2020 in response to the COVID-19 pandemic. In 2020-21, following the previous summer’s closures, City Council directed 12 of the 29 pools to reopen in May 2021. In 2021-22, 14 pools opened in May 2022 with the remaining 14 pools closed due to staffing shortages. Eastlake Pool was closed for structural repair. In 2022-23, a total of 18 pools were open. Twelve pools were open all season, with 6 additional pools open in select months. 55 In 2023-24, it is anticipated 29 pools will open beginning May 2024 if staffing shortages are able to be addressed and Eastlake Pool structural repairs are completed. Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 COMMUNITY ENRICHMENT PARKS AND RECREATION Swimming Pool Season: In 2012-13, the budget allowed for open swim hours at nine pools from 1 to 7 p.m. each day in August through the Labor Day Holiday. No changes were included in the budget for 2013-14 through 201516. In 2016-17, 29 pools were open on Memorial Day weekend through the last weekend in July; due to additional “Kool Kids” funding from Cigna, 11 pools remained open in August through the Labor Day Holiday. In 2023-24, there are no anticipated changes. No changes were included in the budget for 2017-18 and 2018-19. In 2019-20 all pools were closed during the summer months of 2020 in response to the COVID-19 pandemic. In 2020-21, recreational swim and dive teams, water basketball programs, and Cigna Summer programs continued to be temporarily suspended for the 2020-21 season due to the COVID-19 pandemic. In 2021-22, the Cigna-sponsored Lifeguard Academy and Jr. Lifeguard programs became operational. The recreational swim and dive teams and water basketball programs continued to be temporarily suspended due to the lifeguard shortage. In the summer of 2022, 8 pools remained open on weekends from August through Labor Day, in addition to their normal summer schedule. In 2022-23, the recreational swim and dive teams, water basketball programs, and Cigna Summer programs are scheduled to be operational, and 8 pools will remain open on weekends from August through Labor Day, in addition to their normal summer schedule. School Recreation Program During School Year: The 2012-13 budget restored nine Phoenix Afterschool Program (PAC) sites which brought the total number of sites to 39. The 2013-14 budget increased PAC sites to 44. In 2014-15, the number of PAC sites started with 44. Two sites were cancelled mid-year due to low enrollment. The 2015-16 budget had 42 PAC sites. In 2016-17, eight smaller sites were combined into four “super” sites, which reduced the number of sites to 38. No changes were included in the 2017-18 budget. The 2018-19 budget decreased PAC sites to 37 due to the Kyrene School District discontinuing services. In 2019-20, PAC sites decreased from 37 to 36 due to Washington School District discontinuing services at one site. All PAC sites ceased operations in March 2020 in response to the COVID-19 pandemic. In 2021-22, all PAC sites remained closed as of May 2021 in response to the COVID-19 pandemic. By August 2021, 33 of 34 PAC sites were reopened and were operational for the duration of the school year. Sites opened at a maximum capacity of 40 students per school due to limited staffing. In 2022-23, 33 of 34 PAC sites were open as of August 2022 and operated for the duration of the school year. Sites opened at a maximum capacity of 40 students per school due to limited staffing. 56 In 2023-24, PAC is anticipating continued operation of 33 of the 34 sites. Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 COMMUNITY ENRICHMENT LIBRARY Central Library: The 2012-13 budget included 64 hours of operation per week. In July 2012, Burton Barr Central Library expanded overall hours from 58 to 64 hours per week, opening at 9 a.m. instead of 11 a.m. on Tuesdays, Wednesdays and Thursdays. The 2023-24 budget includes several service enhancements: In 2013-14, the number of electronic materials was increased by over 13,000 items. Public meeting room rental and study rooms will fully reopen in Fall of 2023. 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. hive@central is a collaborative space designed to bring together inventors, problem-solvers, entrepreneurs, and small businesses. In January 2015, Library partnered with St. Mary’s Food Bank to provide Kids Café, a meal service program designed to provide free, healthy meals and educational programs. In January 2015, College Depot launched the ReEngage Phoenix program to provide adults 21 and older and youth who have not completed high school with the opportunity to earn an accredited high school diploma and a career certificate through Career Online High School. Beginning March 2015, materials that do not have holds placed are automatically renewed, enhancing the customer experience. The 2016-17 budget restored $100,000 for electronic materials, representing a 22 percent increase. These materials provided an alternative method of delivering services following reductions to branch hours in 2009-10 and 2010-11. In January 2017, Library entered into a contract with Southwest Autism Research & Resource Center (SARRC) to operate a café at Burton Barr Library. Burton Barr Central Library was closed the summer of 2017 due to storm damage and reopened in June 2018. The renovation of Burton Barr Central Library expanded the College Depot, MACH1, and children’s areas within the library. The College Depot expansion enabled an increase in the number and size of workshops. Specialty programming was added to include more summer camps, additional break-out sessions with expertise, additional GED sessions, “Youth Work Readiness” sessions, and additional capacity for in-service and workshop sessions. The MACH1 space added two designated computer labs. The space doubles the capacity for computer-related classes and programs. The designated classroom space allows break-out sessions which provides different age groups and levels of expertise access to resources. A designated space for the sewing machine program was added, enhancing focused learning. A 3D printer room was added which allows for an increase in the number of 3D printers. Designated computers are available for customers to book time. The open making space is upgraded to include state-of-the-art flooring, tables, and outlets to allow the addition of another full summer camp series. The Children’s Space expanded from 5,000 square feet to 14,000 square feet. Design was updated to include a larger 57 StartUp PHX (formerly hive@ central) is relaunching the Business Roadmap in English and Spanish. Exterior book lockers with access to library materials will be available 24/7. Expansions of both the StartUpPhx and PHX Works spaces will be completed. Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 COMMUNITY ENRICHMENT LIBRARY Central Library Continued: capacity Storytime area. Expansion also included a tripling of the children’s materials collection with an increase to the “Great Children’s Book” specialty collection. A designated children’s makers’ programming space, “MACH.5,” for ages birth to 12 was added. Specially designed early literacy interactive furniture and “Little Sprouts” (children’s seed library) were incorporated. No service changes were included in the 2019-20 budget, with hours of operation at 64 hours per week. Two full-time Municipal Security Guard positions were added to provide continuous security coverage for patrons and staff at the Burton Barr Central Library during all hours of operation. In 2019-20, an automated materials handling (AMH) system was installed at Burton Barr Central Library to generate efficiencies and enable customers to return materials 24/7 and get immediate acknowledgement of the returned item(s). In partnership with First Things First, the Human Services Department and the Youth and Education Office opened the Family Resource Center to provide services to families with children birth to age five. In November 2019, Library implemented a fines free policy. All library accounts with overdue fines were waived, and the practice of applying overdue fines for materials returned late was discontinued. In March 2020, all library locations temporarily suspended in-person services due to the COVID-19 pandemic. The loan period for all materials checked out, as well as library card account renewals, was extended. Literacy and STEM programs were offered virtually; customers were provided with online, phone, and one-on-one appointment assistance; and access was extended for eLibrary platforms. Curbside services to allow customers to pick up library materials began in May 2020. PHX C.A.R.E.S social workers were available to assist individuals experiencing homelessness three days a week. College Depot added three Caseworker II positions to expand the Graduating Ready Independent and Tenacious (GRIT) program and manage hotspot lending. The Friends store at Burton Barr reopened on May 9, 2022. Beginning in June 2022, 425 laptops and 200 hotspots were made available for long term lending for students. The 2021-22 budget added funding to continue mobile and selfserve computing services initiated as a result of the COVID-19 pandemic, including cellular service for the MiFi hotspot loan program, annual maintenance for additional self-checkout payment kiosks, and security software for the laptop loan program. A new “light wall” interactive learning/play installation was opened in the Children’s area in March 2023. College Depot added one full-time Admin Aide position and one part-time Library Assistant position through ARPA funding to expand the GRIT program and laptop/hotspot lending program. The Arizona State University (ASU) Tutoring Read America program began work in late 2022. In April 2023, four additional water bottle filling stations were added making a total of six filling stations at Burton Barr Central Library. 58 SERVICE CHANGES FOR 2023-24 Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 COMMUNITY ENRICHMENT LIBRARY Branch Libraries: The 2012-13 total branch library service hours were 711 per week. A new South Mountain Community Library, jointly operated by Maricopa County Community College District and the City, opened in August 2011 on the campus of South Mountain Community College at 72 hours per week. The 2023-24 budget includes several service enhancements: 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. Exterior book lockers with access to library materials will be available 24/7. In 2013, an automated material handling system was installed at Mesquite Library, generating efficiencies and enabling customers to return materials 24/7 and get immediate acknowledgement of the return. In January and October 2014, began partnering with St. Mary’s Food Bank at six branches to provide Kids Café, a meal service program providing healthy meals along with a learning component. In 2013, the FitPHX Energy Zones program, an after-school health education program for Phoenix youth ages 10 to14, was established in three Phoenix Library locations: Harmon, Palo Verde, and Yucca. In October 2015, through a Super Bowl grant, these three locations installed active computer workstations, so customers can walk on a treadmill while using one of the library's public computers. Mesquite Library will replace its automated materials handling machine in fall 2023. Additional ADA assistive technology will be provided in the branches. In fall 2023, StartUpPHX will relaunch SCORE Business Mentoring, a partnership with Maricopa Community Colleges, and other additional programming. A temporary branch at Park Central Mall opened in January 2018 due to the temporary closure of Burton Barr Central Library in the summer of 2017. New bookmobile service will be launched in fall 2023 at 67th Avenue and Lower Buckeye Road, primarily serving the Southwest Valley. The additional four hours of service on Sundays were continued at four branch libraries that were temporarily added because of the Burton Barr Library closure for most of 2017-18: Yucca, Century, Harmon, and Ocotillo. The additional Sunday hours resulted in an average 10 percent increase in usage at the four branches, serving over 21,000 people in 24 weeks. This change brings total branch hours to 775 hours per week. Additional security cameras will be added at Cesar Chavez Library for better coverage of the parking lot to increase customer safety. The 2019-20 budget added Municipal Security Guard positions to various library branches to provide continuous security coverage for patrons and staff during all hours of operation. Staff and supplies were added to expand Kindergarten Bootcamp programming citywide to help parents and children learn together the skills needed for school success. This provided an additional 25 series of classes per year, serving between 350 to 450 families. Sunday hours at the remaining four branches (Acacia, Agave, Desert Broom, and Desert Sage) without Sunday hours were restored. This addition restored branch hours to approximately 49 hours per branch or 68 percent of pre-recession level hours. The total branch library service hours were 833 per week. In 2019-20, in partnership with First Things First, the Human Services Department and the Youth and Education Office opened the Family Resource Center to provide services to families with children birth to age five at Cesar Chavez Library. In March 2020, all library locations temporarily suspended inperson services due to the COVID-19 pandemic. The loan period for all materials checked out, as well as library card account 59 A new library mobile app will be launched in August 2023. A beta version of the Library’s new catalog solution, Vega, will be launched in the winter of 2024. A year-round reading program geared for children 5 and under and their caregivers, known as 1,000 Books by Kindergarten, will be launched in the fall of 2023. Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 COMMUNITY ENRICHMENT LIBRARY Branch Libraries Continued: renewals, was extended. Literacy and STEM programs were offered virtually; customers were provided with online, phone, and one-onone appointment assistance; and access was extended for eLibrary platforms. Curbside services to allow customers to pick up library materials began in May 2020. In May 2020, Library added curbside services 15 hours per week, permitting customers to drive/walk up and pick up holds and utilize mobile printing. In April 2021, all library locations began a laptop and hotspot lending program to customers. In spring 2021, all library locations restored limited in-house services in a phased reopening plan. Services included collectionbrowsing, computer use, and self-check-out of materials. Access was provided with 45-minute reservations made online or at the door based on occupancy limits set by Centers for Disease Control (CDC) guidelines. Curbside service continued for three hours each morning. In May 2021, the Cesar Chavez Library coordinated with the Parks and Recreation and Housing Departments to install a StoryWalk in Cesar Chavez Park with related kits and materials available for children at the library after they finished the Walk. In June 2021, a virtual assistant on Phoenix.gov began assisting customers with common library-related inquiries. South Mountain Community Library re-opened for in-person service in September 2021 in partnership with South Mountain Community College. A new First Five Years educational area for parents and young children was installed at Cholla in December 2021. A second Story Walk at Edison Park was added in February 2022. Over 100 teen volunteers returned for the summer reading program. A third Story Walk was added at Harmon Library in October 2022. Public meeting room rental and study rooms reopened in January 2023. A new First Five Years educational area for parents and young children was installed at Palo Verde Library in May 2023. South Mountain Community Library expanded hours in April 2023, for a total of 69 hours per week. In April 2023, Burton Barr Library expanded private appointments, tours, and programming of the Arizona Room and Rare Book Room, utilizing an online tour booking process. To support City sustainability initiatives, 11 new electric vehicle charging stations were added with two dedicated parking spots and two charging cords. In December 2022, 700 hotspots were added to the hotspot lending program for customers. In 2022-23, a security Dispatch Center was deployed with monitoring of 450-plus cameras to improve customer service. The Library also partnered with ASU’s America Reads tutoring program to provide one-on-one reading tutoring to emerging readers in first through fourth grade who lost ground due to the pandemic. Tutoring is provided by ASU students, and the Library will provide Wi-Fi-provisioned tablet computers to facilitate virtual tutoring as needed. 60 SERVICE CHANGES FOR 2023-24 Table of Contents PROGRAM SERVICE LEVEL IN 2012-13 SERVICE CHANGES THROUGH 2022-23 SERVICE CHANGES FOR 2023-24 ENVIRONMENTAL SERVICES WATER SERVICES Water Bill Comparison for Single-Family Homes: In a March 2013 survey, Phoenix’s average monthly water bill compared favorably to the following benchmark cities: San Diego – $77.89 Tucson – $60.62 San Jose – $55.08 Austin – $51.17 Dallas – $48.53 PHOENIX –$37.75 In an April 2023 survey, Phoenix’s monthly water bill compared favorably to the following benchmark cities: The average monthly water bill for Phoenix is anticipated to be $44.26 in 2023-24, contingent upon City Council approval of proposed rate increases. San Diego – $109.47 San Jose – $124.37 Austin – $85.08 Tucson – $69.25 Fort Worth – $46.50 Dallas – $39.69 Albuquerque – $35.87 PHOENIX – $35.32 San Antonio – $20.77 Albuquerque – $31.81 San Antonio – $21.33 Wastewater Bill Comparison for Single-Family Homes: In a March 2013 survey, Phoenix’s average monthly wastewater bill compared favorably to the following benchmark cities: Austin – $60.79 San Diego – $47.69 Tucson – $40.90 Dallas – $36.30 San Jose – $33.83 San Antonio – $23.97 In an April 2023 survey, Phoenix’s monthly wastewater bill compared favorably to the following benchmark cities: Austin – $64.35 San Diego – $58.00 Tucson – $44.75 Fort Worth – $43.33 Dallas – $41.67 San Antonio – $58.18 San Jose – $45.49 PHOENIX – $21.35 Albuquerque – $16.78 PHOENIX – $20.71 Albuquerque – $18.16 61 The average monthly wastewater bill for Phoenix is anticipated to be $29.48 in 202324, contingent upon City Council approval of proposed rate increases. Table of Contents 62 Table of Contents BUDGET PROCESS, COUNCIL REVIEW AND INPUT, 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 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 measures continued to be carried out to enhance the City’s budget process, making it a year-round, data-driven, and interactive process. • Staff presents an early and detailed budget status to facilitate enhanced strategic resource and expense discussions. • For the ninth consecutive year, the Budget and Research (B&R) Department consulted with the University of Arizona Economic Business Research Center to enhance the City’s sales tax revenue forecasting model. The partnership results in improved revenue projections by giving the City access to independent expert economists who understand the impact of local, national, and global economic changes on the Phoenix economy. In Fiscal Year (FY) 2021-22, total General Fund resources were originally estimated to end the fiscal year at $1,663.0 million. Actual total resources were $1,694.7 million, a difference of $31.7 million or 1.9 percent. Total 2021-22 General Fund revenues (collections) ended the fiscal year at $1,495.7 million, representing a variance to the revised revenue estimate of $45.8 million. • Staff engages in the financial best practice of providing a Five-Year General Fund Forecast to facilitate long-term fiscal planning and strategic decision making by policymakers. • Staff compiles 18 key Phoenix economic indicators in a quarterly report. The indicators are provided to the City Council Economic Development and Equity subcommittee. The data provides an overall picture of recent economic activity trends within Phoenix. • Preliminary Capital Improvement Programs are presented by departments to City Council subcommittees to provide earlier and additional opportunities for input. • For the fourth year, the City continues to use the FundPHX tool (available at phoenix.gov/FundPHX). FundPHX is an online budget tool designed to educate and engage the public in the City's annual budget process. The tool is available in both English and Spanish, and it gives residents an opportunity to try their hand at balancing the City's General Fund operating budget, provide feedback on current funding levels, and share community priorities with staff. Each fall, departments begin the budget setting process by submitting an estimate of the costs associated with providing their current levels of service for the following year (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. A department’s base budget funding may differ from its current year funding for a variety of reasons, such as contractually-obligated cost increases, changes in usage-based costs (i.e., electricity, water, etc.), and other considerations. After these base budget requests are reviewed, departments may be asked to identify a percentage of their budget for potential elimination. These proposals are potential base reductions and represent the department’s lowest-priority activities. Departments are also 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 to fund the expansion of an existing program or adding a new program. Base reductions and supplemental budget 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, maintenance, and utilities. When base reductions and supplemental budget 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 presentation of the Trial Budget enables 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. Budget hearings are typically conducted throughout the community in April, and residents are encouraged to provide their feedback on the Trial Budget. The Trial Budget is also available online, and residents can send comments by email, letters, phone, through the City’s website and social media, and online using the FundPHX tool. 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 Budget is reviewed. 63 Table of Contents FY 2023-24 BUDGET PROCESS Initial Budget Status On September 27, 2022, staff provided a review of the 2021-22 General Fund budget results. The General Fund ending balance of $224.4 million exceeded the estimate of $185.4 million by $39.0 million, primarily due to higher than anticipated revenue collections. The fund balance carried forward to the current fiscal year and factored into the development of the 2023-24 General Fund Budget Status. Two components make up the General Fund ending balance: resources and expenditures. General Fund 2021-22 actual resources were $1,694.7 million and exceeded the estimate of $1,663.0 million by $31.7 million, or a variance of 1.9 percent. Higher than anticipated revenue collections were the main contributing factor to increased resources. The increased revenue collections were partially offset by increased transfers, primarily to City trust funds including the Worker's Compensation Trust and the Self-Insurance Reserve Trust, which were statutorily and actuarially required. General Fund expenditures ended the fiscal year at $1,470.3 million, or $7.3 million less than the revised estimate of $1,477.6 million. The expenditure variance primarily resulted from greater than estimated vacancy savings. During the review of the 2021-22 General Fund budget results, staff also requested adoption of the FY 2023-24 budget calendar, which the City Council adopted. Zero-Based Budget Inventory of Programs On February 2, 2023, for the twelfth consecutive year, the Budget and Research Department provided detailed preliminary budget estimates with year-to-year comparisons in the Zero-Based Inventory of Programs document. The document was created in response to the City Council’s request for a more transparent, relevant, and detailed presentation of the City’s budget. In the Inventory, the City’s budget was presented by program, the key component of a zero-based budget approach. The Inventory also outlines costs, revenue, staffing levels, funding source, performance measures, and other key budget details for the more than 360 programs and services citywide. The Zero-Based Inventory of Programs document was provided at least six weeks prior to the City Manager's Trial Budget. By detailing the more than 360 City programs and services and providing a complete view of the City's current year budget, along with a preliminary look at next year's estimates, the Mayor, City Council and public were able to begin reviewing this important information very early in the budget process. Preliminary Status of the FY 2023-24 General Fund Budget and Five-Year General Fund Forecast On February 21, 2023, staff provided the preliminary status update for the General Fund FY 2023-24 budget. The five-year General Fund forecast through FY 2027-28 was also presented to the Mayor and City Council for the thirteenth consecutive year, providing an essential tool in long-term budget discussions and decision making. The report explained economic, resource, and expenditure assumptions, providing the basis for potential ending fund balance ranges over the next five fiscal years. The General Fund budget outlook for FY 2023-24 indicated a projected surplus of $134 million, a reflection of responsible decision making by the City Council and a strong local and state economy. The projected surplus included an estimated $69 million in ongoing resources and $65 million in one-time funds primarily due to: strong revenue growth impacted by high inflation, significant vacancy savings due to the competitive labor market, and the carry-forward of fund balances including unspent contingency reserves as noted in the FY 2021-22 Year-End General Fund Budget Results presented on September 27, 2022. These resources could be used for employee compensation increases and to provide new or expanded programs and services for the community. Staff indicated they planned to update revenue and expenditure estimates and bring back revised estimates and recommendations on responsible cost additions using the combination of one-time and ongoing projected resources to the March 2023 meeting on the City Manager's 2023-24 Trial Budget. The Five-Year Forecast report included estimates of future General Fund resources and expenditures for FY 2023-24 through FY 2027-28 based on a range of economic and budgetary assumptions. The forecast was not intended to predict precisely future General Fund capacity, but rather to present ranges of potential ending fund balances to be used as a framework for decision making and strategic budget planning. City Manager’s FY 2023-24 Trial Budget The City Manager’s Trial Budget is an important step in the City’s zero-based budget development process. It provides the Mayor, City Council, and the community an opportunity to review a proposed balanced budget months in advance of final budget adoption in June. On March 21, 2023, staff presented a FY 2023-24 City Manager’s Trial Budget. This year’s Trial Budget included new and expanded programs and services for the community, as well as needed market-driven employee compensation increases. 64 Table of Contents Staff reported that the General Fund projected surplus for FY 2023-24 was $134 million, which included one-time resources of $65 million and ongoing resources of $69 million. Staff explained the surplus reflected responsible decision-making by the City Council and a strong local and state economy. The surplus was primarily due to revenue growth impacted by high inflation and a one-time increase in state shared income tax revenues, significant vacancy savings due to the competitive labor market, and the carry-forward of fund balance including unspent contingency funds. As presented in the Five-Year Forecast report to the City Council on February 21, 2023, staff noted the General Fund longterm outlook was currently positive. Staff indicated, however, that economic uncertainty still existed, with many economists predicting the potential for recession or slowdown in the coming year, primarily due to historic high inflation and unknown impacts from future Federal Reserve actions. Staff did not recommend changes to the General Fund status presented in February and indicated they would be closely monitoring City revenues, the economy, and independent analysis over the next several weeks of fiscal year 2022-23. Staff noted it was possible that revenue adjustments could be made with the FY 2023-24 City Manager's Proposed Budget that was scheduled to be presented on May 2, 2023, as more data and information became available. Staff reported the FY 2023-24 Trial Budget was focused on ensuring that the City delivers quality, timely, and efficient services to the community. Over the last three years, the City made strategic decisions throughout the COVID-19 pandemic and expanded services to residents. In order to ensure that those vital services, and the people who provide them, can be sustained for years to come, the Trial Budget proposed to allocate the $134 million surplus in the following ways: • Employee Compensation Increases - $114 million • Continuity of Services for Vulnerable Populations - $7.4 million • Enhanced Public Safety Responsiveness and Criminal Justice Support - $3.8 million • Healthy Neighborhoods and Community Enrichment - $2.8 million • Community Input - $1 million • Contingency Funds - $5 million The Trial Budget also included proposed Non-General Fund supplementals totaling $1.457 million, impacting the Aviation, Housing, Library, Planning and Development, and Public Transit departments, as well as the Regional Wireless Cooperative. Community Feedback Resident input was solicited at 12 community budget hearings held between April 3 and April 15, 2023. Residents also provided feedback online using the FundPHX tool, and comments were sent directly to the Budget & Research Department via email and voicemail. In total, between March 1 through May 5, 2023, the city received 720 comments from 362 individuals on the Proposed Trial Budget. Several residents commented multiple times on the same topic. City Manager’s Proposed Budget and Council Action On May 2, 2023, staff presented a balanced FY 2023-24 City Manager’s Proposed Budget to the Mayor and City Council for information and discussion. No changes were made to the projected $134 million surplus that was presented to City Council on March 21, 2023. Agreements had been negotiated with labor groups for the next fiscal year, and the proposed budget accounted for the negotiated increases. The following list documents the $1 million in recommended General Fund changes to the FY 2023-24 General Fund Trial Budget based on community input: • Community Arts Grants - increased proposed grant funding from $125,000 to $250,000. • Cricket - $250,000 to provide additional cricket field locations and to explore development of partnerships to expand more sites in the future. • Park Repairs - additional $125,000 for additional maintenance at Sueño Park and other park sites in the city. • Phoenix Day Early Childhood Education Center - one-time funding of $250,000 to support affordable child care and early education services. • Street Cleaning - one-time funding of $100,000 to purchase a street sweeper dedicated for bike lanes, and $150,000 to clean and remove debris in up to three additional washes annually and for median clean-ups. 65 Table of Contents Overall, recommendations for General Fund supplemental additions in FY 2023-24 totaled $134 million, focusing on critical City Council and community priorities including: • Employee Compensation Increases - $114 million • Continuity of Services for Vulnerable Populations - $7.6 million • Enhanced Public Safety Responsiveness and Criminal Justice Support - $3.8 million • Healthy Neighborhoods and Community Enrichment - $3.6 million • Contingency Funds - $5 million In addition to Non-General Fund supplementals proposed in the City Manager’s Trial Budget, an $0.05 million supplemental was added in the Proposed Budget for the Public Transit Department for enhanced bus stop cleanings, based on resident feedback during the community engagement process. Council Action The 2023-24 City Council Budget Decision was presented to the City Council for action on May 16, 2023. Staff stated no changes had been made to the projected surplus or to the proposed supplemental additions. The City Council approved the proposed 2023-24 budget as presented. The May 16 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 budget adoption actions. The proposed balanced FY 2023-24 General Fund budget is $2,028.7 million. This is a $249.2 million increase or 14.0 percent from the adopted FY 2022-23 General Fund budget of $1,779.4 million. The increase accounts for the proposed additions detailed above and higher costs associated with employee salaries and fringe benefits, including health insurance and pension, increased costs for vehicle replacements and Fire apparatus, cost increases in capital equipment and expected pay-as-you-go projects, estimated costs for implementation of the Classification and Compensation study, and a higher contingency amount to achieve 4.5 percent of operating costs. Inflation also dramatically impacted several expenditure categories including commodities and contractuals such as fuel, compressed natural gas, electricity, motor vehicle parts, plumbing supplies, custodial and security services, machinery and equipment repair, and facility maintenance costs. The increase also accounts for higher costs for public safety pensions, detailed in the Trial Budget report and presented to the City Council on March 21. Projected General Fund resources are estimated at $2,028.7 million and include the estimated beginning balance of $204.0 million, estimated revenue of $1,830.9 million, and net interfund transfers and recoveries of -$6.3 million, which include interfund transfers for central services, in-lieu property taxes, capital equipment and projects, debt service, infrastructure repayment agreements, and resources to support the Public Safety Specialty Funds and Pension Reserve Fund. General Fund revenues of $1,830.9 million represent annual growth of 10.3 percent over FY 2022-23 and is largely due to growth in state shared income tax, which is based on collections from two years prior and is artificially high due to the State's decision to increase the percentage share with cities and towns from 15 to 18 percent to mitigate impacts from reducing the individual income tax rate. Revenue growth also includes estimated growth in City and state sales taxes. For all funds, which include General, Enterprise and Special Revenue funds such as grants, and all debt service and pay-as-yougo capital costs, the proposed FY 2023-24 budget is $6,750.0 million. Following the Council's budget action on May 16, both the City Charter and State law require subsequent public notification, advertising, and City Council actions. Tentative Budget Adoption A public hearing and adoption of the tentative budget ordinances was completed on May 31, 2023, in compliance with the City Charter requirement that the budget be adopted no later than June 30, 2023. 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. 66 Table of Contents Final Adoption A public hearing and adoption of the final budget ordinances was completed on June 14, 2023. Adoption of the property tax levy ordinance was completed on July 3, 2023, no sooner than 14 days following final budget adoption, in accordance with State law. The following chart is an overview of the 2023-24 community budget process calendar. DATE BUDGET ITEMS November 2022 FundPHX (available to the public) February 2, 2023 2023-24 Inventory of Programs February 21, 2023 Preliminary 2023-24 Budget Status and Five-Year General Fund Forecast March 21, 2023 2023-24 City Manager’s Trial Budget and Preliminary Five-Year Capital Improvement Program April 2023 Community Budget Hearings May 2, 2023 City Manager’s Proposed 2023-24 Budget May 16, 2023 Council Budget Decision May 31, 2023 2023-24 Tentative Budget Ordinance Adoption June 14, 2023 2023-24 Funding Plan and Final Budget Ordinance Adoption July 3, 2023 2023-24 Property Tax Levy Ordinance Adoption 67 Table of Contents 68 Table of Contents GENERAL BUDGET AND FINANCIAL POLICIES City 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 Instruments 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 FY 2023-24 budget development process are as follows: Action Required City Charter Prescribed Deadline Arizona State Statute Prescribed Deadline 2023-24 Budget Dates City Manager’s recommended five-year 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. March 21, 2023 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 2, 2023 Post notice on the official City website if there will be an increase in either the primary or the secondary property tax rate, even if the combined tax rate is a decrease. No requirement. 60 days prior to Tax Levy Adoption. May 4, 2023 Publish general summary of budget and notice of public hearing that must be held prior to adoption of tentative budget ordinances and fiveyear Capital Improvement Program by resolution. Publish in newspaper of general circulation at least two weeks prior to first public hearing. No requirement. 69 Publish on May 17, 2023 Table of Contents City Charter Action Required Prescribed Deadline Arizona State Statute Prescribed Deadline 2023-24 Budget Dates 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. Publish truth-in-taxation 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. Publish on May 26, 2023 and June 5, 2023 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 on June 5, 2023 and June 12, 2023 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 9, 2023 Post notice of intent on the official City website and distribute notice through the City’s social media accounts if there will be an increase in either the primary or secondary property tax rate. No requirement. At least 15 days prior to Tax Levy Adoption. June 14, 2023 Public hearing on budget plus property tax levy or truth-in-taxation 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 14, 2023 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 23, 2023 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 3, 2023 70 May 31, 2023 Table of Contents 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 and Capital Funds 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 and 2) 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. At the end of the fiscal year, the City Council through formal action adopts amendments to the budget ordinances to reflect transfers of contingency amounts and reallocations as needed. According to a State Attorney General opinion, appropriations may be increased if funds are unexpectedly received during the current budget year in one specific circumstance, which is for federal grants when the city is merely acting as a conduit (passthrough). Finally, transfers of amounts within any specific fund or within General Fund programs can be made upon approval of the City Manager. 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. 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). The City Charter requires that eight cents of the primary property tax levy be allocated to the Parks and Recreation Fund. 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 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 FY 2015-16 due to state Proposition 117 passed by Arizona voters in 2012, the limited property value used in this calculation for most properties was the lesser of the property’s full cash value, or an amount five percent greater than the property’s prior-year limited property value. 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, except up to ten percent of annual principal and interest can be maintained as a debt service reserve. Beginning in FY 2015-16 due to state Proposition 117 passed by Arizona voters in 2012, assessment ratios and the secondary tax rate were applied to a property’s limited property value, less exclusions, to determine the property’s secondary tax levy. The limited property value used in this calculation for most properties was the lesser of the property’s full cash value, or an amount five percent greater than the property’s prior-year limited property value. Prior to FY 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 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. 71 Table of Contents 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 FY 1979-80 expenditures adjusted for interim growth in population and inflation as measured by the gross domestic product (GDP) 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 debt-service 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 FY 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 FY 1979-80 base, (3) a one-time override for the following fiscal year, and (4) an accumulation for pay-as-you-go capital. They all require voter approval. City of Phoenix voters have approved 10 local home rule options in 1981, 1985, 1991, 1995, 1999, 2003, 2007, 2011, 2015 and 2020. 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 pay-asyou-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, approved by the voters on November 3, 2020, sets the limit at the City’s annual budget after obtaining community input by the residents of the City of Phoenix on the proposed spending plan. This home rule option is in effect for four fiscal years from FY 2021-22 through FY 2024-25 and allows 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 Annual Comprehensive Financial Report (ACFR). 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 ACFR. 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 Council-approved 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 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. 72 Table of Contents 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. In March 2010, the City Council agreed to gradually increase the contingency with a goal of achieving five percent of General Fund operating expenditures. Achieving this goal will improve the City’s ability to withstand future economic cycles. Enterprise and Special Revenue funds have varying levels of contingency funding consistent with the variability in revenues and expenditures associated with the services provided. 4. Ordinances – Three budget ordinances are adopted each fiscal year: (1) the operating funds ordinance, (2) the capital funds ordinance and (3) the re-appropriated 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 and certain Special Revenue funds. These allocated costs are recouped from the Enterprise and certain Special Revenue 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 ACFR 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. 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. Due to rising pension costs and reforms made to both the general city employee retirement system (COPERS) and the public safety retirement system (PSPRS), these systems have become increasingly complex. In 2017, the State legislature passed a law that offered employers some relief from the escalating PSPRS contribution rates. This law allowed cities to increase the amortization period for the unfunded actuarial liability from a closed 20-year period to a closed 30-year period. The City requested and was approved for the change to a closed 30-year amortization period effective July 1, 2017. However, the Council adopted a plan to use a 25-year amortization period and to establish a Public Safety Pension Reserve Fund with the savings based on the difference from the original 20-year amortization in FY 2017-18. The reserve fund may be used to make extra contributions to pay off the unfunded liability quicker or to help offset future cost increases. The Personal Services section of the Detail Budget document contains additional information regarding the pension systems. The City also advanced $70 million in Wastewater and $170 million in Aviation enterprise funds to pay down the COPERS liability in FY 2017-18 and FY 2020-21, respectively. The City will continue to seek opportunities to advance payments from enterprise and/or specialty funds. 73 Table of Contents In November 2020, voters approved Proposition 207 legalizing the sale of recreational marijuana in the State of Arizona beginning in January 2021. Towards the end of FY 2020-21, the City started receiving tax revenues from sales of recreational marijuana. The City Council adopted a policy in FY 2021-22 to annually direct the General Fund portion of the City sales tax from recreational sales and the state-shared 16% excise tax on recreational marijuana sales for Police and Fire personnel costs to pay down public safety pension liability. 8. Self-Insurance Costs – With a few exceptions, the City is fully self-insured for general and automotive liability exposures. The major exceptions to self-insurance 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 selfinsurance 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, 37 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 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. In the past the growth of internet sales created concern about the erosion of the revenue base. However, as a direct result of a U.S. Supreme Court decision (Wayfair), the State passed H.B. 2757, effective in October 2019, which created an economic nexus standard and required most marketplace facilitators to collect tax on behalf of sellers using the facilitator’s platform. This resulted in a much larger portion of internet sales becoming taxable. The use tax is an important tool for reducing the impact of otherwise non-taxable retail sales. Also, the development of tourismrelated sales tax base (hotels, restaurants and short-term car rentals) is another important component of diversifying revenue. Finally, utility taxes levied against the sales of electricity, natural gas, telecommunications, water and sewer make up about 13 percent of General Fund local sales tax collections. Generally, utility taxes are not responsive to economic conditions and provide a significant revenue source that remains stable during periods of economic downturn. In addition, several detailed revenue policies follow. 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 2.3 percent effective January 1, 2016. However, a two-tier rate structure was established for retail sales of single items in excess of $10,000; with the requirement that the threshold, be adjusted biennially for inflation. Additional information on the current threshold and the rates on other specialized tax categories are included in the Current Local Sales Tax Rates chart within the Revenue Estimates section of this document. 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. Effective January 1, 2017 the Arizona Department of Revenue (ADOR) began collecting all city sales tax. 2. Property Tax – The City Charter limits city property tax rates to $1.00 per $100 of net assessed valuation, plus the amount necessary to pay for debt service and to maintain public libraries. Except as otherwise limited by state law, the City’s primary property tax rate is set based on the $1.00 limitation plus an amount needed for library operations. The secondary property tax rate is set to support debt service requirements. 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. 4. Annual User Fee Reviews – 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. 74 Table of Contents FUND STRUCTURE 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. 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 revenues 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. Special Revenue Funds Arizona Highway User Revenue (AHUR) – AHUR funds are made up of state-collected gas taxes and a portion of other statecollected 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. 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. 75 Table of Contents Public Safety Enhancement – These funds are used to account for the revenues and expenditures associated with a voterapproved two percent increment of the 2.7 percent sales tax on utilities with franchise agreements in March 2005. The Police Department, including the Office of Homeland Security and 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. 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 one percent hotel/motel tax and a two 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. Transportation 2050 – These funds are used to account for the revenues generated by the 0.7 percent sales tax approved by voters in August 2015, with an effective date of January 1, 2016, to fund a comprehensive transportation plan with a 35-year sunset date. This tax supersedes the 0.4 percent sales tax approved by voters in March 2000, which was accounted for in the Transit 2000 Fund. The Public Transit Department is allocated 86.2 percent of the sales tax, with the remaining 13.8 percent being allocated to the Streets Department. Fare box collections are also included in the Transportation 2050 Transit Fund. This fund replaced the Transit 2000 Fund. Enterprise Funds Enterprise funds include Water, Wastewater, Aviation, Solid Waste and Convention Center funds. Except for 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-to-day operations and maintenance, in lieu property taxes (as appropriate), pay-as-you-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. Capital Funds Capital Funds include bond issuance proceeds, and other funds such as development impact fees and airport passenger facility charges that are restricted in use to the acquisition of capital assets. The City appropriates Capital Funds separately, and all Capital Fund expenditures are budgeted in the Capital Improvement Program. Fiduciary Funds Fiduciary funds, including trust and custodial 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 ACFR. However, the year-end balances held in fiduciary funds are provided in the ACFR. 76 Table of Contents REVENUE ESTIMATES Revenue estimates for fiscal year (FY) 2023-24 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 external entities include portions of court fines and fees, and ambulance fees. Revenue estimates also include property taxes; the FY 2023-24 combined property tax rate of $ 2.0992 reflects a slight decrease from the FY 2022-23 rate of $2.1130. It has been over three years since the emergence of COVID-19 in December 2019, and Arizona has recovered from the pandemic downturn ahead of most states. City and state-shared sales tax revenues have shown solid growth throughout the COVID-19 crisis. In the past, the growth of internet sales created concern about the erosion of the revenue base. However, as a direct result of a U.S. Supreme Court decision (Wayfair), the State passed H.B. 2757, effective in October 2019, which created an economic nexus standard and required most marketplace facilitators to collect tax on behalf of sellers using the facilitator’s platform. This resulted in a much larger portion of internet sales becoming taxable and helped to mitigate the impacts of COVID-19 on city and state sales taxes. Furthermore, the federal assistance provided through the Coronavirus, Relief, and Economic Security Act (CARES) and the American Rescue Plan Act (ARPA) has injected a substantial amount of one-time stimulus aid into the national, state and local economies, which has temporarily created significant increases in revenue collections. While the impact of COVID-19 has been mitigated, other issues have emerged, including geopolitical conflicts, high inflation, supply-chain issues, tighter monetary policy, volatile markets, labor shortages and anticipated economic slowdown or mild recession in 2023. These factors pose a significant challenge in accurately forecasting revenue, and the additional uncertainty further supports a cautious and prudent approach to revenue estimation. Personal income is one of many indicators used for estimating state and local sales taxes. Consistent with projections by local economists, the chart below shows that personal income is expected to grow by 4.3 percent for FY 2022-23 and 6.2 percent for FY 2023-24. Personal Income Growth 12% 8.2% 10% 7.0% 8% 6% 4% 6.2% 5.3% $ 2% 4.6% 4.4% $ $ 2015-16 2016-17 $ 6.5% $ $ $ 6.2% 5.3% $ 4.3% $ $ 0% 2014-15 2017-18 2018-19 Fiscal Year 2019-20 2020-21 2021-22 2022-23* 2023-24* *Estimated 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). 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. 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 continued growth for city and state sales taxes, population, personal income and jobs, marginal increases in consumer spending and moderate growth in the housing market. The forecast also reflects the individual income tax cut that became effective on January 1, 2022, and January 1, 2023, and the urban revenue sharing distribution increase from 15% to 18% starting in FY 2023-24. As indicated previously, Arizona adopted Wayfair economic nexus for internet sales. As a result, effective October 1, 2019, most remote sellers and marketplace facilitators must file and pay transaction privilege (sales) tax in Arizona. CITY OF PHOENIX, ARIZONA CITY OF PHOENIX, ARIZONA FIVE YEAR EXCISE TAX REVENUE FORECAST (In Thousands of Dollars) FIVE YEAR EXCISE TAX REVENUE FORECAST (In Thousands of Dollars) 2021-22 2022-23 % 2023-24 % 2024-25 % 2025-26 % 2026-27 % 2027-28 % Actual Estimate Change Estimate Change Forecast Change Forecast Change Forecast Change Forecast Change Privilege License Tax 543,815 569,940 4.8% 589,500 3.4% 620,849 5.3% 653,724 5.3% 688,728 5.4% 724,236 5.2% Police Neighborhood Protection 34,422 36,194 5.1% 37,394 3.3% 39,260 5.0% 41,310 5.2% 43,548 5.4% 45,825 5.2% Privilege License Tax Police Block Watch 2,458 2,585 5.2% 2,671 3.3% 2,805 5.0% 2,950 5.2% 3,111 5.5% 3,272 5.2% Fire Neighborhood Protection 12,293 12,926 5.1% 13,356 3.3% 14,021 5.0% 14,753 5.2% 15,554 5.4% 16,366 5.2% Police - 2007 Public Safety Expansion 78,677 82,730 5.2% 85,474 3.3% 89,734 5.0% 94,419 5.2% 99,539 5.4% 104,741 5.2% Fire - 2007 Public Safety Expansion 19,670 20,682 5.1% 21,369 3.3% 22,434 5.0% 23,605 5.2% 24,884 5.4% 26,186 5.2% Parks and Preserves 49,173 51,708 5.2% 53,420 3.3% 56,084 5.0% 59,010 5.2% 62,210 5.4% 65,461 5.2% Transportation 2050 335,609 353,178 5.2% 364,773 3.3% 382,809 4.9% 402,675 5.2% 424,426 5.4% 446,548 5.2% Convention Center Excise Tax 77,786 84,625 8.8% 86,163 1.8% 88,633 2.9% 92,244 4.1% 96,687 4.8% 101,276 4.7% Sports Facilities Excise Tax 27,040 28,114 4.0% 28,488 1.3% 30,047 5.5% 31,603 5.2% 32,779 3.7% 33,953 3.6% Jet Fuel Other Restricted Fund 707 811 14.7% 823 1.5% 838 1.8% 852 1.7% 854 0.2% 856 0.2% Privilege License Fees (Annual) 3,465 3,003 -13.3% 3,003 0.0% 3,215 7.1% 3,442 7.1% 3,685 7.1% 3,945 7.1% Treasury Collection Service Fee 1 Government Lease Property Excise Tax Subtotal (PLT) 2 3 32.5% 3 0.0% - - - - - - - - 613 638 4.1% 638 0.0% 653 2.4% 668 2.3% 683 2.3% 699 2.3% 1,185,730 1,247,137 5.2% 1,287,075 3.2% 1,351,382 5.0% 1,421,255 5.2% 1,496,688 5.3% 1,573,364 5.1% Utility & Franchise Utility & Franchise Tax 83,257 86,998 4.5% 87,107 0.1% 88,670 1.8% 90,795 2.4% 92,999 2.4% 95,001 2.2% Jail Tax 7,466 7,533 0.9% 7,601 0.9% 7,696 1.2% 7,792 1.3% 7,890 1.3% 7,988 1.3% General Excise Tax 11,198 11,288 0.8% 11,378 0.8% 11,520 1.2% 11,664 1.3% 11,810 1.3% 11,958 1.3% Storm Water Management 5,099 5,143 0.9% 5,194 1.0% 5,249 1.1% 5,304 1.0% 5,359 1.0% 5,415 1.0% Capital Construction 6,210 5,880 -5.3% 5,623 -4.4% 5,559 -1.1% 5,555 -0.1% 5,568 0.2% 5,576 0.1% Police Public Safety Enhancement 16,452 18,367 11.6% 18,504 0.7% 18,869 2.0% 19,187 1.7% 19,471 1.5% 19,726 1.3% Fire Public Safety Enhancement 10,084 11,257 11.6% 11,341 0.7% 11,564 2.0% 11,759 1.7% 11,933 1.5% 12,090 1.3% Subtotal (Utility & Franchise) 139,766 146,466 4.8% 146,749 0.2% 149,127 1.6% 152,056 2.0% 155,030 2.0% 157,754 1.8% Licenses & Permits State Sales Tax 2 State Income Tax 2,3 Marijuana Sales Tax Earmarked for PSPRS TOTAL 4 3,022 3,020 -0.1% 3,070 1.7% 3,144 2.4% 3,215 2.3% 3,288 2.3% 3,362 2.3% 229,901 241,628 5.1% 248,655 2.9% 259,684 4.4% 271,734 4.6% 286,530 5.4% 301,348 5.2% 213,294 308,183 44.5% 435,656 41.4% 388,700 -10.8% 361,287 -7.1% 373,644 3.4% 390,245 4.4% 12,812 14,159 10.5% 14,691 3.8% 15,464 5.3% 16,271 5.2% 17,215 5.8% 18,146 5.4% 1,784,525 1,960,592 9.9% 2,135,896 8.9% 2,167,501 1.5% 2,225,819 2.7% 2,332,395 4.8% 2,444,218 4.8% 1/ 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. 2/ Relative population share used in calculating state shared revenues in 2023-24 was based on the 2021 Census Bureau Population Estimate. It was projected to remain flat throughout the forecast period. The actual share will change annually based on Census Bureau Population Estimates. In addition, Laws 2021, Chapter 412 (Tax Omnibus) increases the Urban Revenue Sharing distribution from 15% to 18% starting in 2023-24. 3/ The forecast includes Tax Rate Reduction: Laws 2021, Chapter 412 (Tax Omnibus), reduces the Individual Income Tax (IIT) brackets to 2 starting in Tax Year (TY) 2022; 2.55% for taxable income up to $28,653 in a single household and $57,305 in a married filing jointly household. The tax rate is 2.98% above those thresholds. Laws 2021, Chapter 412 included additional reductions to the 2.55%/2.98% individual income tax rates contingent upon reaching certain General Fund revenue levels. Based on the Joint Legislative Budget Committee and the Governor's Office of Strategic Planning and Budgeting report for the state General Fund revenue issued on September 29, 2022, the Arizona Department of Revenue implemented the 2.5% single tax rate beginning in TY 2023. 4/ In the November 3, 2020 General Election, voters approved the Smart and Safe Arizona Act (Proposition 207), which has become effective to govern the possession, sale, and taxation of Recreational (non-medical) marijuana (MJ) in Arizona. In January 2021, the City started collecting sales tax from Recreational (non-medical) MJ sales. On June 16, 2021, the City Council adopted the pension funding policy that designated the General Fund portion of the City Sales tax from Recreational (non-medical) MJ retail sales and the state-shared 16% excise tax on the MJ sales for Police and Fire personnel costs to pay down the public safety pension liability. 78 Table of Contents GENERAL FUNDS Total FY 2023-24 General Fund revenues are estimated to be $1,830.9 million or 10.3 percent higher than FY 2022-23 estimates of $1,660.4 million. General Fund revenues consist of four major categories: local taxes and related fees, stateshared revenues, primary property taxes and user fees. Following are descriptions of the revenue sources within these four categories and explanations of FY 2023-24 revenue estimates. Local and state sales tax collections represent approximately 50.6 percent of General Fund revenues. Local sales taxes for FY 2023-24 are expected to grow by 3.0 percent over FY 2022-23 estimates. Phoenix’s share of state sales taxes for FY 2023-24 is expected to grow by 2.9 percent over FY 2023-24 estimates. Combined local and state sales tax revenues for FY 2023-24 are expected to grow by 3.0 percent over FY 2022-23 estimates. Combined rates of growth since FY 2014-15 are provided in the chart below. The table on the next page details estimated General Fund revenue by major source. Local and State Sales Tax Revenue Growth 17% 16% 16.1% 15% 13.3% 13% 11% 9% 7.6% 7% 5% 3% 1% 4.9% 4.1% 2.8% 2.0% 2015-16 2016-17 3.0% 2.9% 0.2% 2014-15 2017-18 2018-19 Fiscal Year 79 2019-20 2020-21 2021-22 2022-23* 2023-24* *Estimated Table of Contents GENERAL FUND REVENUE BY MAJOR SOURCE GENERAL REVENUE BY MAJOR SOURCE (In Thousands of Dollars) (In ThousandsFUND of Dollars) Increase/(Decrease) From 2022-23 Estimate Amount Percent Revenue Source 2021-22 Actual % of Total 2022-23 Estimate % of Total 2023-24 Budget % of Total Local Taxes and Related Fees Local Sales Tax Privilege License Fees Other General Fund Excise Taxes Subtotal 627,072 3,467 19,277 649,816 41.9% 0.2% 1.3% 43.4% 656,938 3,005 19,459 679,402 39.5% 0.2% 1.2% 40.9% 676,607 3,005 19,617 699,229 37.0% 0.2% 1.1% 38.2% 19,669 158 19,827 3.0% 0.0% 0.8% 2.9% State-Shared Revenue Sales Tax State Income Tax Vehicle License Tax Subtotal 229,901 213,294 78,695 521,890 15.4% 14.2% 5.3% 34.9% 241,628 308,183 79,065 628,876 14.5% 18.6% 4.8% 37.9% 248,655 435,656 85,627 769,938 13.6% 23.8% 4.7% 42.1% 7,027 127,473 6,562 141,062 2.9% 41.4% 8.3% 22.4% Primary Property Tax 192,214 12.9% 200,199 12.1% 206,935 11.3% 6,736 3.4% User Fees/Other Revenue Licenses & Permits Cable Communications Fines and Forfeitures Court Default Fee Fire Hazardous Materials Inspection Fee Library Fees Parks and Recreation Planning Police Street Transportation Other Service Charges Other Subtotal 3,022 8,982 8,109 880 64,252 1,299 434 5,141 1,904 13,841 4,526 15,882 3,520 131,792 0.2% 0.6% 0.5% 0.1% 4.3% 0.1% 0.0% 0.3% 0.1% 1.0% 0.3% 1.1% 0.2% 8.8% 3,020 8,200 8,007 778 67,566 1,500 435 6,322 1,811 13,592 6,264 30,849 3,609 151,954 0.2% 0.5% 0.5% 0.0% 4.0% 0.1% 0.0% 0.4% 0.1% 0.8% 0.4% 1.9% 0.2% 9.1% 3,070 8,000 7,987 778 69,398 1,700 439 6,371 1,811 14,511 6,976 30,221 3,539 154,801 0.2% 0.4% 0.4% 0.0% 3.8% 0.1% 0.0% 0.3% 0.1% 0.8% 0.4% 1.7% 0.2% 8.4% 50 (200) (20) 1,832 200 4 49 919 712 (628) (70) 2,847 1.7% -2.4% -0.2% 0.0% 2.7% 13.3% 0.9% 0.8% 0.0% 6.8% 11.4% -2.0% -1.9% 1.9% 1,495,712 100.0% 1,660,431 100.0% 1,830,903 100.0% 170,472 10.3% TOTAL GENERAL FUND LOCAL TAXES AND RELATED FEES General Funds Total Revenues - $1,830.9 Million Local Taxes and Related Fees 38.2% This major revenue category consists of local sales tax, privilege license fees, use tax, franchise taxes and fees, and other general excise taxes. The FY 2023-24 estimate is $699,229,000, which is $19,827,000 or 2.9 percent greater than the FY 202223 estimate of $679,402,000. The assumptions used to estimate local taxes and related fees follow. 80 Table of Contents 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 transportation programs. Portions of several categories and the entire advertising category are restricted to the Convention Center Fund and/or the Sports Facilities Fund. Effective January 1, 2016, Proposition 104 established the Transportation 2050 sales tax and increased the Transit 2000 sales tax previously passed by Proposition 2000 to fund a comprehensive transportation plan with a new 35-year sunset date. The Proposition increased the transaction privilege (sales) tax by 0.3 percent for various business activities. Effective October 1, 2019, Arizona law requires most remote sellers and marketplace facilitators to file and pay transaction privilege (sales) tax in Arizona. 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 by 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 Fund Neighborhood Protection 2007 Public Safety Expansion Advertising – – – – – – 0.5% – – 0.5% Contracting 0.7% 0.1% 0.2% – 0.1% 0.7% 0.5% – – 2.3% Job Printing 0.7% 0.1% 0.2% – 0.1% 0.7% 0.5% – – 2.3% Publishing 0.7% 0.1% 0.2% – 0.1% 0.7% 0.5% – – 2.3% Transportation/ Towing 0.7% 0.1% 0.2% – 0.1% 0.7% 0.5% – – 2.3% Restaurants/Bars 0.7% 0.1% 0.2% – 0.1% 0.7% 0.5% – – 2.3% Leases/Rentals/ 1.2% 0.1% 0.2% – 0.1% 0.7% – – – 2.3% Personal Property 1.2% 0.1% 0.2% – 0.1% 0.7% – – – 2.3% Short-Term Motor Vehicle Rental 1.2% 0.1% 0.2% – 0.1% 0.7% – 2.0% – 4.3% Commercial Rentals 1.3% 0.1% 0.2% – 0.1% 0.7% – – – 2.4% Lodging Rentals Under 30 Days 1.2% 0.1% 0.2% – 0.1% 0.7% 2.0% 1.0% – 5.3% Lodging Rentals 30 Days and Over 1.2% 0.1% 0.2% – 0.1% 0.7% – – – 2.3% Retail Tier 1 (1)(2) 1.2% 0.1% 0.2% – 0.1% 0.7% – – – 2.3% Retail Tier 2 (1)(2) 1.2% 0.1% 0.2% – 0.1% 0.4% – – – 2.0% Amusements 1.2% 0.1% 0.2% – 0.1% 0.7% – – – 2.3% Utilities 2.7%* – – 2.0%** – – – – – 4.7% Telecommunications 2.7% – – – – – – – 2.0% 4.7% Public Safety Enhancement Parks & Pres. Transportation 2050 (1) Convention Center Sports Facilities Capital Const. Total *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 The Transportation 2050 sales tax (Proposition 104) was established by the voters effective January 1, 2016 and increased the Transit 2000 sales tax (Proposition 2000) to fund a comprehensive transportation plan with a 35-year sunset date. The Proposition increased the transaction privilege (sales) tax rates by 0.3% for various business activities and established a two-tier tax rate structure applicable to retail sales of single items in excess of $10,000, to be adjusted biennially for inflation beginning on January 1, 2018. Effective January 1, 2022, the first $11,631 (Tier 1) is subject to the 2.3% tax rate, while transactions over $11,631 (Tier 2) are subject to the 2.0% tax rate. The criteria for Level 1 and Level 2 will be adjusted again on January 1, 2024 2 Arizona adopted Wayfair economic nexus for internet sales. Effective October 1, 2019, Arizona law requires most remote sellers and marketplace facilitators to file and pay transaction privilege (sales) tax in Arizona. 81 Table of Contents The General Fund portion of the local sales tax estimate is $676,607,000 for FY 2023-24. This is an increase of $19,669,000 or 3.0 percent from the FY 2022-23 estimate of $656,938,000. The increase in local sales tax revenue is based on actual collections, growth rates provided by the University of Arizona city sales tax model, and the assumption of moderate economic growth. As shown in the pie chart below, the retail category represents approximately 48 percent of the local General Fund sales tax. The retail sales category is expected to increase by 4.8 percent in FY 2023-24. Personal income growth, which is used as a trend indicator for retail sales activity, is projected at 6.2 percent for FY 2023-24. The growth estimated of the retail sales category in FY 2023-24 assumes continuous growth over FY 2022-23. General Funds Local Sales Taxes Utility and Franchise 13% Various Leases and Rentals 19% Tourism and Entertainment 9% Other 5% Retail 48% Contracting 6% General Fund sales tax revenue is collected on three rental categories: leases and rentals of tangible personal property, commercial and residential real property rentals. These three categories combined are approximately 19 percent of local General Fund sales tax revenue. For FY 2023-24, tangible personal property is projected to decrease by 4.5% since audit adjustments occurred in FY 2022-23, which artificially increased the collections in FY 2022-23. Residential and commercial property rentals are expected to grow by 5.9 and 4.5 percent, respectively. The growth projected in these categories is mainly due to expected continuous growth in the overall economy and a growing population. The contracting category is expected to remain flat in FY 2023-24 due to significant construction projects occurring in FY 2022-23, alongside the expected continued cooling off of the housing market. The revenue collections from contracting are highly correlated with housing permit activity. The growth rate of housing permits in the current fiscal year has decelerated and is expected to grow at a slower pace in FY 2023-24. The contracting category represents approximately 6 percent of the local General Fund sales tax revenue. The restaurants and bars category is expected to increase 4.3 percent and the hotel/motel category is expected to grow by 3.9 percent in FY 2023-24. Both categories, combined with revenue from amusements, are closely related to tourism and entertainment activities. These sectors most adversely affected by the COVID-19 pandemic have seen substantial increases and exceeded the pre-pandemic level of 2019. The growth estimated in FY 2023-24 assumes continuous growth over FY 202223 albeit at a slower pace. Revenues from these activities represent approximately 9 percent of local General Fund sales tax revenue. The utility and franchise tax category is approximately 13 percent of local General Fund sales tax revenue. The category includes electricity, natural and artificial gas, water consumption, sewer service, and communications activities. The FY 202324 estimate for utility sales, franchise and communication tax revenue is $87,107,000, which represents an increase of 0.1 percent compared to FY 2022-23. The slight increase is due to expected utility account and price growth but is offset by the predicted decrease in communications sales tax collections. 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 estimated amount of $31,759,000 in FY 2023-24 indicates a projected increase of 5.9 percent compared to the FY 2022-23 forecast, based on the actual collections during FY 2022-23. The use tax category is subject to fluctuations in purchasing practices and economic factors. The use tax category, along with other categories such as penalty and interest earnings, job printing, publishing, transportation and towing, and accounting adjustments, contributes approximately 5.0 percent of local General Fund sales tax revenue. 82 Table of Contents The following table shows General Fund sales tax collections since FY 2019-20. The amounts shown exclude the additional tax items that are collected based on water service accounts (jail tax and general excise tax). GENERAL FUND SALES TAXES (In Thousands of Dollars) Fiscal Year Revenues 2019-20 2020-21 2021-22 2022-23 (Est.) 2023-24 (Est.) 479,705 536,889 627,072 656,938 676,607 % Change From Previous Year 2.5 11.9 16.8 4.8 3.0 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 FY 2023-24 estimate for privilege license fee revenue of $3,005,000 is projected to remain flat from the FY 2022-23 estimate. 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 FY 2023-24 estimate of $7,601,000 is $68,000 or 0.9 percent more than the FY 2022-23 estimate of $7,533,000. This category also includes a general city services excise tax on municipal services bills based on water meter size implemented in July 2014. The FY 2023-24 estimate for the general city services excise tax of $11,378,000 is $90,000 or 0.8 percent more than the FY 2022-23 estimate of $11,288,000. The Government Property Lease Excise Tax (GPLET) is also included in this category, which is a tax incentive agreement negotiated between a private party and a local government. It was established by the State of Arizona in 1996 to stimulate development in commercial districts by temporarily replacing a building’s property tax with an excise tax. The FY 2023-24 estimate for the GPLET of $638,000 is projected to remain flat from the FY 2022-23 estimate. STATE-SHARED REVENUES General Funds Total Revenues - $1,830.9 Million State Shared Revenue 42.1% This major revenue category consists of the City’s share of the state sales tax, the state income tax and vehicle license tax. The FY 2023-24 estimate for this category is $769,938,000, which is $141,062,000 or 22.4 percent more than the FY 2022-23 estimate of $628,876,000. The increase is due to an estimated increase of 41.4 percent in state-shared income tax, 8.3 percent in vehicle license tax, and 2.9 percent in state sales tax. Prior to FY 2016-17 state-shared revenues were distributed to cities and towns based on mid-decade and decennial census counts and thus, except for minor adjustments primarily due to annexations, each city or town’s relative share only changed every five years. However, due to a change in State law that occurred in 2016, state-shared revenue distributions began to be updated annually based on Census Bureau population estimates starting in FY 2016-17. The decennial census will continue to be used, but only for the year it is completed. 83 Table of Contents 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. As indicated previously, these funds are distributed to individual cities on the basis of relative population percentages. However, the Census Bureau population estimates to be used for FY 2023-24 were not available in time for developing the budget projections. Since no significant changes were anticipated, Phoenix’s share of 27.87 percent for FY 2022-23 was used for FY 2023-24. The City’s share of the state sales tax for FY 2023-24 is expected to be $248,655,000, which is $7,027,000 or 2.9 percent more than the FY 2022-23 estimate of $241,628,000. The increase in state-shared sales tax revenue is based on actual collections in FY 2022-23 and anticipated modest growth in FY 2023-24. The table below shows the cities’ share of state sales tax, Phoenix’s allocation and annual increase since FY 2019-20. STATE SALES TAXES (In Thousands of Dollars) Fiscal Year Cities’ Share of State Collections Total % Change Percent 2019-20 2020-21 2021-22 2022-23 (Est.) 2023-24 (Est.) 589,352 687,053 809,916 860,962 889,082 5.0 29.1 16.6 29.0 17.9 28.1 6.3 27.9 3.3 27.9* Phoenix’s Share Amount % Change 171,927 201,292 229,901 241,628 248,655 4.2 17.1 14.2 5.1 2.9 *Estimated - Final U.S. Census Bureau estimates were not available during budget development. State Income Tax Since 1973, cities in Arizona have shared 15 percent of the actual state individual and corporate income tax collected two years earlier. Pursuant to Laws 2021, Chapter 412, beginning in FY 2023-24, the state-shared income tax distribution percentage is increased from 15% to 18% to compensate for revenue loss to cities and towns due to the individual income tax cut. Individual cities receive their portion based on the cities’ share of the state population. Similar to state-shared sales tax, since Census Bureau population estimates were not available in time for developing the budget projections and no significant changes were anticipated, Phoenix’s share for FY 2022-23 was used for FY 2023-24. Starting from FY 2023-24, Arizona cities and towns will receive 18% of the state income tax, which is expected to be $1.565 billion. The distribution represents actual individual and corporate income tax collections by the State in the 2021-22 fiscal year. The anticipated $1.565 billion is a 41.4 percent increase from the previous fiscal year. The surge in FY 2023-24 is due to the distribution share increase from 15% to 18% and additional income tax collections in FY 2021-22. Phoenix's total distribution for FY 2023-24 is estimated at $435,656,000, which is an increase of $127,473,000 or 41.4 percent from the FY 2022-23 estimate of $308,183,000. The following table shows the total cities’ share of state income tax, Phoenix’s share, percentage allocation and annual increase/decrease since FY 2019-20. STATE INCOME TAX (In Thousands of Dollars) Fiscal Year 2019-20 2020-21 2021-22 2022-23 (Est.) 2023-24 (Est.) Cities’ Share of State Collections Phoenix’s Share % Shared % w/Cities Total Change Percent Amount 15.0 15.0 15.0 15.0 18.0 737,561 828,493 756,344 1,106,959 1,564,826 9.3 12.3 (8.7) 46.4 41.4 *Estimated - Final U.S. Census Bureau estimates were not available during budget development. 84 29.1 29.0 28.0 27.8 27.8* 214,697 240,237 213,294 308,183 435,656 % Change 9.0 11.9 (11.2) 44.5 41.4 Table of Contents Vehicle License Tax Vehicle license tax has 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. A portion of vehicle license tax collections is allocated to the Arizona Highway User Revenue Fund, with the remainder being 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. As with the other state-shared revenues since Census Bureau population estimates were not available in time for developing the budget projections and no significant changes were anticipated, Phoenix’s share of 38.9 percent of Maricopa County for FY 2022-23 was used for FY 2023-24. Phoenix’s share of the vehicle license tax for FY 2023-24 is anticipated to be $85,627,000, which is $6,562,000 or 8.3 percent more than the FY 2022-23 estimate of $79,065,000. The increase is primarily attributable to the discontinuation of the alternative fuel vehicle license tax discount starting from January 1, 2023. The following table shows the cities’ share of the vehicle license tax, Phoenix’s share, allocation percentage and annual percentage change since FY 2019-20. VEHICLE LICENSE TAX (In Thousands of Dollars) Fiscal Year Amount Distributed by Phoenix’s Share Maricopa County Percent Amount 2019-20 2020-21 2021-22 2022-23 (Est.) 2023-24 (Est.) 173,623 197,392 194,736 203,121 219,979 40.6 40.4 40.4 38.9 38.9* 70,484 79,768 78,695 79,065 85,627 Increase/(Decrease) Amount Percent 274 9,284 (1,073) 370 6,562 0.4 13.2 (1.3) 0.5 8.3 *Estimated - Final U.S. Census Bureau estimates were not available during budget development. PRIMARY PROPERTY TAX General Funds Total Revenues - $1,830.9 Million Primary Property Tax 11.3% 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 voter-approved 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 untaxed property (primarily new construction), and allowable tort liability judgments. The Phoenix City Charter also limits the primary property tax rate to no more than $1.00 plus the amount to cover the costs of libraries. 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. The amendment has capped the limited property value at no greater than 5.0 percent above the previous year, plus new construction since FY 2015-16. 85 Table of Contents The chart below shows the primary property tax rate since FY 2019-20. The estimated FY 2023-24 primary property tax levy is $209,026,000. The levy is a 3.9 percent increase over the FY 2022-23 levy of $201,207,000. The primary net assessed valuation of $16.27 billion is 5.0 percent above the FY 2022-23 primary net assessed valuation of $15.49 billion. Historically, actual property tax collections have been slightly lower than the amount levied. For FY 2023-24, collections for primary property tax are estimated to be $206,935,000, or 99 percent of the levy amount. Primary Property Tax Rate $1.50 $1.31 $1.31 $1.31 $1.30 $1.29 2019-20 2020-21 2021-22 2022-23 2023-24 $1.25 $1.00 $0.75 $0.50 $0.25 $0.00 Fiscal Year The FY 2023-24 levy results in a primary property tax rate of $1.2851 per $100 of assessed value and a secondary property tax rate of $0.8141, for a total property tax rate of $2.0992 per $100 of assessed value. The table below shows primary assessed valuation, primary property tax revenues and primary rates since FY 2019-20. PRIMARY PROPERTY TAX Primary Net Assessed Valuation (in Millions) % Change Primary Levy (in Thousands) % Change Rate per $100 Net Assessed Valuation 13,223 6.6 172,626 5.8 1.3055 2020-21 13,923 5.3 181,767 5.3 1.3055 2021-22 14,801 6.3 193,225 6.3 1.3055 2022-23 15,491 4.7 201,207 4.1 1.2989 2023-24 16,265 5.0 209,026 3.9 1.2851 Fiscal Year 2019-20 86 Table of Contents USER FEES/OTHER REVENUES General Funds Total Revenues - $1,830.9 Million User Fees and Other Revenues - 8.4% This major revenue category consists of licenses and permits, cable television fees, fines and forfeitures, 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 FY 2023-24 estimate for this category is $154,801,000, which is $2,847,000 or 1.9 percent more than the FY 2022-23 estimate of $151,954,000. The increase is primarily due to the estimated revenue growth in fees/charges from Fire, Police, and Street Transportation departments. Following are descriptions of the various categories and explanations of the revenue estimates. 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 FY 2023-24 estimate of $3,070,000 is $50,000 or 1.7 percent more than FY 2022-23 estimate of $3,020,000. The projection assumes a slight increase in liquor license applications and for other activity to remain unchanged from FY 2022-23. 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 FY 2023-24 estimate of $8,000,000 is $200,000 or 2.4 percent less than FY 2022-23 estimate of $8,200,000. The decrease is due to an anticipated decline in cable television customers in Phoenix. Fines and Forfeitures This category is comprised of various sanctions, including traffic moving violations, criminal offense fines, parking violations, driving under the influence, defensive driving program and substance abuse screening service. The FY 2023-24 estimate of $7,987,000 is $20,000 or 0.3 percent less than the FY 2022-23 estimate of $8,007,000. The slight decrease is attributable to a one-time income in FY 2022-23, which will not occur in FY 2023-24. Court Default Fee A default fee was implemented in FY 1993-94 in order to recover court costs associated with defendants who fail to appear for court or fail to pay previously imposed sanctions on civil traffic violations. In FY 2009-10, the fee was increased from $25 to $40. The FY 2023-24 estimate for court default fee revenue of $778,000 is projected to remain flat from the FY 2022-23 estimate. Fire 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 FY 2023-24 estimate for ETS is $51,332,000, which is $1,593,000 or 3.2 percent more than the FY 2022-23 estimate of $49,739,000. The increase mainly reflects the inflationary rate adjustment. Other Fire revenue sources include fire prevention inspection fees, computer-aided dispatch (CAD) and various other charges for the services provided to the community. The FY 2023-24 estimate for other fire services is $18,066,000, which is $239,000 or 1.3 percent more than the FY 2022-23 estimate of $17,827,000. This increase is primarily due to an estimated increase in CAD collections. 87 Table of Contents Hazardous Materials Permit and Inspection Fee Because incidents involving hazardous materials have increased over the years, a hazardous material 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 FY 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 FY 2023-24 estimate of $1,700,000 is projected to increase by $200,000 from the FY 2022-23 estimate of $1,500,000 due to an anticipated increase in inspections. Library Fees In November 2019, the City waived all overdue library fines and discontinued assessing fines on library items returned late. The revenue lost from this program is being partially offset by additional revenue from the Maricopa County Library Assistance Program. Library revenues are primarily generated from the Maricopa County Library Assistance Program, copier/printer and damaged library materials fees, wireless communications license fees and room rentals at City libraries. The FY 2023-24 estimate of $439,000 is $4,000 more than the FY 2022-23 estimate of $435,000. During the pandemic, several branches were closed, events were canceled, and revenues reduced significantly in FY 2020-21 and have slowly recovered in FY 2021-22. A slight increase in projection accounts for additional rentals in FY 2023-24. 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 Ak-Chin Pavilion, and other miscellaneous park fees. The FY 2023-24 estimate of $6,371,000 is $49,000 or 0.8 percent more than the FY 2022-23 estimate of $6,322,000. The slight increase in FY 2023-24 is primarily attributable to expected revenue increases in various miscellaneous fees, charges from South Mountain Park, ballpark fees, concession revenues, and revenue from selling alcoholic beverage permits. 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 FY 2023-24 estimate of $1,811,000 is projected to remain flat from the FY 2022-23 estimate. Police 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. The estimate of $14,511,000 in FY 2023-24 is projected to increase by $919,000 or 6.8 percent from the FY 2022-23 forecast of $13,592,000. The increase is primarily attributable to anticipated higher revenues from police personal services billings and miscellaneous fees, which is offset by an estimated decline in fees from false alarm assessments. 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 FY 2023-24 estimate of $6,976,000 is $712,000 or 11.4 percent more than the FY 2022-23 estimate of $6,264,000. The increase is mainly due to an anticipated increase in revenues from rights-of-way fees and other miscellaneous fees. 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 concessions. The FY 202324 estimate of $30,221,000 is $628,000 or 2.0 percent less than the FY 2022-23 estimate of $30,849,000. The decrease is primarily due to less estimated revenues from rentals and concessions, offset by more anticipated revenue from parking garages. All Other Fees This fee category consists of miscellaneous service charges in the Finance, Human Services and Neighborhood Services departments and miscellaneous categories. The FY 2023-24 estimate of $3,539,000 is $70,000 or 1.9 percent less than the FY 2022-23 estimate of $3,609,000. The decrease is mainly due to lower anticipated other miscellaneous revenue, which is offset by higher expected revenue from Human Services. 88 Table of Contents 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 FY 2023-24 revenue estimates. The table on the next page provides FY 2022-23 and FY 2023-24 estimates as well as FY 2021-22 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, 2007 Public Safety Expansion, Public Safety Enhancement, Parks and Preserves, and Transportation 2050. 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, Regional Wireless Cooperative, Golf Courses, grant funds and other revenues. Neighborhood Protection Sales Tax 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 FY 2023-24 estimate of $53,422,000 is $1,717,000 or 3.3 percent more than the FY 2022-23 estimate of $51,705,000. These estimates are consistent with those for the same categories in the local sales tax discussion. In addition, $365,000 is estimated for combined net interest earnings in FY 2023-24. 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 FY 2023-24 estimate of $106,843,000 is $3,431,000 or 3.3 percent more than the FY 2022-23 estimate of $103,412,000. These estimates are consistent with those for the same categories in the local sales tax discussion. In addition, $278,000 is estimated for interest earnings in FY 2023-24. 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. 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 FY 2023-24 estimate of $29,845,000 is $221,000 or 0.7 percent more than the FY 2022-23 estimate of $29,624,000. 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 FY 2023-24 estimate of $53,420,000 is $1,713,000 or 3.3 percent more than the FY 2022-23 estimate of $51,707,000. These estimates are consistent with the estimates for the same categories in the local sales tax discussion. In addition, $2,777,000 is estimated for land rentals, lease revenue and interest earnings in FY 2023-24. 89 Table of Contents NON-GENERAL FUND REVENUE BY MAJOR (In Thousands NON-GENERAL FUND REVENUE BY MAJOR SOURCESOURCE (In Thousands of Dollars) of Dollars) Increase/(Decrease) From 2022-23 Estimate Amount Percent Revenue Source 2021-22 Actual 2022-23 Estimate 2023-24 Budget SPECIAL REVENUE FUNDS Neighborhood Protection 2007 Public Safety Expansion Public Safety Enhancement Parks and Preserves Transportation 2050 Court Awards Development Services Capital Construction Sports Facilities Arizona Highway User Revenue Regional Transit Revenues Community Reinvestment Secondary Property Tax Regional Wireless Cooperative Golf Courses City Improvement Impact Fee Program Administration Court Special Fees Monopole Rental Tennis Center Vehicle Impound Program Heritage Square Affordable Housing Program Jet Fuel Other Restricted Fund Recreational Marijuana Special Revenue Fund Other Restricted (gifts/trusts) 49,951 98,481 26,536 50,214 362,608 6,051 87,583 6,351 30,963 156,459 7,059 6,950 123,935 5,147 10,310 1 784 750 168 50 2,333 1 3,352 707 12,812 21,783 52,244 103,758 29,624 55,981 390,829 5,651 91,614 6,414 32,705 153,839 43,172 8,888 129,609 5,993 10,784 3 674 781 169 76 2,402 41 9,130 811 14,159 25,503 53,787 107,121 29,845 56,197 402,264 4,673 84,311 6,157 32,452 158,475 82,429 11,905 134,938 7,156 10,130 628 764 169 76 2,471 36 7,889 823 14,691 27,266 1,543 3,363 221 216 11,435 (978) (7,303) (257) (253) 4,636 39,257 3,017 5,329 1,163 (654) (3) (46) (17) 1 1 69 (5) (1,241) 12 532 1,763 3.0% 3.2% 0.7% 0.4% 2.9% -17.3% -8.0% -4.0% -0.8% 3.0% 90.9% 33.9% 4.1% 19.4% -6.1% -100.0% -6.8% -2.2% 0.3% 0.7% 2.9% -12.2% -13.6% 1.5% 3.8% 6.9% Grants Public Housing Grants Human Services Grants Community Development Criminal Justice Public Transit Grants Other Grants Subtotal - Grants 108,530 134,441 17,446 12,256 172,858 145,591 591,122 130,335 119,208 37,061 14,585 44,045 177,421 522,655 194,819 69,662 44,010 11,703 136,908 325,223 782,325 64,484 (49,546) 6,949 (2,882) 92,863 147,802 259,670 49.5% -41.6% 18.7% -19.8% +100% 83.3% 49.7% 1,662,461 1,697,506 2,018,978 321,472 18.9% 573,639 492,275 266,858 199,649 99,148 576,271 539,529 263,303 198,103 110,448 528,508 627,172 289,188 197,194 112,998 (47,763) 87,643 25,885 (909) 2,550 -8.3% 16.2% 9.8% -0.5% 2.3% 1,631,569 3,294,030 1,687,654 3,385,160 1,755,060 3,774,038 67,406 388,878 4.0% 11.5% Total Special Revenue Funds ENTERPRISE FUNDS Aviation Water System Wastewater System Solid Waste Convention Center Total Enterprise Funds TOTAL NON-GENERAL FUND 90 Table of Contents Transit 2000 and Transportation 2050 Funds Effective January 1, 2016, Proposition 104 established the Transportation 2050 sales tax, which increased the 0.4 percent Transit 2000 sales tax previously passed by Proposition 2000 to fund a comprehensive transportation plan with a new 35-year sunset date. The Proposition increased the transaction privilege (sales) tax by 0.3 percent for various business activities. Since January 2016, sales tax collections from Proposition 104 have been budgeted and accounted for in the Transportation 2050 fund, while sales tax collections prior to that time from Proposition 2000 were included in the Transit 2000 fund. The FY 2023-24 sales tax estimate for Transportation 2050 is $364,773,000, which is $11,595,000 or 3.3 percent more than the FY 2022-23 estimate of $353,178,000. These estimates are consistent with the estimates for the same categories in the local sales tax discussion. 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 FY 2023-24 fare box revenue estimate of $21,718,000 is projected to increase by $1,078,000 or 5.2 percent from the FY 2022-23 estimate of $20,640,000. This increase is primarily attributable to continued increases in ridership after the pandemic. The FY 2023-24 estimate also includes revenues from bus shelter advertising, interest earnings and other miscellaneous fees of $15,773,000, which is $1,238,000 or 7.3 percent less than the FY 2022-23 estimate of $17,011,000. This decrease is due to less anticipated revenue from interest income, offset by more expected revenue from bus shelter advertising. 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 FY 2023-24 is $4,673,000, which is $978,000 or 17.3 percent less than the FY 2022-23 estimate of $5,651,000. The decrease reflects less anticipated cases in FY 2023-24. 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 FY 2023-24 estimate is $84,311,000, which is $7,303,000 or 8.0 percent less than the FY 2022-23 estimate of $91,614,000. This decrease is primarily due to estimated revenue declines in building permit fees, building plan review fees, interest earnings and other miscellaneous fees, which is offset by more estimated revenue from other building fees and engineering permits. 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 FY 2023-24 estimate is $5,623,000, which is $257,000 or 4.4 percent less than the FY 2022-23 estimate of $5,880,000. The telecommunications tax category has experienced a declining trend, which might be caused by the transition from the hard-wired telephone lines to non-taxable data/Internet-based communications. The FY 2023-24 estimate also includes interest earnings of $534,000. Sports Facilities Sports facilities revenues consist of a 1 percent portion of the 5.3 percent hotel/motel tax category, a 2 percent tax on shortterm motor vehicle rentals, and interest revenue generated by the fund. The FY 2023-24 estimate is $28,488,000, which is $374,000 or 1.3 percent more than the FY 2022-23 estimate of $28,114,000. The revenue estimates are consistent with the estimates for the same categories in the local sales tax discussion. The FY 2023-24 estimate also includes $3,964,000 in other revenues, including lease payments from the Translational Genomics Research Institute and interest earnings. 91 Table of Contents 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. These statewide funds are deposited in the state’s Highway User Revenue Fund (HURF) for allocation, including an allocation to cities and towns. Phoenix’s HURF distribution is recorded in the city’s Arizona Highway User Revenue (AHUR) fund. A new distribution formula for HURF 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). For FY 2023-24, Phoenix is projected to receive $125.3 million from the allocation to all cities and towns and $32.7 million from the allocation to cities and towns over 300,000 population. The total FY 2023-24 HURF distribution estimate of $157,955,000 is $6,095,000 more than the FY 2022-23 estimate of $151,860,000. The increased FY 2023-24 estimate is primarily attributed to projected increases in collections of gas and use fuel tax (3.5 percent) and vehicle license tax (VLT) (6.0 percent). VLT growth is partially driven by legislation that eliminated VLT subsidies for alternative fuel vehicles, effective January 1, 2023. The estimate for FY 2023-24 interest revenue is $500,000, reduced from the FY 2022-23 estimate of $1,959,000 due to projected lower fund balance. Other revenues are estimated at $20,000, unchanged from FY 2022-23. The table below shows the state-shared HURF allocations to the City of Phoenix since FY 2019-20. ARIZONA HIGHWAY USER REVENUES (In Thousands of Dollars) Increase/(Decrease) Fiscal Year AHUR Distribution Amount Percent 2019-20 2020-21 2021-22 2022-23 (Est.) 2023-24 (Est.) 135,984 146,188 155,465 151,860 157,955 (2,880) 10,204 9,277 (3,605) 6,095 (2.1) 7.5 6.3 (2.3) 4.0 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 FY 2023-24 estimate of $82,429,000 is $39,257,000 or 90.9 percent higher than the FY 2022-23 estimate of $43,172,000. The increase is due to anticipated growth in service costs to be paid by other jurisdictions and the RPTA. Community Reinvestment The FY 2023-24 estimate of $11,905,000 is $3,017,000 or 33.9 percent more than the FY 2022-23 estimate of $8,888,000 and represents estimated revenues to be received through various economic redevelopment agreements in the downtown area. The significant increase is due to estimated growth in sales of real estate in FY 2023-24. 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 FY 2015-16. The amendment caps the limited property value at no greater than five percent above the previous year, plus new construction. As discussed in the General Fund revenue section, the FY 2023-24 primary property tax rate is $1.2851 per $100 of assessed valuation, reduced from the FY 2022-23 primary property tax rate of $1.2989 per $100 of assessed valuation. The FY 2023-24 secondary rate is $0.8141 per $100 of assessed value and is unchanged from the FY 2022-23 secondary rate. The combined tax rate is $2.0992. The FY 2023-24 secondary property tax levy of $132,416,000 is based on this $0.8141 rate and the primary net assessed valuation of $16.27 billion. This resulting levy increases the FY 2022-23 secondary property tax levy of $126,108,000 by $6,308,000 to satisfy debt service requirements. Also included in the FY 2023-24 estimate is $3,846,000 in bond interest subsidies. Revenues are partially offset by an estimated $1,324,000 in uncollected taxes. In total, secondary property tax and bond interest subsidy revenue is estimated to be $134,938,000. 92 Table of Contents The table below shows secondary assessed valuation, secondary property tax levies and secondary property tax rates since FY 2019-20. SECONDARY PROPERTY TAX Rate per $100 Fiscal Year 2019-20 2020-21 2021-22 2022-23 2023-24 Net Assessed Valuation (in Millions) % Change Secondary Levy (in Thousands) % Change Net Assessed Valuation 13,223 13,923 14,801 15,491 16,265 6.6 5.3 6.3 4.7 5.0 108,971 114,741 120,494 126,108 132,416 6.6 5.3 5.0 4.7 5.0 0.8241 0.8241 0.8141 0.8141 0.8141 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 communication needs of first responders and other municipal radio users. It currently includes twenty-two cities, towns, fire districts, and other government agencies located in the Phoenix metropolitan region, as well as two associate, one long-term conditional and nearly 50 interoperability participating agencies. 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/agencies for their share of the cost to operate and maintain the network. The FY 2023-24 revenue estimate of $7,156,000 is $1,163,000 or 19.4 percent more than the FY 2022-23 estimate of $5,993,000. The double-digit increase is due to anticipated radio rate and count increases in FY 2023-24 and additional reimbursements from members for upgrade projects. Golf Courses Revenue sources in the golf course category include golf course fees, golf range balls, golf identification cards, golf cart rentals and pro shop sales at city-run golf courses, which include Aguila, Cave Creek, Encanto, and Palo Verde. The FY 202324 estimate of $10,130,000 is $654,000 or 6.1 percent less than the FY 2022-23 estimate of $10,784,000. Activity level for golf courses is anticipated to decrease in FY 2023-24, as more worn-out golf carts will occur and there might be a delay in replacing these golf carts. 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. The FY 2023-24 revenue is estimated at $628,000, which is $46,000 or 6.8 percent less than the FY 2022-23 revenue estimate of $674,000. The decrease is mainly attributed to an estimated decline in impact fees because of one-time projects in FY 2022-23 and estimated reduced interest earnings due to a projected lower fund balance. Other Restricted Fees Included in this category are revenues associated with the Court Technology Enhancement fee and the Judicial Collection Enhancement Fund, monopole rentals from several city parks, Tennis Center at Washington Park, Vehicle Impound fees, Heritage Square, Affordable Housing Program, Jet Fuel Other Restricted Fund, and recreational marijuana (MJ) special revenue fund. The Jet Fuel Other Restricted Fund was established to account for jet fuel sales and use tax as a result of a Federal Aviation Administration policy requiring that those funds be used only for aviation-related purposes, which was subsequently included in State law with an effective date of December 2017. The recreational MJ special revenue fund was created for the recreational MJ sales taxes earmarked for the public safety pension liability. On June 16, 2021, the City Council adopted the pension funding policy that designated the General Fund portion of the City sales tax from recreational MJ retail sales and the state-shared 16% excise tax on the MJ sales for Police and Fire personnel costs to pay down the public safety pension liability. Also included is revenue from restricted fees for recreation and other programs, and donations specified for various City programs. The FY 2023-24 estimate of $54,183,000 is $1,112,000 or 2.1 percent more than the FY 2022-23 estimate of $53,071,000. The increase is primarily due to the anticipated increases in the opioid settlement funding and recreational MJ sales tax, offset by estimated reduced revenues in the Affordable Housing Program. 93 Table of Contents Public Housing Grants The FY 2023-24 Public Housing grants revenue included in the annual operating budget is $194,819,000, which is $64,484,000 or 49.5 percent more than the FY 2022-23 estimate of $130,335,000. This increase is primarily due to more housing assistance payments and HOME Investment Partnerships Program (HOME) funding from the federal government, which is offset by less revenue from housing subsidies, rentals, and other miscellaneous revenue. The HOME program is aimed at increasing the availability of affordable rental housing and expanding home ownership opportunities for first-time homebuyers. Human Services Grants The FY 2023-24 revenue estimate of $69,662,000 is $49,546,000 or 41.6 percent less than the FY 2022-23 estimate of $119,208,000. The decrease is primarily due to the reduction in the Emergency Rental Assistance Program and Head Start funds. This category includes funds from the Department of Health and Human Services, Department of Housing and Urban Development, Workforce Investment Act, and Aging Program Grants. 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 low-and moderate-income persons; aid in the prevention or elimination of slums and blight; or meet other urgent community development needs. The FY 2023-24 CDBG entitlement is $44,010,000, which is $6,949,000 or 18.7 percent more than the FY 2022-23 estimate of $37,061,000. The increase is primarily due to carryovers from FY 2022-23 to FY 2023-24. Criminal Justice Grants The FY 2023-24 grant revenue for criminal justice programs is estimated to be $11,703,000, which is $2,882,000 or 19.8 percent less than the FY 2022-23 estimate of $14,585,000. The decrease is due to estimated reductions in Police operating grant funding. Grants include funding for the Police Department training academy, drug trafficking prevention, internet crimes against children task force program, law enforcement community engagement training, and other crime related prevention programs. Public Transit Grants The FY 2023-24 Federal Transit Administration Grant estimate is $136,908,000 reflecting an increase of $92,863,000 or 210.8 percent more than the FY 2022-23 estimate of $44,045,000. The significant increase is mainly due to the additional funding from the Federal Transit Administration for several capital projects. Other Grants The FY 2023-24 budget also includes $325,223,000 for federal, state and other grants, which is $147,802,000 or 83.3 percent more than the FY 2022-23 estimate of $177,421,000. The substantial increase is primarily due to Coronavirus State and Local Fiscal Recovery Funds (SLFRF) awarded to the City under the ARPA signed by President Biden in March 2021 to provide further relief from the COVID-19 pandemic. This funding was allocated based on the Council-approved strategic plan and in accordance with federal guidelines. The increase includes the carryover of this funding from FY 2022-23 to FY 202324. The increase is also attributable to the additional funding for Community Development Entitlement and carryovers for Neighborhood Stabilization Program and housing development grants. 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 primarily include airline operation fees, concession revenues and interest income at Sky Harbor International, Deer Valley and Goodyear airports. In December 2019, the City Council approved the imposition of new rideshare fees at Sky Harbor International Airport to help reduce the number of vehicles at the terminals and encourage the use of the free Sky Train. The fees went into effect on May 1, 2020, after being unanimously upheld by the Arizona Supreme Court in response to a lawsuit filed by the Arizona Attorney General. The fees are used to offset costs for infrastructure, maintenance, and improvements at the airport. Total Aviation revenue for FY 2023-24 is anticipated to be $528,508,000, which is $47,763,000 or 8.3 percent less than the FY 2022-23 estimate of $576,271,000. The decrease is due to the Aviation ARPA revenue received in FY 2022-23 in response to the pandemic, which is not anticipated in FY 2023-24. The decrease is offset by the continued growth in airline operation fees, concession and rental revenues as travel resumes after the pandemic. 94 Table of Contents The following table shows Aviation revenue by major category and annual percent change since FY 2019-20. SUMMARY OF AVIATION REVENUES (In Thousands of Dollars) 2022-23 Airline Operation Concessions and Rentals Interest Other/Federal Grants Goodyear Deer Valley 2019-20 2020-21 2021-22 (Est.) 2023-24 (Est.) 159,116 173,643 10,418 12,856 2,947 3,366 127,020 146,676 3,407 107,758 3,045 3,290 144,864 267,607 2,312 152,312 3,053 3,491 163,064 297,489 11,510 97,646 2,988 3,574 200,824 305,177 11,510 4,427 2,985 3,585 Total Aviation Revenue 362,346 391,196 573,639 576,271 528,508 Change from Prior Year (8.3)% 8.0% 46.6% 0.5% (8.3)% 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 FY 2023-24 is projected to be $627,172,000, which is $87,643,000 or 16.2 percent more than the FY 202223 estimate of $539,529,000. The double-digit increase accounts for the proposed Water rate increase to address rising costs and includes anticipated small increases in the number of accounts. The following table shows water system revenues by major category since FY 2019-20. SUMMARY OF WATER SYSTEM REVENUES (In Thousands of Dollars) 2022-23 2019-20 2020-21 2021-22 (Est.) 2023-24 (Est.) Water Sales Environmental Consumption Charge Raw Water Charge Interest Development Fees Combined Service Fees Val Vista All Other 315,381 68,719 34,427 5,225 5,536 1,983 8,081 14,763 352,111 78,589 39,560 1,573 5,896 1,955 9,390 3,088 347,231 73,910 36,652 2,253 6,365 1,987 8,416 15,461 371,808 75,230 37,602 12,726 6,200 5,000 10,285 20,678 446,784 78,774 39,870 7,256 6,200 5,000 10,661 32,627 Total Water Revenue 454,115 492,162 492,275 539,529 627,172 Change from Prior Year 12.7% 8.4% 0.0% 9.6% 16.2% 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 $289,188,000 in FY 2023-24, which is $25,885,000 or 9.8 percent more than the FY 2022-23 estimate of $263,303,000. The increase is mainly due to the proposed rate increase to address rising costs, interest earnings, and revenue from the multi-city sewer system. The following table shows Wastewater revenue by major category and annual percent change since FY 2019-20. SUMMARY OF WASTEWATER SYSTEM REVENUES (In Thousands of Dollars) 2022-23 Sewer Service Charge Environmental Charges Development Fees Interest Multi-City Other 2019-20 2020-21 2021-22 (Est.) 2023-24 (Est.) 171,133 35,294 5,152 6,047 15,296 19,742 172,712 35,775 5,723 2,674 14,017 23,843 177,045 36,864 6,086 2,044 13,610 31,209 172,863 35,896 6,200 7,088 15,872 25,384 195,432 36,636 6,200 8,752 16,972 25,196 Total Wastewater Revenue 252,664 254,744 266,858 263,303 289,188 Change From Prior Year 4.0% 0.8% 4.8% (1.3%) 9.8% 95 Table of Contents Solid Waste This category includes revenues from the monthly residential collection and landfill tipping fees. The FY 2023-24 estimate of $197,194,000 is a slight decrease of $909,000 or 0.5 percent less than the FY 2022-23 estimate of $198,103,000. The revenue decrease is primarily due to less anticipated revenue from interest earnings as the anticipated decreased fund balance, offset by anticipated more revenue from solid waste service and city landfill fees. In February 2020, the City Council approved an increase to the solid waste monthly rate for residential customers of $3.75 effective in April 2020 and another increase of $3.25 effective in January 2021, and a 2 percent inflation rate to be added to the residential rate each year effective in January 2022 until 2026. 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 2.3 percent tax on construction, printing, publishing, transportation/towing and restaurant/bar sales, plus a 2.0 percent portion of the 5.3 percent hotel/motel tax on rooms rented for 30 days or less. Earmarked sales taxes are expected to produce $86,163,000 in FY 2023-24, an increase of $1,538,000 or 1.8 percent above the FY 2022-23 estimate of $84,625,000. Convention Center operating revenues are expected to be $20,090,000, parking revenue is expected to be $5,545,000, and interest revenue is expected to be $1,200,000, for a total revenue estimate of $112,998,000. This is $2,550,000 or 2.3 percent more than the FY 2022-23 total estimated revenue of $110,448,000. The increase is due to the expected growth in sales tax and the activity levels at the Convention Center. The tax estimates for Convention Center are also 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 FY 2019-20. CONVENTION CENTER SALES TAXES (In Thousands of Dollars) Increase/(Decrease) Fiscal Year Amount Collected Amount Percent 2019-20 2020-21 2021-22 2022-23 (Est.) 2023-24 (Est.) 55,266 54,331 77,786 84,625 86,163 (5,934) (935) 23,455 6,839 1,538 (9.7) (1.7) 43.2 8.8 1.8 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 following pie chart, contracting and tourism represent 95 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. The tourism industry has been hit especially hard by the novel coronavirus. In the General Fund, however, contracting and tourism represent only 15 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 increase estimates assume City sales tax will continue to grow, albeit at a slower pace. 2023-24 Convention Center Earmarked Sales Taxes Tourism-related 62% Other 5% Contracting 33% 96 Table of Contents GENERAL GOVERNMENT 97 Table of Contents MAYOR Program Goal Budget Allowance Explanation The Mayor is elected on a nonpartisan ballot to represent the entire City for a four-year term. 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. The Mayor’s Office 2023-24 operating budget allowance of $2,700,000 is $212,000 or 8.5 percent more than 2022-23 estimated expenditures. The budget reflects negotiated increases in employee compensation. Expenditure and Position Summary Operating Expense Total Positions 2021-22 Actual 2022-23 Estimate 2023-24 Budget $2,200,000 15.0 $2,488,000 15.0 $2,700,000 15.0 $2,200,000 $2,488,000 $2,700,000 Source of Funds: General Fund CITY COUNCIL Program Goal Budget Allowance Explanation The City Council is composed of eight council members elected by districts on a nonpartisan ballot. Four-year terms for council members from odd-numbered districts expire in April 2025. Terms for council members from even-numbered districts expire in April 2027. 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. The 2023-24 City Council operating budget allowance of $6,854,000 is $470,000 or 7.4 percent more than 2022-23 estimated expenditures. The budget reflects negotiated increases in employee compensation and other normal inflationary adjustments. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $4,782,000 41.5 $6,384,000 45.5 $6,854,000 45.5 Source of Funds: General Fund $4,782,000 $6,384,000 $6,854,000 98 Table of Contents CITY MANAGER Program Goal Budget Allowance Explanation The City Manager’s Office 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. The City Manager’s Office 2023-24 operating budget allowance of $20,128,000 is $11,541,000 or 134.4 percent more than 2022-23 estimated expenditures. This is primarily due to an increase in American Rescue Plan Act (ARPA) grants and an increase in the General Fund. The General Fund 2023-24 budget allowance of $11,109,000 is $3,471,000 or 45.4 percent more than 2022-23 estimated expenditures. The increase is primarily due to annualization of staffing and related costs for the Office of Accountability and Transparency. In addition, the conversion of Office of Heat Response, Office of Innovation, and Citywide grant administration staff from ARPA grant funds to the General Fund. Negotiated increases in employee compensation also contributed to the increase. The Grants 2023-24 budget allowance of $8,734,000 is $8,063,000 or 1,201.6 percent more than 2022-23 estimated expenditures. This is primarily due to additional ARPA grant funding for the Office of Heat Response and the Office of Innovation. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $6,978,000 56.5 $8,587,000 65.0 $20,128,000 65.0 Source of Funds: General Fund Grants Water $6,143,000 589,000 246,000 $7,638,000 671,000 278,000 $11,109,000 8,734,000 286,000 REGIONAL WIRELESS COOPERATIVE Program Goal Budget Allowance Explanation 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 communication needs of first responders and other municipal radio users in and around central Arizona. Formerly known as the Phoenix Regional Wireless Network, the RWC has expanded to service a still 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 2023-24 operating budget allowance of $6,881,000 is $657,000 or 10.6 percent more than 202223 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. In addition, included in the 2023-24 budget is funding for a new part-time accountant to support administrative and accounting responsibility of the VHF (conventional) radio network. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $4,808,000 4.0 $6,224,000 4.0 $6,881,000 5.0 Source of Funds: RWC $4,808,000 $6,224,000 $6,881,000 99 Table of Contents GOVERNMENT RELATIONS Program Goal Budget Allowance Explanation Government Relations represents the City, as appropriate, in contacts with federal, state, regional, county and other local governments. Government Relations also is charged with citywide grants coordination. The Government Relations 2023-24 operating budget allowance of $1,581,000 is $194,000 or 14.0 percent more than 2022-23 estimated expenditures. The budget reflects negotiated increases in employee compensation and to implement the results from the Classification and Compensation study, along with other normal inflationary adjustments. Government Relations Major Performance Measures and Service Levels The following significant performance measures and service level trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget 89% 81 65 75% 85% 70 65 76% 85% 70 70 74% 94 95 93 Percentage of Arizona state legislative bills opposed by the City which were not enacted Number of strategic federal meetings brokered for elected officials or government executives Number of strategic state and local meetings brokered for elected officials or government executives Success rate of federal and state competitive grants and private foundation grants that Government Relations assisted departments securing Number of tribal gaming grants processed by Government Relations 1 Based on 10 months actual experience. Expenditure and Position Summary Operating Expense Total Positions Source of Funds: General Fund 2021-22 Actual 2022-23 Estimate 2023-24 Budget $1,288,000 5.0 $1,387,000 6.0 $1,581,000 6.0 $1,288,000 $1,387,000 $1,581,000 COMMUNICATIONS OFFICE Program Goal Budget Allowance Explanation The Communications Office supports the City Manager’s Office by developing and coordinating strategic messaging regarding City services, events, and resources across all departments to residents, media, businesses, and visitors. The Communications Office is responsible for creating content for the City website, PHXTV, social media platforms, and produces live stream programing. In addition, the office oversees the management of public records requests citywide. The Communications Office 2023-24 operating budget allowance of $4,803,000 is $803,000 or 20.1 percent more than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement results from the Classification and Compensation study. It also reflects expanded contractual funding for citizen engagement and marketing efforts. These increases are partially offset by the conclusion of American Rescue Plan Act funding and reduced usage of communications infrastructure funds. Communications Office Major Performance Measures and Service Levels The following significant performance measures and service level trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual New PHXTV content produced per year Annual number of PIO interactions with media Average response time to public records requests (days) Phoenix.gov pageviews (monthly average) Social media impressions per year Email messages sent to residents via GreenRope Annual number of strategic paid media campaigns 1 496 921 1.5 1,775,050 28,986,218 8,069,778 3 Based on 10 months actual experience. Expenditure and Position Summary Operating Expense Total Positions Source of Funds: General Fund Other Restricted Grants 2021-22 Actual 2022-23 Estimate 2023-24 Budget $3,476,000 21.1 $4,000,000 24.0 $4,803,000 23.0 $3,360,000 6,000 110,000 $3,701,000 150,000 150,000 $4,778,000 25,000 100 2022-23 Estimate1 595 1,100 1.5 1,650,000 34,500,000 9,600,000 4 2023-24 Budget 650 1,100 1.5 1,600,000 32,000,000 10,000,000 7 Table of Contents CITY AUDITOR Program Goal Budget Allowance Explanation 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. The City Auditor 2023-24 operating budget allowance of $3,682,000 is $358,000 or 10.8 percent more than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study, as well as increased costs for external auditing services. City Auditor Major Performance Measures and Service Levels Expenditure and Position Summary The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 2023-24 Estimate1 Budget Percent of audit plan completed 89% 80% 80% Performance audit and management reports issued 92 80 71 Percent of audit recommendations implemented within two years 96% 90% 90% Economic impact of audits as a result of identified improvements or cost savings (millions)2 $0.87 $0.50 $0.60 Hearing rulings issued timely according to time frames listed in the city code 100% 100% 100% 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $2,743,000 25.4 $3,324,000 25.4 $3,682,000 25.4 Source of Funds: General Fund $2,743,000 $3,324,000 $3,682,000 Based on 10 months actual experience. 2023-24 budget level is representative of the historical average. 1 2 City Auditor Thousands Impact of Recommendations $1,200 $1,000 $870 $800 $600 $600 $600 $500 $500 $400 $200 $0 2019-20 2020-21 2021-22 Fiscal Year The 2023-24 level is representative of the historical average. 101 2022-23* *Estimated 2023-24* Table of Contents EQUAL OPPORTUNITY Program Goal Budget Allowance Explanation 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. The Equal Opportunity Department 2023-24 operating budget allowance of $4,067,000 is $701,000 or 20.8 percent more than 2022-23 estimated expenditures. The increase is primarily due to fewer anticipated staff vacancies in 2023-24, as well as negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. Equal Opportunity Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget Discrimination complaints in employment, public accommodations, housing and ADA accessibility, investigated and closed2 212 300 350 Outreach presentations to small and disadvantaged businesses and small business advocacy organizations 35 40 40 Number of disadvantaged business enterprises (DBEs) certified 543 558 608 Number of small business enterprises (SBEs) certified 559 562 612 Number of SBE and DBE prime contracts monitored3 390 461 517 Based on 10 months actual experience. Discrimination complaints investigated and closed are based on the number of cases filed. Increases are expected due to the conversion of investigations staff from temporary to regular status. 3 The number of SBE and DBE prime contracts monitored are affected by the timing of the reporting period and the number of construction contracts received. 1 2 Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $3,231,000 27.0 $3,366,000 30.0 $4,067,000 30.0 Source of Funds: General Fund Grants Other Restricted $2,789,000 441,000 1,000 $2,856,000 511,000 - $3,486,000 562,000 19,000 102 Table of Contents HUMAN RESOURCES Program Goal Budget Allowance Explanation 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. The Human Resources Department 2023-24 operating budget allowance of $37,626,000 is $12,361,000 or 24.7 percent less than 2022-23 estimated expenditures. This is primarily due to the conclusion of Council-approved American Rescue Plan Act (ARPA) projects, including premium pay to employees and contributions to the City’s healthcare and workers’ compensation trusts. The General Fund 2023-24 budget allowance of $30,340,000 is $2,063,000 or 7.3 percent more than 2022-23 estimated expenditures. The increase is primarily due to carryover of funding for costs related to the City’s new Learning Management System, fewer anticipated vacancies, and negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. The 2023-24 budget also includes full-year funding for positions added mid-year in 2022-23 which support day-to-day business operations and provide employee customer service in the Benefits, Employee Relations, Talent Acquisition, Classification and Compensation, and Organizational Support and Leave Programs divisions. Human Resources Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget Percentage of hiring managers satisfied with applicants placed on hiring eligible list 76.7% 74.9% 78.0% Annualized employee turnover rate 7.7% 8.5% 7.4% Employee performance evaluations completed on time 71.4% 75.0% 75.0% 12 10 15 The number of employee suggestions received 1 Based on 10 months actual experience. Expenditure and Position Summary Operating Expense Total Positions Source of Funds: General Fund Grants 2021-22 Actual 2022-23 Estimate 2023-24 Budget $40,707,000 $49,987,000 $37,626,000 127.7 141.7 141.7 $20,630,000 20,077,000 $28,277,000 21,710,000 $30,340,000 7,286,000 103 Table of Contents PHOENIX EMPLOYMENT RELATIONS BOARD Program Goal Budget Allowance Explanation 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. The Phoenix Employment Relations Board 2023-24 operating budget allowance of $129,000 is $10,000 or 8.4 percent more than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study, as well as costs for conferences that did not occur in 2022-23. Phoenix Employment Relations Board Major Performance Measures and Service Levels Expenditure and Position Summary The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual Number of cases filed annually2 2022-23 2023-24 Estimate1 Budget 2 0 4 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions Source of Funds: $104,000 1.0 $119,000 1.0 $129,000 1.0 General Fund $104,000 $119,000 $129,000 Based on 10 months actual experience. 2 Number of cases filed varies depending upon specific issues encountered. 1 RETIREMENT SYSTEMS Program Goal Budget Allowance Explanation Retirement Systems provides staff support to the general, police and fire retirement boards and administers retirement programs for all city employees. The Retirement Systems 2023-24 gross operating budget allowance of $3,898,000 is $240,000 or 6.6 percent more than 2022-23 estimated expenditures. This is primarily attributed to vacancy savings that occurred in both the General Fund and Other Restricted Funds in 2022-23, as well as negotiated increases in employee compensation and the implementation of results from the Classification and Compensation study. Also contributing to the increase were additional contractual costs for medical evaluations for disability retirements. Retirement Systems Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: General City retirements2 Public safety retirements2 General City and public safety member contacts3 Appointments Walk-in service Telephone calls General City and Public Safety Benefit estimates provided (excluding self-service)3 2021-22 Actual 2022-23 Estimate1 2023-24 Budget 453 487 439 255 426 200 1,523 405 8,333 2,484 881 416 8,255 1,895 881 400 8,000 1,800 Based on 10 months actual experience. Fewer retirements are expected due to negotiated increases in employee compensation in 2023-24. 3 In 2022-23, the state Public Safety Personnel Retirement System took over most public safety retirement appointments and transactions. 1 2 Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense (Gross1) Total Positions $2,961,000 18.0 $3,658,000 18.0 $3,898,000 18.0 Source of Funds: General Fund (Gross1) Other Restricted $2,571,000 390,000 $3,093,000 565,000 $3,281,000 618,000 Gross costs are recovered through citywide assessments to all city departments. 1 104 Table of Contents LAW Program Goal Budget Allowance Explanation 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. The Law Department 2023-24 operating budget allowance of $35,833,000 is $4,813,000 or 15.5 percent more than 2022-23 estimated expenditures. The increase is partially due to new positions to facilitate the needs of the ongoing Department of Justice investigation. In addition, the increase to the General Fund (and corresponding decrease in Grants) is due to the decrease in funding from the Victim of Crime Act Assistance grant. Several positions funded by this grant were moved to the General Fund to stay in compliance with mandated victims’ rights. Finally, the budget includes negotiated increases for employee compensation and to implement the results from the Classification and Compensation study. Law Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget Number of cases submitted for charging review 25,577 27,180 27,000 Pre-trial disposition conferences set 60,297 57,065 57,000 Criminal cases sent to diversion (estimate) 1,465 1,380 1,350 39 37 35 Number of first Pre-trial Disposition Conferences (PDC) with body-worn camera (BWC) evidence 13,206 13,014 13,000 Number of hours of body worn camera footage requested for review2 22,204 12,851 20,000 Number of hours of BWC footage reviewed by LAU staff Number of jury trials prosecuted 14,402 12,007 16,000 New civil cases opened in the fields of condemnation, collection, taxes and civil litigation, excluding liability and other cases assigned to outside counsel 492 539 525 Number of civil Cases closed, including those assigned to outside counsel and handled through the alternative dispute resolution process3 331 824 300 1,210 1,156 1,150 Ordinances and resolutions for City Council adoption drafted and reviewed Based on 10 months actual experience. 2022-23 backlog of 1,331 cases waiting to be filled with an unknown number of hours. Additionally, the numbers are not fixed and increase based on date of violation requests. 3 Projected 2022-23 higher than normal due to a record retention project. 1 2 Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget $26,294,000 226.5 $31,020,000 245.0 $35,833,000 250.0 General Fund $24,643,000 $28,975,000 $34,147,000 Court Awards 55,000 46,000 52,000 Other Restricted 182,000 201,000 201,000 1,415,000 1,799,000 1,432,000 Operating Expense Total Positions Source of Funds: Grants 105 Table of Contents INFORMATION TECHNOLOGY Program Goal Budget Allowance Explanation Information Technology Services 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 cost-effective 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. The Information Technology Services (ITS) 2023-24 operating budget allowance of $92,904,000 is $13,315,000 or 16.7 percent more than 2022-23 estimated expenditures. The increase is primarily due to the transfer of approximately $7 million from the ITS Capital Improvement Program budget to fund solutions and services identified in the department’s five-year plan needed to ensure proper maintenance and modernization of information technology operations and to provide enhanced technology services to the public. The increase is also due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. Information Technology Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: Percentage of on-time operations center services Critical systems availability percentage: Enterprise network Telephone network Phoenix.gov ePay TALIS RWC Number of pages accessed in Phoenix.gov Average cycle time of telephone service requests Units of portable and mobile radio equipment2 1 2 2021-22 Actual 2022-23 Estimate1 2023-24 Budget 99.0% 99.0% 99.0% 99.9% 99.9% 99.9% 99.9% 99.5% 99.9% 18,650,860 < 21 days 19,721 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 20,060,000 < 21 days 20,040 99.9% 99.9% 99.9% 99.9% 99.9% 99.9% 20,260,000 < 21 days 20,400 Based on 10 months actual experience. Includes all portable and mobile radios supported on behalf of all Regional Wireless Cooperative members, as well as support of portable and mobile radios for Fire’s VHF system. The increase in radio count is due to new members. Expenditure and Position Summary Operating Expense Total Positions Source of Funds: General Fund Aviation Solid Waste Water Cable Television 2021-22 Actual 2022-23 Estimate 2023-24 Budget $63,830,000 216.0 $79,589,000 225.0 $92,904,000 225.0 $63,045,000 293,000 204,000 284,000 2,000 $78,757,000 281,000 212,000 326,000 13,000 $92,022,000 297,000 223,000 347,000 16,000 106 Table of Contents CITY CLERK Program Goal Budget Allowance Explanation The City Clerk Department exists to uphold public trust and protect local democracy by providing access to services and information on matters of public interest to residents, elected officials, City departments, and other customers. The department manages elections and annexations; prepares council agendas, minutes, and meeting notices; maintains public records; processes liquor and regulated business licenses; and supports all City department operations through provision of internal printing, graphic design, and mail services. The City Clerk Department 2023-24 operating budget allowance of $9,744,000 is $3,121,000 or 47.1 percent more than 2022-23 estimated expenditures. The increase is primarily due to the carryover of funding for the new business licensing system and go-live costs for the records management system, as well as costs for the November 2023 GO Bond Election. Also contributing to the increase are negotiated increases in employee compensation, the implementation of results from the Classification and Compensation study, and fewer anticipated staff vacancies. City Clerk Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget Number of council formal and special meeting agenda items 2,149 2,500 2,500 Open meeting law notices posted 2,982 3,800 3,800 Percent of open meeting law notices posted in accordance with state law 100% 100% 100% Total printing and copy impressions (millions) 13,768,000 16,000,000 16,500,000 City Council regular and special elections held 0 2 1 15,713 19,000 19,000 101,678 125,000 125,000 2 License services applications and contacts 2 Records (in pages) provided for public access online 2 1 2 Based on 10 months actual experience. An increase in 2022-23 and 2023-24 is anticipated as operations continue normalizing to pre-pandemic activity. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $4,331,000 51.7 $6,623,000 51.5 $9,744,000 51.5 Source of Funds: General Fund $4,331,000 $6,623,000 $9,744,000 107 Table of Contents FINANCE Program Goal Budget Allowance Explanation 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. The Finance Department 2023-24 operating budget allowance of $33,213,000 is $5,802,000 or 21.2 percent more than 2022-23 estimated expenditures. The increase is primarily in General Fund and Other Restricted funds. The General Fund 2023-24 budget allowance of $29,093,000 is $4,087,000 or 16.3 percent more than 2022-23 estimated expenditures. The increase is primarily due to an increase in software agreements for financial and travel system upgrades, negotiated increases in employee compensation, and to implement the results from the Classification and Compensation study. The Other Restricted Fund 2023-24 budget allowance of $2,570,000 is $1,735,000 or 207.8 percent more than 2022-23 estimated expenditures. The increase is due to expected pre-pandemic sales tax revenue from properties within the Park Central Community Facilities District (CFD), which will result in an increase to the City’s contribution to the CFD trust. The Grants Fund 2023-24 budget allowance of $0 is $235,000 or 100.0 percent less than 2022-23 estimated expenditures. This is due to the conclusion of the American Rescue Plan Act funding for the personal protective equipment warehouse. Finance Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: Sales tax and franchise fees collected (millions) 2021-22 Actual 2022-23 Estimate1 2023-24 Budget $1,303 $1,400 $1,400 2 Average real estate acquisition cycle time (months) 11 11 12 3 Average property damage claims cycle time (days) 33.5 37 60 Average invitation for bid cycle time (days) 152 190 90 4 Based on 10 months actual experience. Cycle time varies with changes in the volume of acquisitions from year to year. 3 A 60-day cycle time is the performance goal. Factors such as volume and complexity have an impact on the processing of claims. 4 Factors such as COVID-19 and higher than normal vacancy rates have impacted the bid cycle time. Ninety days is the performance goal. 1 2 Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $40,609,000 218.0 $27,411,000 220.0 $33,213,000 220.0 Source of Funds: General Fund Sports Facilities Other Restricted Grants Aviation Wastewater Water $21,798,000 109,000 199,000 17,091,000 233,000 438,000 740,000 $25,006,000 109,000 835,000 235,000 208,000 490,000 528,000 $29,093,000 159,000 2,570,000 224,000 490,000 677,000 108 Table of Contents BUDGET AND RESEARCH Program Goal Budget Allowance Explanation 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. The Budget and Research 2023-24 operating budget allowance of $4,563,000 is $82,000 or 1.8 percent lower than 2022-23 estimated expenditures. The budget reflects negotiated increases in employee compensation and to implement the results from the Classification and Compensation study, along with other normal inflationary adjustments. The increase is offset by lower administrative costs which were incurred in 2022-23 for the General Obligation Bond Program committee process. Budget and Research Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget Percent variance of actual versus estimated expenditures for each major fund (data for the General Fund is shown) -0.5% 0 -± 3% 0 -± 3% Percent variance of actual versus estimated resources for each major fund (data for the General Fund is shown) 1.9% 0 -± 3% 0 -± 3% Capital Improvement Program percent variance of actual versus estimated expenditures -9% 0 -± 10% 0 -± 10% 1 Based on 10 months actual experience. Expenditure and Position Summary Operating Expense 2021-22 Actual 2022-23 Estimate 2023-24 Budget $4,008,000 $4,645,000 $4,563,000 Total Positions 29.0 24.0 24.0 Source of Funds: General Fund $4,008,000 $4,645,000 $4,563,000 109 Table of Contents 110 Table of Contents PUBLIC SAFETY The Public Safety Program Represents 34.9% of the Total Budget. The Public Safety program budget includes Fire, Police, and the Office of Homeland Security and Emergency Management. 111 Table of Contents 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 2023-24 operating budget allowance of $978,646,000 is $112,115,000 or 12.9 percent more than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study, which impacts all funds. It also reflects several new programs and enhancements to services in the General Fund. The General Fund 2023-24 budget allowance of $741,278,000 is $81,482,000 or 12.3 percent more than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. It also reflects several new programs or service enhancements, although most of these additions are able to be offset in the 2023-24 budget by anticipated sworn salary savings. These additions include new Civilian Investigator positions to support the department's ongoing civilianization efforts; additional analysts in the Investigations and Patrol Divisions and the Compliance and Oversight Bureau to provide key analytics and research work to support a variety of department efforts; new Law Enforcement Training Specialists in the Training Bureau to enhance training capacity; additional staff in the Laboratory Services Bureau to assist in the investigative process and processing of crime scenes; and new Police Assistants in the Patrol Division and Logistical Resources Bureau to ensure the integrity of chain of custody and preservation of property. The 2023-24 General Fund budget also reflects additional costs for marketing and advertising services, increased costs for jail services from Maricopa County, and the impact of a new bodyworn camera contract. Police Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 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 15 seconds Moving violation citations issued Traffic accidents Percentage of cases cleared: Murder Rape Robbery Aggravated Assault Burglary Theft Auto Theft Arson 1 Based on 10 months actual experience. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions Source of Funds: $778,713,000 4,472.9 $866,531,000 4,548.9 $978,646,000 4,587.9 General Fund Court Awards Neighborhood Protection Public Safety Enhancement Public Safety Expansion Sports Facilities Other Restricted Grants $610,288,000 3,167,000 36,257,000 15,475,000 80,959,000 1,685,000 20,422,000 10,461,000 $659,796,000 5,574,000 41,180,000 19,761,000 92,851,000 1,769,000 32,478,000 13,123,000 $741,278,000 4,619,000 47,397,000 23,711,000 106,350,000 1,857,000 43,039,000 10,394,000 112 2021-22 Actual 2022-23 Estimate1 2023-24 Budget 7.2 25.6 53.4 78% 43,383 29,693 7.5 25.8 48.0 81% 48,840 27,450 7.5 26.0 50.0 81% 48,840 27,450 62% 12% 30% 28% 11% 11% 8% 30% 85% 10% 28% 29% 10% 11% 6% 28% 74% 10% 28% 29% 10% 11% 6% 28% Table of Contents Police Violent Crimes per 1,000 Residents 9 8.4 8.1 8.1 8.0 2020-21 2021-22 2022-23* 2023-24* 7.8 6 3 0 2019-20 *Estimated Fiscal Year Police Property Crimes per 1,000 Residents 40 33.0 31.0 31.3 27.1 26.4 2019-20 2020-21 2021-22 2022-23* 2023-24* 20 0 Fiscal Year 113 *Estimated Table of Contents FIRE Program Goal Budget Allowance Explanation The Fire Department provides the highest level of life and property safety through fire prevention, fire control and emergency medical and public education services. The Fire Department 2023-24 operating budget allowance of $565,019,000 is $63,959,000 or 12.8 percent more than 2022-23 estimated expenditures. The increase is primarily in the General Fund and Other Restricted Fund, which is partially offset by a decrease in the Grants Fund. The General Fund 2023-24 budget allowance of $481,278,000 is $56,890,000 or 13.4 percent more than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation, to implement the results from the Classification and Compensation study, and to make a significant one-time purchase of Fire apparatus. In addition, included in the 2023-24 budget is funding for: twenty-four sworn positions to provide dedicated staffing for the new Fire Station 74, located at 19th Avenue and Chandler Boulevard; seven sworn positions and one new vehicle (ambulance) for one new Rescue unit; and one new Human Resources position to support the processing of payroll and leave transactions. The Other Restricted 2023-24 budget allowance of $18,589,000 is $5,501,000 or 42.0 percent higher than 2022-23 estimated expenditures. This is due to an increase in public safety pension payments which are funded by Proposition 207 revenues. The Grants Fund 2023-24 budget allowance of $19,075,000 is $3,009,000 or 13.6 percent lower than 2022-23 estimated expenditures. This is due to decreased funding for the Arizona 9-1-1 Grant Program because of the transition to a new 9-1-1 platform which will reduce telecommunication expenditures. Fire Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual Percent of fire and emergency medical call responses within four minutes 29.7% Patient transports to Valley hospitals via emergency medical vehicles 78,544 Percentage of time Advanced Life Support (ALS) medical calls are responded to with paramedic units within five minutes 48.3% Number of fire investigations to determine cause only 967 Number of calls by type: Emergency Medical 214,339 Fire 24,843 Other (mountain/swift water/trench/tree rescues/other) 8,624 1 2022-23 Estimate1 2023-24 Budget 28.3% 29.2% 88,550 89,000 47.4% 48.5% 877 975 216,000 25,000 9,000 224,000 27,000 9,000 Based on 10 months actual experience. Fire First Unit Average Response Time Minutes 6:00 5:22 5:15 5:00 5:05 5:02 4:00 2:00 0:00 2019-20 2020-21 2021-22 Fiscal Year Response time shown is only for emergency calls 114 2022-23* *Estimated 2023-24* Table of Contents Fire Percentage of Time First Unit Arrives on Scene in Four Minutes or Less 30% 28.9% 29.5% 28.8% 27.6% 28.4% 2019-20 2020-21 2021-22 2022-23* 2023-24* 20% 10% 0% *Estimated Fiscal Year Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $449,322,000 2,288.7 $501,060,000 2,364.7 $565,019,000 2,386.7 Source of Funds: General Fund Neighborhood Protection Public Safety Enhancement Public Safety Expansion Other Restricted Grants $382,352,000 11,611,000 11,433,000 15,249,000 14,518,000 14,159,000 $424,388,000 12,105,000 11,772,000 17,623,000 13,088,000 22,084,000 $481,278,000 13,150,000 13,400,000 19,527,000 18,589,000 19,075,000 OFFICE OF HOMELAND SECURITY AND EMERGENCY MANAGEMENT Program Goal Budget Allowance Explanation The Office of Homeland Security and Emergency Management provides the City with the capability to plan for, mitigate, respond to and recover from largescale community emergencies and disasters as a result of human-caused, technological or natural hazards. The Office of Homeland Security and Emergency Management (OHSEM) was incorporated into the Fire Department in January 2022. The 2021-22 Actuals reflect costs for the first half of the fiscal year when OHSEM was a standalone entity. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $275,000 0.0 $0.0 $0.0 Source of Funds: General Fund Public Safety Enhancement Grants $8,000 221,000 46,000 $- $115 Table of Contents 116 Table of Contents CRIMINAL JUSTICE The Criminal Justice Program Represents 1.6% of the Total Budget. The Criminal Justice program budget includes the Municipal Court and Public Defender. 117 Table of Contents MUNICIPAL COURT Program Goal Budget Allowance Explanation 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. The Municipal Court 2023-24 operating budget allowance of $41,673,000 is $1,956,000 or 4.9 percent more than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. Municipal Court Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual Criminal filings2 Civil filings2 Average number of days from arraignment to hearing for minor traffic cases Number of criminal cases with a pending trial date at year end Average cycle time for sending out restitution and bail refund checks Average hold time for incoming information calls to the Customer Call Center 1 2 2022-23 Estimate1 31,000 68,500 35 3,500 2.5 days 0.33 minutes 34,000 80,500 38 3,400 2.5 days 0.31 minutes 2023-24 Budget 34,000 80,500 37 3,400 2.5 days 0.40 minutes Based on 10 months actual experience. Citations issued by Phoenix Police, Neighborhood Services, and other citing authorities decreased beginning in April 2020 due to the COVID-19 pandemic. Several agencies notified the Court they intend to resume citation issuance in 2022-23. Municipal Court Percent of Criminal Cases Resolved within 180 Days from Case Filing 100% 95% 80% 80% 76% 76% 76% 2021-22 2022-23* 2023-24* 60% 40% 20% 0 2019-20 2020-21 *Estimated Fiscal Year In 2020-21 and 2021-22, continuances were requested from all parties due to COVID-19 which resulted in a lower percentage of resolved cases. Expenditure and Position Summary Operating Expense Total Positions Source of Funds: General Fund Other Restricted 2021-22 Actual 2022-23 Estimate 2023-24 Budget $34,402,000 $39,717,000 $41,673,000 279.0 281.0 281.0 $32,433,000 1,969,000 $37,031,000 2,686,000 $38,970,000 2,703,000 118 Table of Contents PUBLIC DEFENDER Program Goal Budget Allowance Explanation The Public Defender Program provides legal representation for indigent defendants in Phoenix Municipal Court. The Public Defender 2023-24 operating budget allowance of $6,295,000 is $560,000 or 9.8 percent more than the 2022-23 estimated expenditures. The increase is primarily due to the increased cost of contracted legal services. In addition, the budget includes negotiated increases for employee compensation and to implement the results from the Classification and Compensation study. Public Defender Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: Defendants charged with misdemeanor crimes represented at the Phoenix Municipal Court 1 2 Based on 9 months actual experience. Based on the City’s pending creation of a Community Court. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $7,575,000 11.0 $5,735,000 13.0 $6,295,000 13.0 Source of Funds: General Fund $7,575,000 $5,735,000 $6,295,000 119 2021-22 Actual 2022-23 Estimate1 2023-24 Budget2 14,763 15,000 17,500 Table of Contents 120 Table of Contents TRANSPORTATION The Transportation Program Represents 18.0% of the Total Budget. The Transportation program budget includes Aviation, Public Transit, and Street Transportation. 121 Table of Contents STREET TRANSPORTATION Program Goal Budget Allowance Explanation The Street Transportation Department plans for the safe and convenient movement of people and vehicles on city streets, effectively maintains the city’s streets, designs and inspects the construction of streets to assure they meet specifications, and minimizes street damage through the control of irrigation and storm water. The Street Transportation Department also provides for the economical, safe, and aesthetic design and construction of facilities on City property. The Street Transportation 2023-24 operating budget allowance of $124,336,000 is $6,783,000 or 5.8 percent more than 2022-23 estimated expenditures. The increase is primarily due to increased costs in the General Fund and Arizona Highway User Revenue (AHUR) funds. The General Fund 2023-24 budget allowance of $25,473,000 is $1,353,000 or 5.6 percent more than 2022-23 estimated expenditures. The increase reflects several new or enhanced services, including additional wash and median cleanings, a dedicated street sweeper for bike lanes, and increased service frequency in the landscape maintenance program. Negotiated increases to employee compensation and to implement the results of the Classification and Compensation Study also contributed to the increase. The Arizona Highway User Revenue fund 2023-24 budget allowance of $94,493,000 is $5,607,000 or 6.3 percent more than 2022-23 estimated expenditures. The increase is primarily due to fewer anticipated vacancies, negotiated increases in employee compensation, and to implement the results of the Classification and Compensation study. Other contributing factors include additional facility maintenance costs, increased electricity costs for street lighting, and increased liability insurance costs. These increases are partially offset by reduced planned vehicle and equipment purchases. Street Transportation Maintenance Rapid Response (Responding to urgent issues such as obstructions in the roadway) % within 1 day 100% 98.0% 91.0% 95.0% 91.0% 86.0% 80% 60% 40% 20% 0% 2019-20 2020-21 2021-22 Fiscal Year 2022-23* 2023-24* *Estimated Decrease beginning in 2020-21 due to impact of COVID-19 pandemic on staffing levels and ongoing staffing shortages. 122 Table of Contents Street Transportation Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget Routine street maintenance requests for service completed within 21 days 75% 86% 95% Percent of all traffic signal control cabinets inspected annually 51% 39% 95% Respond to high priority traffic signal trouble calls within 2 hours (knockdowns, signal on flash and signal malfunction) 90% 95% 95% Construction project complaints or inquiries addressed within two working days 98% 98% 98% Number of days to review and respond to street light requests 5 5 5 Number of days to review private development plans 10 10 10 Utility plan review turnaround time within 10 working days 92% 92% 92% Complete requests for sign and crosswalk work within 45 days 82% 82% 82% 67 85 100 2 Total number of High Intensity Activated Pedestrian Crosswalk System (HAWKS) 1 2 Based on 10 months actual experience. Decreases in 2021-22 and 2022-23 due to staffing vacancies. Expenditure and Position Summary Operating Expense Total Positions 2021-22 Actual 2022-23 Estimate 2023-24 Budget $104,319,000 $117,553,000 $124,336,000 737.0 753.0 752.0 Source of Funds: General Fund $22,399,000 $24,120,000 $25,473,000 Arizona Highway User Revenue 77,798,000 88,886,000 94,493,000 Capital Construction 69,000 69,000 70,000 Transportation 2050 377,000 461,000 466,000 Other Restricted 3,649,000 3,886,000 3,790,000 Grants 26,000 130,000 44,000 123 Table of Contents AVIATION Program Goal Budget Allowance Explanation The Aviation Department provides the Phoenix metropolitan area with a self-supporting system of airports and aviation facilities that accommodate general and commercial aviation in a safe, efficient, and convenient manner. The Aviation Department 2023-24 operating budget allowance of $338,174,000 is $33,118,000 or 10.9 percent more than 2022-23 estimated expenditures. The Aviation Fund increase is primarily attributed to $15 million in increased personal services costs. The increase reflects negotiated increases in employee compensation and to implement the results from the Classification and Compensation study, along with other normal inflationary adjustments. Additionally, there are two new Airport Access Agent positions added to enhance security badging services. The budget also includes a full-year of operating costs for the Sky Train, increased costs for custodial services, and higher electricity rates. The Grants fund decrease is due to the completion of American Rescue Plan Act grant funding. Sky Harbor Airport Passengers Arriving and Departing Passengers (Millions) 47.9 50 46.5 43.9 40 34.7 30 26.8 20 10 2019-20 2020-21 2021-22 Fiscal Year 2022-23* 2023-24* *Estimated Passenger traffic decreased in 2019-20 and 2020-21 due to the COVID-19 pandemic. Aviation Major Performance Measures and Service Levels Expenditure and Position Summary The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual Airline rental rates (cost per square foot): Terminal 3 Terminal 4 1 2022-23 2023-24 Estimate1 Budget $99.60 $99.60 $123.00 $123.00 $169.32 $169.32 Gross sales per departing passenger: Terminal 3 $6.94 Terminal 4 $11.37 $8.07 $11.52 $9.00 $12.00 Aircraft takeoffs and landings 875,000 900,000 Total international passengers Air cargo processed (in tons) 854,192 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense $348,614,000 $305,056,000 $338,174,000 Total Positions 892.0 922.0 922.0 Source of Funds: Aviation Grants 1,715,743 2,450,000 2,525,000 438,835 410,000 425,000 Based on 10 months actual experience. 124 $348,414,000 $301,256,000 $338,174,000 200,000 3,800,000 - Table of Contents PUBLIC TRANSIT Program Goal Budget Allowance Explanation The Public Transit Department mission is to provide Phoenix with reliable and innovative bus, light rail, and paratransit services and to improve the city’s transit system through the transparent administration of the Transportation 2050 (T2050) plan. The 2023-24 Public Transit Department operating budget allowance of $334,840,000 is $35,706,000 or 11.9 percent more than 2022-23 estimated expenditures. The increase is primarily due to the Transportation 2050 Fund and Regional Transit Fund and is partially offset by reductions in Grants and General Funds. The Transportation 2050 Fund 2023-24 budget allowance of $249,903,000 is $23,815,000 or 10.5 percent more than 2022-23 estimated expenditures. The increase is primarily the result of expenditures in 2023-24 being shifted from the Grants Fund to the Transportation 2050 Fund due to the end of federal funds awarded in response to COVID-19, negotiated increases in employee compensation, and to implement the results from the Classification and Compensation study. The 2023-24 budget also includes market rate increases for fixed route bus services and light rail operation cost increases due to the completion of the Northwest Extension Phase II. The Regional Transit Fund 2023-24 budget allowance of $61,925,000 is $22,704,000 or 57.9 percent more than 2022-23 estimated expenditures. The increase is primarily due to the conclusion of Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CRRSA) and the American Rescue Plan Act (ARPA) funding, which was previously available to offset the cost of fixed route bus service. It also reflects additional purchase of bus service by the region from the City of Phoenix as ridership is anticipated to continue to increase towards pre-pandemic levels. The Grants Fund 2023-24 budget allowance of $21,578,000 is $8,922,000 or 29.3 percent less than 2022-23 estimated expenditures. The decrease is primarily due to the conclusion of CRRSA and ARPA funding. The General Fund 2023-24 budget allowance of $0 is $1,891,000 or 100 percent less than 2022-23 estimated expenditures. The decrease reflects the transfer of the senior center shuttle contract to the Human Services Department. Public Transit Annual Bus Ridership (Boardings) Millions 40 28 20 17 16 16 2021-22 2022-23* 2023-24* 15 0 2019-20 2020-21 Fiscal Year *Estimated The decrease in 2020-21 reflects the impact of the COVID-19 pandemic. The increase in 2021-22 is the result of COVID-19 restrictions being lifted. The decrease in 2022-23 is due to supply chain issues for farebox equipment repair parts, new staff and bus operator training, and a slower return to post-pandemic ridership than anticipated. 125 Table of Contents Public Transit Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget On-time performance for bus service2 86.2% 83.1% 93.0% On-time performance for Dial-a-Ride prescheduled service 92.6% 93.1% 93.4% Cost recovery from bus fares3 6.3% 7.2% 7.1% Bus boardings per revenue mile 0.829 0.828 0.828 Average weekday ridership - light rail (Phoenix only)4 14,800 16,000 17,000 Based on 10 months actual experience. The decrease in 2021-22 and 2022-23 is due to a change in reporting method from targets to actual figures, with the new system accounting for early bus arrivals at time points, which the legacy system did not do. The 2023-24 figure is a target contractual requirement. 3 The increase in 2022-23 is due to the expected gradual growth of ridership and pandemic recovery. 4 The increase in 2022-23 is due to the expected gradual growth of ridership and pandemic recovery. The completion of Northwest Extension Phase II will also increase ridership in the latter half of 2023-24. 1 2 Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense $237,795,000 $299,134,000 $334,840,000 Total Positions 122.0 127.0 127.0 Source of Funds: General Fund $767,000 $1,891,000 $Transportation 2050 77,927,000 226,088,000 249,903,000 Regional Transit 6,390,000 39,221,000 61,925,000 Grants 151,444,000 30,500,000 21,578,000 Other Restricted 1,251,000 1,434,000 1,434,000 City Improvement 17,000 - 126 Table of Contents COMMUNITY DEVELOPMENT The Community Development Program Represents 9.2% of the Total Budget. The Community Development program budget includes Community and Economic Development, Housing, Neighborhood Services, and Planning and Development. 127 Table of Contents 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 2023-24 operating budget allowance of $96,602,000 is $13,650,000 or 16.5 percent more than 2022-23 estimated expenditures reflecting increased costs in all funds. The Development Services Fund 2023-24 budget allowance of $87,446,000 is $10,240,000 or 13.3 percent more than 2022-23 estimated expenditures. The increase is primarily due to fewer anticipated vacancies, negotiated increases in employee compensation, and to implement the results from the Classification and Compensation study. It also reflects additional costs for contractual plan review and inspection services and increased facility maintenance costs. The increase also includes additional funding for positions to support the continued implementation of SHAPE PHX, a business application that provides land management and permit tracking in one software system; a new position to support the electronic plan review team; and an additional position to support human resources functions. The General Fund 2023-24 budget allowance of $7,072,000 is $2,203,000 or 45.2 percent more than 2022-23 estimated expenditures. The increase is primarily due to fewer anticipated vacancies, as well as negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. In addition, funding was carried over from 2022-23 to 2023-24 for Historic Preservation’s Threatened Building Grant Program. The Grants 2023-24 budget allowance of $566,000 is $500,000 or 757.6 percent more than 2022-23 estimated expenditures due to the carryover of the Rio Reimagined Area grant. The Other Restricted Fund 2023-24 budget allowance of $1,519,000 is $708,000 or 87.3 percent more than 2022-23 estimated expenditures. Increases are primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. It also reflects additional costs for Impact Fee studies and the new Stormwater Post Construction program. Planning and Development Total Construction Permits Issued Thousands 60 50 40 48 49.7 47 47 2020-21 2021-22 2022-23* 2023-24* 43.3 30 20 10 0 2019-20 Fiscal Year 128 *Estimated Table of Contents Planning and Development Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget 49,719 47,000 47,000 Turnaround time for major commercial building plans (days) 45 46 45 Turnaround time for medium commercial building plans (days) 35 36 35 Turnaround time for minor commercial building plans (days) 25 26 25 Total construction permits issued Turnaround time for residential building plans (days) 30 30 30 Percent of commercial inspections completed on time 99% 98% 99% Percent of residential inspections completed on time 96% 93% 96% Percent of costs recovered through fees 101% 109% 100% Average number of days to schedule pre-application meeting prior to rezoning application 14 14 14 Average number of days to complete Zoning Verification letters 15 15 15 100% 100% 100% 692 700 700 Board, commission and committee packets available seven days prior to meeting Number of design reviews performed on building permits in historic districts Number of city grants awarded for historic rehabilitation projects 12 12 18 Number of regulatory compliance reviews for federally funded city capital projects2 300 240 250 1 2 Based on 10 months actual experience. Reviews decreased in 2022-23 due to decreased federal funding that was awarded to other departments. Section 106 reviews are submitted to Historic Preservation staff when other departments have federal projects. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense $74,293,000 $82,952,000 $96,602,000 Total Positions 520.8 536.8 536.8 Source of Funds: Development Services $68,941,000 $77,206,000 $87,446,000 Grants 66,000 66,000 566,000 General Fund 4,414,000 4,869,000 7,072,000 Other Restricted 872,000 811,000 1,519,000 129 Table of Contents HOUSING Program Goal Budget Allowance Explanation 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. The Housing 2023-24 operating budget allowance of $198,920,000 is $67,318,000 or 51.2 percent more than 2022-23 estimated expenditures. The increase is primarily the result of additional appropriation in Grants, with a smaller increase in Other Restricted Funds. The Grants 2023-24 operating budget allowance of $186,227,000 is $65,508,000 or 54.3 percent more than 2022-23 estimated expenditures. This increase reflects anticipated additional Section 8 housing assistance payments from the U.S. Department of Housing and Urban Development. It also reflects the carryover of several Council-approved American Rescue Plan Act projects and other contingency funding, as well as the impact of negotiated increases to employee compensation and the implementation of the results of the Classification and Compensation study. The Other Restricted Funds 2023-24 operating budget allowance of $10,691,000 is $1,929,000 or 22.0% more than 2022-23 estimated expenditures. The increase is due to additional appropriation for affordable housing projects. The General Fund 2023-24 operating budget allowance of $2,003,000 is $118,000 or 5.6 percent less than 2022-23 estimated expenditures due to the completion of the final phases of the Santa Fe Springs Apartments rehabilitation project. Housing Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget 2,297 2,681 2,711 475 330 599 Rental assistance provided for low-income residents in the private housing market3,5 6,977 7,745 7,820 Federally assisted housing units for families and seniors 1,388 1,045 1,007 Utilization rate for Section 8 vouchers 93% 90% 90% Occupancy rate for public housing units 90% 98% 98% Affordable housing units for families and individuals Affordable housing units created or preserved for families and individuals owned and operated by private sector developers2 4 Based on 10 months actual experience. The COVID-19 pandemic and economic factors caused delays in the development of affordable housing units. Development is expected to increase in 2023-24. Through the Rental Assistance Demonstration (RAD) program, approximately 680 units in public housing complexes are being converted to voucher-based Section 8 rental units. This innovative program enables public housing authorities to utilize private financing to complete needed repairs and renovations to aging facilities, while not diminishing the supply of available public housing. 4 In addition to the impact of RAD conversions, decreasing federally assisted housing unit figures reflect the ongoing sale of homes under the Section 32 and Section 18 programs. 5 Figures include 390 Emergency Housing Vouchers, which are funded through the American Rescue Plan Act to support residents at risk of homelessness. 1 2 3 Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget $ 109,081,000 $ 131,602,000 $ 198,920,000 Total Positions 127.0 129.0 129.0 Source of Funds: General Fund Other Restricted Grants $ 1,578,000 2,827,000 104,676,000 $ 2,121,000 8,762,000 120,719,000 $ 2,003,000 10,691,000 186,227,000 Operating Expense 130 Table of Contents COMMUNITY AND ECONOMIC DEVELOPMENT Program Goal Budget Allowance Explanation 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 nonredevelopment areas. The Community and Economic Development 2023-24 operating budget allowance of $21,815,000 is $420,000 or 2.0 percent more than 2022-23 estimated expenditures. This is primarily due to negotiated increases in employee compensation. The General Fund 2023-24 budget allowance of $9,771,000 is $1,154,000 or 13.4 percent more than 2022-23 estimated expenditures. The increase is primarily due to implementation of real estate management software, increased property insurance costs, and increased funding to support the Elevate EdAz program. The increase also reflects negotiated increases in employee compensation and other normal inflationary adjustments. The Community Reinvestment 2023-24 budget allowance of $2,292,000 is $599,000 or 20.7 percent less than 2022-23 estimated expenditures due to the elimination of one-time contractual obligations incurred for the Super Bowl. The Sport Facilities 2023-24 budget allowance of $194,000 is $9,000 or 4.9 percent more than 2022-23 estimated expenditures due to normal inflationary adjustments. The Other Restricted 2023-24 budget allowance of $4,696,000 is $331,000 or 7.6 percent more than 2022-23 estimated expenditures due to an increase in Strategic Economic Development Fund projects and increased costs for services in the Enhanced Municipal Services District. The Grants 2023-24 budget allowance of $4,116,000 is $513,000 or 11.1 percent less than 2022-23 estimated expenditures due to the completion of most Mobile Career Unit development activities funded by the grant from Bloomberg Philanthropies. The Convention Center budget allowance of $642,000 is $37,000 or 6.1 percent greater than 2022-23 estimated expenditures due to the allocation of increased Enhanced Municipal Services District costs. Community and Economic Development Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: Projected new jobs created within the City of Phoenix due to department efforts2 Projected new jobs retained within the City of Phoenix due to department efforts 2022-23 Estimate1 2023-24 Budget 10,404 7,500 7,425 4,502 530 473 $2.1 billion $2 billion $510 million 78 80 75 2 Projected new capital investment created within the City of Phoenix due to department efforts2 2021-22 Actual Projected number of recruiting events assisted, promoted, or hosted by the Business and Workforce Development Team Based on 9 months (new jobs created) or 10 months (others) actual experience. The attraction of an enormous high-tech manufacturing project in 2021-22 resulted in significant job creation and capital investment, which carried over into 2022-23. The especially high jobs-retained figure in 2021-22 represents the decision of a major employer to remain in Phoenix. Due to the predicted economic slowdown, job creation and job retention are expected to be lower in 2023-24 from 2022-23. 1 2 Expenditure and Position Summary Operating Expense Total Positions Source of Funds: General Fund Community Reinvestment Sports Facilities Other Restricted Grants Aviation Convention Center Water 2021-22 Actual 2022-23 Estimate 2023-24 Budget $20,890,000 $21,395,000 $21,815,000 61.0 62.0 61.0 $7,680,000 1,316,000 267,000 2,799,000 8,239,000 16,000 543,000 30,000 $8,617,000 2,891,000 185,000 4,365,000 4,629,000 74,000 605,000 30,000 $9,771,000 2,292,000 194,000 4,696,000 4,116,000 74,000 642,000 30,000 131 Table of Contents NEIGHBORHOOD SERVICES Program Goal Budget Allowance Explanation To preserve and improve the physical, social, and economic health of Phoenix neighborhoods, support neighborhood self-reliance and enhance the quality of life of residents through community-based problem solving, neighborhood-oriented services, and public/private cooperation. The Neighborhood Services 2023-24 operating budget allowance of $91,079,000 is $47,474,000 or 108.9 percent more than 2022-23 estimated expenditures. The increase is reflected in the General Fund and Grants. It is partially offset by the conclusion of Neighborhood Protection funding for the gated alley pilot program, which has since been expanded and moved into the General Fund. The General Fund 2023-24 budget allowance of $20,578,000 is $1,982,000 or 10.7 percent more than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results of the Classification and Compensation study. New funding was added for the Gated Alley Program, providing for a total of 77 gated alley segments each year. New funding has also been added to support the conversion of two Neighborhood Inspector positions previously funded by grant funds. The Grants Funds 2023-24 budget allowance of $70,486,000 is $45,809,000 or 185.6 percent more than 2022-23 estimated expenditures. The increase is primarily due to unspent funding carried forward and included in the 2023-24 budget. Also contributing to the increase are negotiated increases in employee compensation, fewer anticipated vacancies, and the implementation of the results from the Classification and Compensation study. Neighborhood Services Neighborhood Preservation Standard Case Cycle Time Calendar Days 60 40 34 42 40 38 38 2022-23* 2023-24* 20 0 2019-20 2020-21 2021-22 Fiscal Year *Estimated Standard case cycle time is the number of calendar days 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. The 2020-21 increase was due to the COVID-19 pandemic. Cycle time improved to 38 days in 2022-23 as processes normalized after the pandemic and is expected to remain at 38 days due to staffing vacancies. 132 Table of Contents Neighborhood Services Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget 45,313 50,000 50,000 109 120 120 42,149 42,000 43,000 40 38 38 94% 94% 94% 16 15 15 Sites where graffiti was removed through the Graffiti Busters program2 Number of household units rehabbed or assisted through housing rehabilitation programs 3 Neighborhood Preservation cases opened annually Neighborhood Preservation average standard case cycle time (days) 4 Percent of Neighborhood Preservation cases resolved voluntarily (goal is 93% or above) Number of new neighborhood groups Based on 10 months actual experience. Graffiti removal sites are anticipated to increase as staffing levels improve. Some 2021-22 projects were completed in the first quarter of 2022-23. 4 Case cycle time improved to 38 days as processes normalized after the COVID-19 pandemic and is expected to remain at 38 days due to staffing vacancies. 1 2 3 Expenditure and Position Summary Operating Expense 2021-22 Actual 2022-23 Estimate 2023-24 Budget $28,622,000 $43,605,000 $91,079,000 Total Positions 196.0 202.0 202.0 Source of Funds: General Fund $14,554,000 $18,596,000 $20,578,000 Grants 13,991,000 24,677,000 70,486,000 Neighborhood Protection 73,000 331,000 Other Restricted 3,000 15,000 133 Table of Contents 134 Table of Contents COMMUNITY ENRICHMENT The Community Enrichment Program Represents 10.1% of the Total Budget. The Community Enrichment program budget includes Human Services, Library, the Office of Arts and Culture, Parks and Recreation, and the Phoenix Convention Center. 135 Table of Contents PARKS AND RECREATION Program Goal Budget Allowance Explanation 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 provides outlets that cultivate a wholesome sense of civic pride and social responsibility. The Parks and Recreation Department 2023-24 budget allowance of $150,286,000 is $18,393,000 or 13.9 percent more than 2022-23 estimated expenditures. The increase is reflected in all funds. The General Fund 2023-24 budget allowance of $128,060,000 is $14,631,000 or 12.9 percent more than 2022-23 estimated expenditures. The increase is primarily due to fewer anticipated vacancies, negotiated increases to employee compensation, and to implement the results from the Classification and Compensation study. New funding has been added to create an overnight shift of two Urban Park Ranger Teams; to staff an additional Forestry crew, assisting citywide tree planting and maintenance and supporting the Tree and Shade Master Plan; to create a Parks volunteer coordinator to oversee a volunteer program supporting urban flatland parks citywide; to create up to three cricket fields and to explore development of partnership opportunities to expand future sites; and to provide additional maintenance and repair at Sueño Park and other park sites. The Grants Fund 2023-24 budget allowance of $1,675,000 is $1,156,000 or 222.7 percent more than 2022-23 estimated expenditures. This increase is due to the carryover of American Rescue Plan Act funds for youth sports programs, to provide community Wi-Fi connectivity, and engagement in neighborhood activation programs. It also reflects negotiated increases in employee compensation and the implementation of results from the Classification and Compensation study. The Golf Fund 2023-24 budget allowance of $9,288,000 is $1,184,000 or 14.6 percent more than 2022-23 estimated expenditures. The increase is primarily due to continued growth in the number of rounds sold at City golf courses, which has increased expenditures in numerous categories, including landscape maintenance, golf cart lease costs, and additional merchandise to be sold at golf course shops. It also reflects negotiated increases in employee compensation and the implementation of results from the Classification and Compensation study. The Phoenix Parks and Preserves Initiative Fund 2023-24 budget allowance of $7,923,000 is $696,000 or 9.6 percent more than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. The Other Restricted Fund 2023-24 budget allowance of $3,341,000 is $727,000 or 27.8 percent more than 2022-23 estimated expenditures. This increase is due to additional budgeting for the improvement of monopole sites located within Parks division boundaries. Parks and Recreation Recreation Facility Attendance Thousands 300 264 200 189 189 2022-23* 2023-24* 130 100 1 0 2019-20 2020-21 2021-22 Fiscal Year *Estimated The decrease in 2020-21 is due to all recreation facilities being closed on April 1, 2020, in response to the COVID-19 pandemic. The increase in 2021-22 and 2022-23 is due to the Phoenix City Council directing the phased reopening of recreation facilities beginning June 2021. 136 Table of Contents Parks and Recreation Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget Construction projects completed2 50% 50% 75% Fill 80% or more of all non-team sport registration openings 53% 50% 50% Usage of athletic field’s available programmable time 54% 54% 54% Community usage of recreation and community center available programmable time 47% 46% 46% Recreation facility attendance 130,072 188,900 188,900 Number of golf rounds 280,867 289,541 296,000 3 1 2 3 Based on 10 months actual experience. The increase in 2023-24 is due to the projected completion of several multi-year projects. Lower attendance in 2021-22 impacted by COVID-19 pandemic. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense $119,679,000 $131,893,000 $150,286,000 Total Positions 1,054.0 1,061.6 1,082.6 Source of Funds: General Fund $103,306,000 $113,429,000 $128,060,000 Other Restricted 1,221,000 2,614,000 3,341,000 Grants 991,000 519,000 1,675,000 Parks and Preserves 6,109,000 7,227,000 7,923,000 Golf 8,051,000 8,104,000 9,288,000 137 Table of Contents LIBRARY Program Goal Budget Allowance Explanation The Library provides information and resources that are relevant, accessible, and responsive to the intellectual needs and interests of the community. The Library 2023-24 operating budget allowance of $52,313,000 is $4,471,000 or 9.3 percent more than 2022-23 estimated expenditures, reflecting increased costs in all funds. The General Fund 2023-24 budget allowance of $49,528,000 is $3,695,000 or 8.1 percent more than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. It also reflects additional costs for computer software and components, increased facility maintenance costs, and the conversion of two Municipal Security Guard positions from temporary to regular status. The Grants 2023-24 budget allowance of $2,570,000 is $746,000 or 40.9 percent more than 2022-23 estimated expenditures. This increase is due to American Rescue Plan Act projects, including a new bookmobile, PHXWorks program technology expenses, and College Depot staffing. Library Library Material Circulation (Items circulated) Millions 18 12 8.5 8.5 9.4 9.5 2021-22 2022-23* 2023-24* 6.9 6 0 2019-20 2020-21 Fiscal Year *Estimated Measure covers physical and electronic media including audio books, e-books, CDs, DVDs, databases, books, and periodicals. 2019-20 and 2020-21 data reflect temporary suspension of in-person services at all locations in March 2020 due to the COVID-19 pandemic and availability of curbside services that began in May 2020. 2021-22 data reflect partial resumption of in-person services at all branches and the addition of Kanopy to the catalog. Library locations returned to regular operating hours in 2021-22. Expenditure and Position Summary Library Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget Operating Expense Total Positions Early literacy program 46,550 66,000 51,000 attendance2,4 Source of Funds: General Fund Library visitors2 1,650,371 2,000,000 2,200,000 2 Grants Library’s website visits 16,357,510 16,500,000 16,500,000 2,3 Other Restricted Library material circulation 8,452,505 9,400,000 9,500,000 Based on 10 months actual experience. 2021-22 reflects partial resumption of in-person services at all Library branches. 3 This measure includes physical and electronic media, including audio books, e-books, CDs, DVDs, databases, books, and periodicals. 2021-22 includes the addition of Kanopy to the catalog. 4 Lower attendance is expected in 2023-24 due to decreased grant funding. 1 2 138 2021-22 Actual 2022-23 Estimate 2023-24 Budget $43,727,000 $47,842,000 $52,313,000 400.9 412.5 411.5 $41,683,000 1,908,000 137,000 $45,833,000 1,824,000 185,000 $49,528,000 2,570,000 216,000 Table of Contents PHOENIX CONVENTION CENTER Program Goal Budget Allowance Explanation 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. The Phoenix Convention Center 2023-24 operating budget allowance of $65,382,000 is $4,972,000 or 8.2 percent more than 2022-23 estimated expenditures. The increase is primarily in the Convention Center Fund and offset by a decrease in American Rescue Plan Act (ARPA) grant funds. The General Fund 2023-24 budget allowance of $3,569,000 is $75,000 or 2.1 percent more than 2022-23 estimated expenditures. The increase is primarily due to the operation and maintenance costs for the purchased Plaza and 2nd Avenue garages and the addition of one full-time employee to manage the 100 W. Washington building renovations. This is offset by a decrease in special contractual services due to the migration of the parking access and revenue control system from server-based to a cloud-based environment. The Convention Center Fund 2023-24 budget allowance of $61,217,000 is $10,143,000 or 19.9 percent more than 2022-23 estimated expenditures. The increase is primarily due to event activity increasing back to pre-pandemic levels; increasing expenditures in personal services, security services, production temporary staff, electricity, and a/c chiller services. Increases to the budget also include negotiated increases in employee compensation and to implement the results from the Classification and Compensation study, changes to marketing services, and the restoration of capital purchases delayed due to the pandemic. Due to the end of the ARPA funds supplementing the Convention Center Funds, there is a large increase in expenditures from the previous fiscal year. The Grants Fund 2023-24 budget allowance of $0 is $5,160,000 or 100 percent less than 2022-23 estimated expenditures. The decrease is due to the department using their remaining ARPA funds, used to offset operating expenditures in the Convention Center Fund, in 2022-23 to cover operating expenditures. Phoenix Convention Center Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget $393 $442 $486 246,355 296,287 325,895 Number of conventions 66 64 66 Number of local public shows 15 18 14 45.24% 47.00% 49.00% Estimated direct spending impact from conventions (millions)2 Number of convention delegates Percent square feet occupancy (average of all event types) Number of theatrical performances 255 242 266 161,478 220,821 242,900 Total parking revenue (millions) $5.38 $8.06 $8.07 Revenue per parking space $1,224 $1,835 $1,837 $790 $1,005 $1,014 Total theater attendance Operating expense per parking space 1 2 Based on 10 months actual experience. Estimated direct spending impact is reported by Visit Phoenix. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget $48,343,000 $60,410,000 $65,382,000 219.0 220.0 220.0 General Fund $2,445,000 $3,494,000 $3,569,000 Sports Facilities 698,000 682,000 596,000 Grants 2,377,000 5,160,000 - Convention Center 42,824,000 51,074,000 61,217,000 Operating Expense Total Positions Source of Funds: 139 Table of Contents HUMAN SERVICES Program Goal Budget Allowance Explanation 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. The Human Services Department 2023-24 operating budget allowance of $172,854,000 is $41,283,000 or 19.3 percent less than 2022-23 estimated expenditures. The overall decrease is primarily due to the conclusion of federal grants awarded to respond to the COVID-19 pandemic. The General Fund 2023-24 budget allowance of $40,944,000 is $16,249,000 or 65.8 percent more than 2022-23 estimated expenditures. This is primarily due to additional funding to continue emergency services for shelter operations throughout the City serving individuals experiencing unsheltered homelessness; to support the work of the Office of Homeless Solutions; to compensate for loss of Low Income Home Energy Assistance Program funding; to offset expiring Victims of Crime Act grant funding; for expansion of the department's Behavioral Health Engagement Teams contract and PHX CARES Outreach Teams contract; to support the New Leaf Phoenix Day Early Childhood Education Center; to utilize one-time funding to open a 100-person emergency shelter on the Human Services campus; and due to the transfer of funding from the Public Transit Department to manage the Senior Center shuttle contract. The increase also reflects negotiated increases in employee compensation and to implement results from the Classification and Compensation study. The Grants 2023-24 budget allowance of $126,617,000 is $61,195,000 or 32.6 percent less than 2022-23 estimated expenditures. The decrease is primarily due to the conclusion of grants related to emergency rental and utility assistance and emergency shelter contracts in response to the COVID-19 pandemic. This is partially offset by an increase in funding for and/or carryover of Council-approved American Rescue Plan Act (ARPA) projects, as well as additional emergency rental assistance funding received from the U.S. Department of the Treasury. The Other Restricted 2023-24 budget allowance of $4,913,000 is $3,663,000 or 293 percent more than 2022-23 estimated expenditures. The increase is primarily due to the One Arizona opioid settlement, with funds to be used to address substance use and the impacts of the opioid crisis. Human Services Meals Served by Senior Nutrition Program Thousands 800 701 616 600 499 400 387 390 2022-23* 2023-24* 200 0 2019-20 2020-21 2021-22 Fiscal Year The reduction from 2021-22 to 2022-23 is due to the Area Agency on Aging pandemic relief meals expiring effective June 30, 2022. 140 *Estimated Table of Contents Human Services Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 Actual 2022-23 Estimate1 2023-24 Budget Number of homeless households (individuals and families) assisted through emergency shelter 8,572 8,510 8,510 Number of households served at family service centers2 27,750 16,889 4,647 54% 59% 85% 4,048 4,283 4,700 1,014 800 800 615,600 387,117 390,000 51,411 33,000 35,000 Number of job seekers assisted through the Workforce Development initiatives 41,657 52,987 55,400 Number of Senior Center Shuttle Trips 16,229 74,600 85,500 Percentage of school attendance for Head Start 3 Medical and dental exams completed for Head Start 3 Medical and dental exams completed for Early Head Start 4 Number of meals served to seniors 5 Number of victim services provided6 7 8 Based on 10 months actuals. The decrease in 2022-23 and 2023-24 reflects reduced Federal Emergency Rental Assistance Program and other COVID-19 funding. 3 The increase reflects anticipated full enrollment for 2023-24 as operations return to pre-pandemic levels. 4 The decrease in 2022-23 and 2023-24 reflects reduced enrollment in the program. 5 The decrease in 2022-23 reflects Area Agency on Aging funding for pandemic relief meals expiring on June 30, 2022. 6 The decrease in 2022-23 reflects a modification to how services are reported. 7 The increase in 2022-23 and 2023-24 reflects the expected recovery from the pandemic, accompanied by a shift to more innovative community outreach efforts and new partnership initiatives to connect targeted audiences with employer job openings. 8 Services prior to 2023-24 were administered by the Public Transit Department. Decreased trips in 2021-22 reflect reduced Senior Center hours and the impact of the COVID-19 pandemic on shuttle use rates. 1 2 Expenditure and Position Summary Operating Expense Total Positions 2021-22 Actual 2022-23 Estimate 2023-24 Budget $178,896,000 $214,137,000 $172,854,000 427.0 459.0 430.0 Source of Funds: General Fund $21,708,000 $24,695,000 361,000 1,250,000 4,913,000 156,477,000 187,812,000 126,617,000 Wastewater 155,000 155,000 155,000 Water 225,000 225,000 225,000 Other Restricted Grants $40,944,000 141 Table of Contents PHOENIX OFFICE OF ARTS AND CULTURE Program Goal Budget Allowance Explanation 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. The Phoenix Office of Arts and Culture 2023-24 operating budget allowance of $6,618,000 is $326,000 or 5.2 percent more than 2022-23 estimated expenditures. This is primarily due to increases in the General Fund and is partially offset by a decrease in Grants. The General Fund 2023-24 budget allowance of $5,666,000 is $368,000 or 6.9 percent more than 2022-23 estimated expenditures. The increase is due to additional funding for community arts grants and fewer anticipated staff vacancies. It also reflects negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. The Grants 2023-24 budget allowance of $932,000 is $42,000 or 4.3 percent less than 2022-23 estimated expenditures. The decrease is primarily due to the spending down of American Rescue Plan Act funds for an arts and culture internship program, arts and culture nonprofit stabilization grants, and artist technical assistance grants. Phoenix Office of Arts and Culture Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance. 2021-22 Actual 2022-23 Estimate1 2023-24 Budget Grant applications processed to support arts activities through schools and nonprofit organizations2 95 127 160 Grant awards administered to support arts activities through schools and nonprofit organizations2 88 112 126 Completed Percent-for-Art projects to enhance capital improvement projects with artwork 6 5 8 Local artists/arts organizations training workshops3 26 30 35 Percent of projects in Art Plan being implemented 57% 46% 65% 70 70 90 4 Community presentations Based on 10 months actual experience. Increases are expected due to increased outreach to grantees. 3 Includes presentations and workshops to local artists, the annual grant workshop training for arts organizations, and arts learning workshops. 4 Includes projects that were in design, under construction, or were completed. Reduced percentage in 2022-23 reflects the carryover of some Art Plan projects to future years and the impact of staff vacancies. 1 2 Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $7,928,000 11.0 $6,292,000 11.0 $6,618,000 12.0 Source of Funds: General Fund Grants Other Restricted $4,489,000 3,438,000 1,000 $5,298,000 974,000 20,000 $5,666,000 932,000 20,000 142 Table of Contents ENVIRONMENTAL SERVICES The Environmental Services Program Represents 15.5% of the Total Budget. The Environmental Services program budget includes Environmental Programs, Sustainability, Public Works, Solid Waste Management, and Water Services. 143 Table of Contents 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 water 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 Department 2023-24 operating budget allowance of $469,997,000 is $65,679,000 or 16.2 percent higher than 2022-23 estimated expenditures. The increase is included in all funds. The Water Fund 2023-24 budget allowance of $327,078,000 is $50,710,000 or 18.3 percent higher than 202223 estimated expenditures. This is primarily due to fewer anticipated vacancies, negotiated increases in employee compensation, and to implement the results from the Classification and Compensation study. This increase also includes appropriation for funds received from the Bureau of Reclamation and Central Arizona Water Conservation District for forgoing delivery of a portion of Phoenix’s Colorado River entitlement, which will be used for replacement water and to support water conservation programs. The Wastewater Fund 2023-24 budget allowance of $139,594,000 is $14,263,000 or 11.4 percent higher than 2022-23 estimated expenditures. This is primarily due to fewer anticipated vacancies, negotiated increases in employee compensation, and to implement the results from the Classification and Compensation study, as well as other usage and inflationary adjustments for chemicals, electricity, and pest and odor control services. The Grants Fund 2023-24 budget allowance of $783,000 is $509,000 or 185.8 percent more than 2022-23 estimated expenditures. This is due to the carryover of unspent Council-approved American Rescue Plan Act (ARPA) funding for customer utility assistance. The Other Restricted Funds 2023-24 budget allowance of $2,543,000 is $197,000 or 8.4 percent higher than 2022-23 estimated expenditures. These funds primarily support the stormwater program, and the increase reflects negotiated increases in employee compensation and the implementation the results from the Classification and Compensation study. Water Services Waterline Leaks Repaired (Percent repaired within 48 hours) 100% 80% 85% 86% 2019-20 2020-21 86% 85% 69% 60% 40% 20% 0% 2022-23* 2021-22 2023-24* *Estimated Fiscal Year The decrease from 2021-22 to 2022-23 reflects critical staff vacancies and a loss in contracted staff. Water Services Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: Water main break/leaks per 100 miles Waterline leaks repaired within 48 hours2 Percent of miles of sewer cleaned per year Sanitary sewer overflows per 100 miles Gallons of water produced system wide (billions) Gallons of wastewater treated (billions) Telephone calls-received Telephone calls-percent answered3 1 2 3 2021-22 Actual 2022-23 Estimate1 2023-24 Budget 13.4 86% 17.6% 1.03 110.4 64.8 439,922 96.6% 13.5 69% 15.6% 0.56 109.8 67.1 392,671 98.1% 15.0 85% 20.0% 0.60 115.3 68.5 400,000 96.0% Based on 10 months actual experience. The decrease from 2021-22 to 2022-23 is due to critical staff vacancies and a loss in contracted staff. 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”. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $348,172,000 1,493.0 $404,318,000 1,535.8 $469,997,000 1,535.8 Source of Funds: Other Restricted Grants Wastewater Water $1,989,000 3,943,000 110,548,000 231,692,000 $2,346,000 274,000 125,331,000 276,368,000 $2,543,000 783,000 139,594,000 327,078,000 144 Table of Contents PUBLIC WORKS – SOLID WASTE MANAGEMENT Program Goal Budget Allowance Explanation 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. The Solid Waste 2023-24 operating budget allowance of $173,599,000 is $8,594,000 or 5.2 percent greater than 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. Solid Waste Recyclable Material Processed Thousands of Tons 150 128.8 125.0 123.7 121.2 122.0 2022-23* 2023-24* 100 50 0 2019-20 2021-22 2020-21 *Estimated Fiscal Year Solid Waste Management Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: 2021-22 2022-23 2023-24 Actual Estimate1 Budget Residential households served with same-day contained solid-waste and recyclable-material collections2 Tons of total solid waste collected and landfilled3 Tons of solid waste from City residences disposed4 416,176 420,002 423,863 1,013,301 972,257 978,090 626,381 616,541 620,241 Based on 10 months actual experience. The 2022-23 projected service level is based on annualization of 9 months of actuals data and 0.69% growth over the last 9 months. Projected households for 2023-24 are based on 0.92% growth from 2022-23 projections. 3 Tonnage includes disposal tonnage collected at City transfer stations and landfill as well as Solid Waste Field Services tonnage sent to contracted private transfer stations and landfills. Projected tonnage for 2023-24 is based on 0.6% growth from 2022-23 projections. The reduction in tonnage in 2022-23 is due to reduction in the COVID threat and people returning to physical workspaces. 4 Tonnage includes Solid Waste Field Services tonnage, transfer station residential loads, non-profit free loads and recycling rejects. Projected tonnage for 2023-24 is based on 0.6% growth from 2022-23 projections. 1 2 145 Expenditure and Position Summary 2021-22 Actual Operating Expense Total Positions $157,946,000 635.5 2022-23 Estimate 2023-24 Budget $165,005,000 $173,599,000 637.5 627.5 Source of Funds: Solid Waste $157,946,000 $165,005,000 $173,599,000 Table of Contents PUBLIC WORKS – SUPPORT SERVICES Program Goal Budget Allowance Explanation 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. The Public Works 2023-24 operating budget allowance of $36,678,000 is $8,408,000 or 29.7 percent more than 2022-23 estimated expenditures. The increase is entirely in the General Fund which is offset by a reduction in Grant funds. The General Fund 2023-24 budget allowance of $36,023,000 is $9,714,000 or 36.9 percent more than 2022-23 estimated expenditures. This is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. In addition to normal inflationary increases, the budget also includes an increase in funding for operation and maintenance of the 100 West Washington building. The Grants decrease is due to the completion of American Rescue Plan Act grant funding. Public Works Major Performance Measures and Service Levels The following significant performance measures and service trends will be achieved with the 2023-24 budget allowance: Building space square footage serviced and maintained 2 Facility service requests completed Fleet vehicles per mechanic Units of equipment for which fleet management is provided3 Annual miles of fleet vehicle utilization (in millions) 1 2 3 2021-22 Actual 2022-23 Estimate1 2023-24 Budget 9,759,942 20,397 41.9 7,764 46.6 10,758,119 21,155 42.6 7,876 48.2 10,758,119 21,700 42.8 7,907 48.4 Based on 10 months actual experience. The square footage change between 2021-22 and 2022-23 was the result of adding the 100 West Washington Building and its garages. Equipment includes vehicles, trailers, tractors, generators, off-road equipment, and other kinds of heavy-equipment items. Expenditure and Position Summary Operating Expense Total Positions Source of Funds: General Fund Other Restricted Grants 2021-22 Actual 2022-23 Estimate 2023-24 Budget $35,536,000 445.0 $28,270,000 462.0 $36,678,000 462.0 $24,930,000 23,000 10,583,000 $26,309,000 640,000 1,321,000 $36,023,000 640,000 15,000 146 Table of Contents ENVIRONMENTAL PROGRAMS Program Goal Budget Allowance Explanation 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. The Office of Environmental Programs 2023-24 operating budget allowance of $5,070,000 is $1,687,000 or 25.0 percent less than 2022-23 estimated expenditures. The decrease is primarily due to the conclusion of federal grant resources made available through the American Rescue Plan Act (ARPA). The General Fund 2023-24 budget allowance of $1,789,000 is $214,000 or 13.6 percent greater than 2022-23 estimated expenditures due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. The Other Restricted 2023-24 budget allowance of $226,000 is $19,000 or 9.2% greater than 2022-23 estimated expenditures due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. The Grants 2023-24 budget allowance of $2,280,000 is $1,999,000 or 46.7 percent less than 2022-23 estimated expenditures primarily due to the conclusion of federal grant resources made available through ARPA. The Water 2023-24 budget allowance of $704,000 is $79,000 or 12.6 percent higher than 2022-23 estimated expenditures due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. Environmental Programs Total Training Provided to Employees and Consultants on Environmental issues Number Trained 2,000 1,713 1,606 1,500 1,188 800 1,000 500 489 0 2019-20 2020-21 2021-22 2022-23* 2023-24* *Estimated Fiscal Year Fiscal Year (FY) 2019-20 training numbers were low due to the COVID-19 pandemic as the majority of training was scheduled March through June 2020. FY 2020-21 and FY 2021-22 had unusually high training numbers as more training sessions were added to capture those staff that missed the training in FY 2019-20. Environmental Programs Major Performance Measures and Service Levels The following significant performance measures and service level trends will be achieved with the 2023-24 budget allowance: Number of site assessments conducted2 Number of brownfields projects implemented Percentage of time Environmental Programs works with City departments to correct Environmental Facility Assessment findings within 90 days 1 2 2021-22 Actual 2022-23 Estimate1 2023-24 Budget 245 2 100% 258 4 100% 200 3 90% Based on 10 months actual experience. “Site assessments” means facility assessments, air quality (dust) site visits on certain City-owned property, and assessments of City projects to determine compliance with a variety of environmental regulations. Expenditure and Position Summary 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Expense Total Positions $9,496,000 14.0 $6,757,000 16.0 $5,070,000 15.0 Source of Funds: General Fund Capital Construction Other Restricted Grants Water $1,112,000 31,000 160,000 7,787,000 406,000 $1,575,000 70,000 207,000 4,279,000 625,000 $1,789,000 70,000 226,000 2,280,000 704,000 147 Table of Contents SUSTAINABILITY Program Goal Budget Allowance Explanation The Office of Sustainability provides professional administration of a citywide sustainability program that includes assessing the impact of sustainability practices to the City and community at large, while balancing the City's shared objectives for a healthy environment, an excellent quality of life, and continued economic vitality. The Office of Sustainability 2023-24 operating budget allowance of $1,100,000 is $196,000 or 21.7 percent more than 2022-23 estimated expenditures. The increase is primarily in the General Fund and Grants Fund. The General Fund 2023-24 budget allowance of $715,000 is $92,000 or 14.8 percent more than the 2022-23 estimated expenditures. The increase is primarily due to negotiated increases in employee compensation and to implement the results from the Classification and Compensation study. The Grants Fund 2023-24 budget allowance of $310,000 is $103,000 or 49.8 percent more than 2022-23 estimated expenditures. The city received a new grant from the Catena Foundation to support the city’s effort to develop an electric vehicle education and awareness campaign focused in disadvantaged and low income community areas, and expand transportation electrification infrastructure or implement low/no emissions e-mobility options. Expenditure and Position Summary Operating Expense Total Positions Source of Funds: General Fund Other Restricted Grants 2021-22 Actual 2022-23 Estimate 2023-24 Budget $742,000 5.0 $904,000 6.0 $1,100,000 6.0 $465,000 27,000 250,000 $623,000 75,000 207,000 $715,000 75,000 310,000 148 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. GENERAL FUND CONTINGENCY The General Fund contingency in FY 2023-24 will be $81,247,000, plus $20,000,000 to be set-aside for potential employee compensation increases to attract and retain a quality workforce. The set-aside could also be used if needed in the event of an economic downturn or an unexpected reduction in revenues to ensure the General Fund remains balanced. Any use of the set-asides will require City Council approval. In March 2010, the Council agreed to gradually increase the contingency with a goal of achieving five percent of General Fund operating expenditures. Achieving this goal will improve the City’s ability to withstand future economic declines. The FY 2023-24 contingency reflects an increase of $12,802,000 over the FY 2022-23 contingency of $68,445,000 and increases the contingency percentage by 0.25% to 4.50%. The following table shows contingency funding and set-aside amounts over the past nine years. 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 Percent of Operating Expenditures 2014-15 1,145,995 45,268 — 4% 2015-16 1,149,761 46,400 — 4% 2016-17 1,212,282 48,400 34,746 4% 2017-18 1,268,098 50,400 5,500 4% 2018-19 1,296,723 52,400 9,219 4% 2019-20 1,374,444 55,400 2,512 4% 2020-21 1,405,970 55,596 — 4% 2021-22 1,576,231 57,000 67,164 4% 2022-23 1,610,478 68,445 52,343 4.25% 2023-24 1,805,4901 81,247 20,000 4.50% 1 Total General Fund operating expenditures in FY 2023-24 are $1,906,737,000, and include operating costs for all General Fund programs and services, contingency and set-aside amounts. For purposes of calculating the contingency Percent of Operating Expenditures, contingency and set-aside amounts are excluded from the General Fund Operating Expenditures amount. 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. Use of these amounts requires City Council approval. The following table shows the contingency amount for each of the other funds. 2023-24 OTHER FUND OPERATING EXPENDITURE AND CONTINGENCY AMOUNT (000s) Fund Operating Expenditures2 Contingency Amount Aviation Convention Center Development Services Solid Waste Sports Facilities Transportation 2050 Wastewater Water 338,769 61,859 87,446 173,822 2,805 250,370 140,239 329,346 25,000 3,000 8,000 1,000 2,500 4,000 10,000 22,000 Percent of Operating Expenditures 7% 5% 9% 1% 89% 2% 7% 7% Non-General Fund operating expenditures include operating costs for Non-General Fund programs and services, and contingency. For purposes of calculating the contingency Percent of Operating Expenditures, contingency amounts are excluded from the Non-General Fund Operating Expenditures amount. 2 150 Table of Contents COVID-19 FUNDING SUMMARY FEDERAL FUNDING IN RESPONSE TO THE COVID-19 PANDEMIC Coronavirus Aid, Relief, and Economic Security (CARES) Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law to address economic fallout in the United States resulting from the COVID-19 pandemic. State and local governments were awarded a variety of grant funds under the CARES Act. Coronavirus Relief Fund (CRF) The CARES Act allocated $150 billion in Coronavirus Relief Funds to states and cities with populations over 500,000 to address and mitigate the impacts of COVID-19. As a result, the City of Phoenix was awarded $293 million in Coronavirus Relief Funds. Based on the federal guidance, these funds could only be used to cover costs that were necessary expenditures caused by COVID-19 incurred between March 1 and December 30, 2020. On May 5, 2020, City Council adopted the Coronavirus Relief Fund Strategic Plan. Based on input from City Council, the funds were allocated between Community Investment, City Operations, and a Reserve to Preserve City Services. The Community Investment Programs were allocated between the following six categories: • Business and Employee Assistance • Rent/Mortgage and Utility Assistance • Distance Learning and WiFi Access • Mitigation and Care of Vulnerable Populations • Food Delivery • Better Health and Community Outcomes The programs created within these categories were designed to directly address the negative impacts of the COVID-19 pandemic on Phoenix residents and local businesses. Some of the approved programs were new initiatives, while others supplemented existing programs that were approved or implemented as a broader strategy to mitigate COVID-19. The City Operations portion of the Coronavirus Relief Fund Strategic Plan was designed to provide City departments with the resources needed to keep employees and residents safe and to provide staff with the tools and technology needed to facilitate teleworking and continuity of operations. The City Operations Programs were allocated under the following six categories: • Employee COVID-19 Testing • PPE and Cleaning Supplies • Medical and Public Safety Measures • Payroll Expense Reimbursement/Management Oversight of COVID Funds • Telework/e-Government Solutions • Public Facility Retrofit Funding The Reserve was initially created to address any unknown needs that could have surfaced as staff and the community dealt with the virus. However, as guidance from the Treasury changed, staff determined that the Reserve could be used to preserve existing General Funded programs that were facing reduction due to declining revenue by strategically offsetting eligible public safety salaries in the General Fund. The Strategic Plan was modified throughout the year as conditions and needs changed and on December 8, 2020, staff presented City Council with the final update report. These funds were fully expended by the end of fiscal year 2020-21. 151 Table of Contents Other Significant Grants Awarded to the City of Phoenix Under the CARES Act or the Consolidated Appropriations Act The following is a summary of other funds received by City departments under either the CARES Act or the Consolidated Appropriations Act. Aviation The Aviation Department received $148 million in funding from the CARES Act. Per Department of Treasury guidance this funding was available to be used on any lawful airport purpose. In addition, the Aviation Department received $39 million in funding from the Coronavirus Response and Relief Supplemental Appropriations Act of 2021(CRRSA). These funds were fully expended by the end of fiscal year 2021-22. Public Transit The Public Transit Department received $99.5 million in CARES Act funding from the U.S. Department of Transportation (USDOT). In addition, the Public Transit Department received $43 million in funding from USDOT as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CRRSA). The funding from the federal COVID-19 relief packages was to provide the resources needed to continue public transit operations and respond to the impacts of COVID-19. These funds were fully expended by the end of fiscal year 2022-23. Neighborhood Services The Neighborhood Services Department (NSD) received approximately $23.9 million in CARES Act Community Development Block Grant funding from the federal Department of Housing and Urban Development (HUD). These funds were allocated to prevent, prepare for, and respond to the COVID-19 pandemic by providing grants for very small businesses, assisting nonprofits to provide community services, supporting residents sheltering in place through housing rehabilitation, funding public facility improvement projects with nonprofits and schools, and increasing shelter beds for people experiencing homelessness. In fiscal year 2022-23, NSD completed a significant public facility improvement project with multiple schools serving Phoenix households, in addition to continuing to work with nonprofits to acquire or improve sites intended to serve individuals experiencing homelessness. The majority of the remaining funds going into fiscal year 2023-24 are under contract for homeless support services or facility improvements. Human Services The Human Services Department received nearly $40 million in COVID-related funding through a variety of agencies. Funding was used to assist Phoenix residents facing housing instability, homelessness, and other emergency services. Funding was also used to support Head Start aged children and families. Additionally, the Human Services Department received $51.1 million for the emergency rental assistance program from the Consolidated Appropriations Act 2021, and in March 2022 the department received an additional $35.0 million in funds reallocated from other grantees. Housing Department The Housing Department received $6.6 million in CARES Act funding from the U.S. Department of Housing and Urban Development (HUD) to be used for maintenance of normal operations and to prevent, prepare for, and respond to the COVID-19 pandemic. These funds were fully expended by the end of fiscal year 2021-22. Fire Department The Fire Department received $879,000 in Assistance to Firefighters Grant COVID-19 supplemental funding. These funds were allocated to purchase personal protective equipment for public safety responders and included items such as respirators, masks, and gloves. These funds were fully expended by the end of fiscal year 2021-22. Police Department and Fire Department The Police and Fire Departments received $2,572,519 in Coronavirus Supplemental Funding Program Formula Grant funds to purchase personal protective equipment for public safety responders. Items funded include masks, gloves, and gowns. Funds were also allocated to cover Police and Fire overtime expenses attributed to the City of Phoenix Incident Management Team while managing the COVID-19 response. These funds were fully expended by the end of fiscal year 2021-22. 152 Table of Contents American Rescue Plan Act (ARPA) On March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law to provide additional relief to address the continued impact of the COVID-19 pandemic on the economy, public health, state and local governments, individuals, and businesses. State and Local Fiscal Recovery Fund The City of Phoenix received approximately $396 million in State and Local Fiscal Recovery Funds under the American Rescue Plan Act, which was signed by President Biden in March 2021. Funding was received in two equal distributions 12 months apart. The City received the first allocation of $198 million on May 19, 2021. The second allocation of $198 million was awarded in May 2022. According to federal guidance, these funds may only be used to cover costs that are necessary expenditures caused by COVID-19 incurred between March 3, 2021, and Dec. 31, 2024. Per the revised guidance, funds can only be used to: • Support public health expenditures, by funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff; • Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector; • Replace lost public sector revenue, using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic; • Provide premium pay for essential workers, offering additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors; and • Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet. At the time of the award, City Council directed that a strategic plan be approved for each tranche of funding received, resulting in the entire SLFRF allocation being approved between 2021 and 2022. After receiving the first SLFRF allocation of $198 million on May 19, 2021, City Council approved the first tranche strategic plan, detailing approved ARPA programs on June 8, 2021. The second tranche strategic plan was approved on June 7, 2022. In total, the City of Phoenix APRA Strategic Plan of $396 million includes 60-plus programs spanning areas such as COVID-19 testing and vaccine efforts, homelessness and mental health services, business assistance, family financial assistance, youth sports and education, technology and wireless network improvements, and food insecurity. Categories include: • Affordable Housing and Homelessness • Better Health and Community Outcomes • City Operations • Education • Neighborhood Sustainability • Phoenix Resilient Food System • Education • Workforce The City Operations category, the second largest of the three plan areas, is strategically focused on General Fund (GF) resiliency and capitalizing on the one-time nature of this funding source to address issues that will free up future GF resources and support transformational investments. The proposed strategic plan assumes City Operations will receive approximately 25% of ARPA funding, or $100 million, over two years. This area includes the following areas of focus: • Infrastructure, Technology and Capital Needs • Revenue Replacement • PPE, Cleaning, Sanitizing/Testing and Vaccine Distribution As of April 30, 2023, $177 million has been spent on ARPA programs, including COVID-19 testing and vaccinations, micro and small business grants, homelessness services, food programs, workforce and tuition assistance, nonprofit and artists grants, bus cards, rental assistance, landlord incentives, business assistance, and premium pay. The City remains on track to fully expend awarded funds by the December 31, 2024 deadline. The City also created a public website tracking all ARPA programs. Visitors to the website can access the ARPA Strategic Plan, as well as detailed project information, updated spending data, and key performance indicators. Information can be found at www.phoenixopendata.com by visitors selecting the ARPA website under the Showcases section. 153 Table of Contents Other ARPA Funds Awarded to Specific Departments In addition to the citywide funds discussed above, ARPA funds were also awarded directly to certain City departments. Aviation Department The Aviation Department was awarded $158 million in ARPA funds for operating expenses, which have been fully expended. Housing Department The U.S. Department of Housing and Urban Development awarded the Housing Department $30.5 million in ARPA funds. The award was comprised of $4.2 million for Emergency Housing Vouchers to provide temporary public housing to individuals and families experiencing homelessness or at risk of homelessness; $21.3 million for the on-going production or preservation of affordable housing, tenant-based rental assistance, supportive services, and purchase or development of non-congregate shelter for individuals and families experiencing homelessness; and $5 million to support implementation of the Choice Neighborhoods grant program. Human Services Department The Human Services Department (HSD) was awarded $55.3 million to administer the emergency rental assistance program, which provides rent and utility assistance to qualifying residents impacted by COVID-19. HSD received $7.0 million in reallocated Emergency Rental Assistance 2.0 funding to provide additional services to Phoenix residents facing housing instability, as well as $1.0 million in ARPA funding from Maricopa County for the expansion of services at two Heat Relief shelters. A separate $4.1 million grant was awarded to support services for Head Start children and families. Public Transit Department The U.S. Department of Transportation awarded the Public Transit Department $186 million as part of the American Rescue Plan Act. $105 million was awarded to continue public transit operations and respond to the impacts of COVID-19, while $81 million was designated specifically for the South-Central Extension/Downtown Hub light rail project. Of the $186 million awarded, approximately $10.1 million remains to be spent and is included in the 2023-24 budget. 154 Table of Contents DEBT SERVICE Debt service expenditures include payments of principal, interest, costs of issuance and related costs such as trustee fees and reserve requirements for bonds issued. The debt service allowance in 2023-24 for existing debt and anticipated future bond sales is $1,110,617,000. As shown in the following pie chart, debt service expenditures are funded by both operating and capital funding sources. Secondary Property Tax represents the annual tax levy for general obligation bonded debt service and a federal subsidy payment. City Improvement 7.1% 2023-24 Debt Service Wastewater 7.8% Water 13.3% Solid Waste 0.9% Convention Center 1.6% Capital Funds 47.8% Secondary Property Tax 12.1% Aviation 9.4% 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 by state-shared gas taxes and other highway user fees and charges and also are not general obligations of the City. Debt Management In general, the City has used general obligation bonds to finance capital programs of general government (non-enterprise) departments. These include programs such as 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. 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 recommended bond authorizations. 155 Table of Contents These authorizations provided funding to construct capital improvements in the following areas: • • • • • • • • • • • Police and Fire Protection Police, Fire and Computer Technology Parks, Recreation and Mountain Preserves Education Facilities Library Facilities Street Improvements Storm Sewers Senior Facilities Cultural Facilities 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 City maintains a General Obligation Reserve Fund, which under State law cannot exceed 10% of annual principal and interest payments after 2022-23. 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, S&P and Fitch. The City’s general obligation bonds are rated Aa1, AA+ and AAA respectively. City of Phoenix Bond Ratings Rating (1) General Obligation Junior Lien Water Revenue (2) Senior Lien Airport Revenue (2) Junior Lien Airport Revenue (2) Senior Lien Tax Excise Tax Revenue (2) 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) (1) (2) Moody’s S&P Fitch Aa1 Aa2 Aa3 A1 Aa2 Aa2 Aa2 Aa2 A3 Aa2 Aa2 AA+ AAA AAA+ AAA AAA AAA AA+ A AA AA AAA AA+ AA+ - Represents underlying rating, if insured. Issued by the City of Phoenix Civic Improvement Corporation. 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. Statement of Bonded Indebtedness(1) (In Thousands of Dollars) General Obligation Bonds Purpose Revenue-Supported General Obligation Bonds Total General Obligation Bonds Various Airport Sanitary Sewer Water $740,890 $ — — — — — — — $740,890 — — — Direct Debt $740,890 $740,890 Less: Revenue Supported Net Debt (1) Non-Enterprise General Obligation Bonds $ — — — $ — $740,890 — $740,890 Represents general obligation bonds outstanding as of January 1, 2023. Such figures do not include the outstanding principal amounts of certain general obligation bonds that 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. Debt Limitation Pursuant to Chapter 177, Laws of Arizona 2016, which became effective August 6, 2016, the City’s debt limitation is based on the full cash net assessed valuation. Full cash net assessed valuation for 2022-23 was $23,045,115,140. 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 full cash net assessed valuation, nor may outstanding general obligation bonded debt for all other purposes exceed 6 percent of a City’s full cash net assessed valuation. Unused borrowing capacity as of January 1, 2023, is shown below, based upon 2022-23 assessed valuation. 156 Table of Contents Water, Sewer, Light, Parks, Open Spaces, Playgrounds, Recreational Facilities, Public Safety, Law Enforcement, Fire Emergency, Streets and Transportation Purpose Bonds 20% Constitutional Limitation $4,609,023,028 Direct General Obligation Bonds Outstanding(1) (664,065,000) Less: Debt Limit Reduction from Refunding (47,631,872) (2) Unused 20% Limitation Borrowing Capacity $ 3,897,326,156 All Other General Obligation Bonds 6% Constitutional Limitation $ 1,382,706,908 Direct General Obligation Bonds Outstanding Less: Debt Limit Reduction from Refunding ($76,825,000) (1) (14,779,763) (2) Unused 6% Limitation Borrowing Capacity (1) (2) $ 1,291,102,145 Represents general obligation bonds outstanding as of January 1, 2023. Per A.R.S. Section 35-473.01.I, refunding bonds issued on or after August 6, 2016 may cause a reduction in available debt limits based on the nature of the refunded bonds (each, a “Debt Limit Reduction from Refunding”). If the principal amount of the refunded bonds is greater than the principal amount of the bonds that are refunding them and net premium is used to fund the escrow, then the difference in principal amounts will constitute a Debt Limit Reduction from Refunding. 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 January 1, 2023. Net Direct General Obligation Bonded Debt Ratios Per Capita Debt Pop. Est. Limited Net Assessed Valuation ($15,490,531,934) ($232,423,574,149) $449.50 4.78% 0.32% (1,648,257) (1) Direct General Obligation Bonded Debt Outstanding as of January 1, 2023 (1) Full Cash Valuation Population estimate obtained from the U.S. Census Bureau as of July 1, 2021. 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 well-managed, 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, such as police precinct stations. Similar to bonded debt, these financings are rated by bond rating agencies. 157 Table of Contents DEBT SERVICE BY SOURCE OF FUNDS AND TYPE OF EXPENDITURE (In Thousands of Dollars) 2021-22 Actual 2022-23 Estimate 2023-24 Budget Operating Funds City Improvement Secondary Property Tax Aviation Convention Center Solid Waste Wastewater Water 97,989 128,726 104,878 20,763 15,227 71,381 132,063 72,110 206,818 99,337 17,465 15,174 76,396 147,528 78,972 134,892 104,352 17,481 9,581 86,395 147,538 Total Operating Funds 571,026 634,828 579,210 Bond Funds Aviation Wastewater Water Other 474 352 317 654 1,233 900 900 Total Bond Funds 826 971 3,033 Other Capital Funds Customer Facility Charges Federal, State and Other Participation Passenger Facility Charges 6,101 24,498 51,763 20,563 24,999 56,761 20,558 451,055 56,761 Total Other Capital Funds 82,363 102,323 528,374 Total 654,215 738,122 1,110,617 Principal Interest and Other 347,733 306,481 422,273 315,851 792,964 317,653 Total 654,215 738,122 1,110,617 Source of Funds Type of Expenditure 158 Table of Contents OUTSTANDING DEBT AND DEBT SERVICE COVERAGE 2021-22 YEAR-END ACTUAL (In Thousands of Dollars) Effective Issue Date Series Purpose Average Maturity Interest Life Original Dates Rate (Years) Amount Principal Interest Outstanding Outstanding Coverage (2) General Obligation Bonds (1) 03/01/04 2004 Various Improvem ents 7/1/10-28 4.22 16.3 200,000 14,720 2,650 10/27/09 2009A Various Improvements Taxable Series 2009A 7/1/20-34 3.42 18.4 280,955 237,495 86,346 N/A 10/27/09 2009C Refunding 2009C 7/1/11-23 2.70 6.7 117,195 3,615 126 N/A 06/12/12 2012B Various Improvements Taxable Series 2012B 7/1/21-23 2.76 9.8 16,640 2,895 83 N/A 06/24/14 2014 Refunding 7/1/19-27 2.71 9.5 278,015 189,670 20,054 N/A 09/13/16 2016 Refunding 7/1/18-27 1.74 9.0 226,215 206,415 38,363 N/A 06/21/17 2017 Refunding 7/1/18-27 1.52 3.4 68,305 14,185 1,652 N/A 05/25/22 2022 Refunding 7/1/23-34 2.93 5.9 146,400 146,400 43,296 N/A 1,333,725 815,395 192,570 Total General Obligation Bonds N/A Loans from Direct Borrowings 08/03/10 Loan Wastewater WIFA 7/1/18-26 2.97 12.0 6,287 2,830 175 2.20 04/11/11 Loan W ater W IFA 7/1/16-24 2.97 9.4 2,093 501 22 2.01 06/01/11 Loan Wastewater WIFA 7/1/26-29 2.97 16.6 3,909 3,909 644 2.20 09/14/11 Loan W ater W IFA 7/1/24-29 2.97 15.8 1,497 1,497 222 2.01 04/11/19 Loan Closed Loop Fund, LP 10/15/19-24 0.00 5.0 3,000 1,350 - 2.20 16 ,786 10,087 1,063 Total Loans from Direct Borrowings Municipal Corporation Obligations 08/01/01 2001 Water System Rev Re funding 7/1/02-24 4.68 14.1 99,980 13,810 1,149 10/06/05 2005B State Distribution Rev 2005B (3) 7/1/12-44 4.72 28.9 275,362 248,146 384,298 2.01 N/A 09/01/10 2010B Airport Rev 2010B (Taxable) 7/1/2040 3.67 29.8 21,345 21,345 25,358 56.28 12/22/11 2011 Wastewater System Rev Refunding 7/1/14-24 2.58 8.4 118,290 21,935 1,628 2.20 06/21/12 2012A Excise Tax Rev Refunding 2012A 7/1/14-25 2.30 6.7 17,510 220 20 17.49 03/05/13 2013 Airport Rev Refunding (AMT) 7/1/14-32 3.28 11.8 196,600 125,455 37,015 56.28 04/15/14 2014 Wastewater System Rev Refunding 7/1/15-29 3.00 9.4 127,810 73,155 15,344 2.20 12/17/14 2014A W ater System Rev 2014A 7/1/19-44 3.76 19.7 152,830 7,455 564 2.01 12/17/14 2014B Water System Rev Refunding 2014B 7/1/16-29 2.64 9.7 445,085 295,915 55,427 2.01 05/12/15 2015A Excise Tax Rev Refunding 2015A 7/1/17-41 3.56 16.2 319,305 275,365 149,812 17.49 17.49 05/12/15 2015B Excise Tax Rev Refunding 2015B (Taxable) 7/1/16-35 3.35 10.2 60,895 36,925 9,070 12/15/15 2015A Airport Rev 2015A (Non-AMT) 7/1/16-45 3.99 18.6 95,785 84,515 57,745 56.28 12/15/15 2015B Airport Rev Refunding 2015B (Non-AMT) 7/1/2034 4.08 18.5 18,655 18,655 11,193 56.28 11/16/16 2016 Wastewater System Rev Refunding 7/1/17-35 2.89 11.3 225,325 178,505 69,122 2.20 01/10/17 2016 Water System Rev Refunding 2016 7/1/17-39 3.59 15.1 375,780 350,895 181,926 2.01 06/01/17 2017A Excise Tax Rev 2017A 7/1/18-32 2.16 6.8 116,835 66,865 11,214 17.49 06/01/17 2017B Excise Tax Rev Refunding 2017B 7/1/19-29 2.02 6.3 101,895 53,670 8,684 17.49 11/21/17 2017A Airport Rev 2017A (AMT) 7/1/18-47 3.84 18.7 190,930 176,045 136,229 56.28 11/21/17 2017B Airport Rev Refunding 2017B (Non-AMT) 7/1/21-38 3.23 13.5 173,440 162,340 77,326 56.28 12/21/17 2017D Airport Rev Refunding 2017D (Non-AMT) 7/1/21-40 3.36 14.2 474,725 442,590 212,071 56.28 06/19/18 2018A Wastewater System Rev 2018A 7/1/25-43 3.66 17.4 133,270 133,270 82,344 2.20 06/19/18 2018B Wastewater System Rev Refunding 2018B 7/1/19-24 2.26 4.0 84,295 38,790 2,932 2.20 11/28/18 2018 Airport Rev 2018 (AMT) 7/1/19-48 4.22 19.3 226,180 213,505 173,749 56.28 12/05/19 2019A Rental Car Facility (Taxable) 2019A 7/1/28-45 3.33 18.4 244,245 244,245 181,794 2.89 12/05/19 2019B Rental Car Facility Ref (Taxable) 2019B 7/1/20-28 2.60 4.6 60,485 42,920 3,517 2.89 56.28 12/11/19 2019A Airport Rev 2019A (Non-AMT) 7/1/41-49 3.61 25.9 341,095 341,095 356,544 12/11/19 2019B Airport Rev 2019B (AMT) 7/1/20-49 3.44 19.1 392,005 388,895 300,929 56.28 12/11/19 2019C Airport Rev Refunding (Taxable) 2019C 7/1/23-25 2.38 4.6 29,435 29,435 1,366 56.28 04/09/20 2020A W ater System Rev 2020A 7/1/30-44 3.14 20.0 165,115 165,115 146,809 2.01 04/09/20 2020B W ater System Rev 2020B 7/1/30-44 3.14 20.0 228,015 228,015 202,735 2.01 08/25/20 2020A Excise Tax Rev 2020A 7/1/21-45 1.90 12.0 131,595 129,025 62,005 17.49 08/25/20 2020B Excise Tax Rev (Taxable) 2020B 7/1/21-45 2.39 13.9 150,000 140,675 43,738 17.49 08/25/20 2020C Excise Tax Rev Refunding (Taxable) 2020C 7/1/23-36 1.58 7.1 116,685 116,685 9,632 17.49 06/09/21 2021A W ater System Rev 2021A 7/1/26-45 2.45 16.1 250,000 250,000 179,100 2.01 06/09/21 2021B Water System Rev Refunding 2021B 7/1/22-26 0.52 3.5 67,345 63,385 8,117 2.01 06/09/21 2021C Water System Rev Refunding (Taxable) 2021C 7/1/26-44 2.61 15.0 151,280 151,280 55,027 2.01 159 Table of Contents OUTSTANDING DEBT AND DEBT SERVICE COVERAGE 2021-22 YEAR-END ACTUAL (In Thousands of Dollars) Effective Issue Date Series Purpose Average Maturity Interest Life Original Dates Rate (Years) Amount Total Municipal Corporation Obligations Principal Interest Outstanding Outstanding 6,379,427 5,330,141 3,255,533 30,000 28,640 20,840 30,000 28,640 20,840 7,759,938 6,184,263 3,470,006 Coverage (2) Community Facilities Districts 06/27/19 2019 Park Central CFD Special Assessment Rev 7/1/21-44 Total Community Facilities Districts Bonds Total Outstanding Debt (1) (2) (3) 5.73 16.0 General Obligation bonds are paid from secondary property taxes with the tax rate set by the City Council and are covered by a statutory lien. Minimum debt service coverage ratio for each bond type is as follows: Airport Revenue Bonds 1.25 Excise Tax Revenue Bonds 2.00 Rental Car Facility Charge Revenue Bonds 1.25 W astewater Revenue Bonds 1.20 W ater Revenue Bonds 1.10 The primary source of revenue for loan payments is State of Arizona distributions the City is to receive pursuant to legislation passed in 2003 authorizing up to fifty percent State funding for certain convention center developments in the State. The schedule of State Distributions are sufficient to make loan payments when due. 160 0.88 Table of Contents OVERVIEW OF CAPITAL IMPROVEMENT PROGRAM PROCESS The Capital Improvement Program (CIP) 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 March 21, 2023, the preliminary five-year Capital Improvement Program was transmitted to the City Council. The preliminary plan has been updated to reflect cost or timing changes identified since the preliminary program was developed. The Capital Improvement Program Highlights section of this document provides summary-level information on program contents; project-level detail is provided in the Capital Improvement Program budget book. 2023-24 Capital Improvement Program Development The annual citywide Capital Improvement Program update process began in December 2022 when departments prepared revised 2022-23 estimates and updated their five-year capital improvement programs. The 2022-23 estimates reflect updated construction cost estimates, schedules adjustments, awarded contract amounts and other program changes. The 2023-28 program includes projects planned for authorized and anticipated 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 voter-approved bond programs including the 2006 Bond Program approved by Phoenix voters in March 2006. 2006 Citizens’ Bond 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 grouped 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 2007-2009 recession resulted in a reduction in property tax revenue, which placed a strain on the property tax supported General Obligation Bond Program. As a result, a portion of this program was indefinitely deferred. Enterprise Funds In addition to supporting related operations and maintenance costs, enterprise funds support pay-as-you-go funded capital projects and debt service for enterprise bond-funded capital projects. Water, Wastewater and Solid Waste enterprise funds complete annual updates to their multi-year rate plans. These plans are first reviewed by the applicable City Council subcommittee prior to action on the plans by the full City Council. If necessary, user fee changes are implemented to support the updated plans. Aviation funds include airport revenues, Passenger Facility Charges collected from enplaned passengers at the time of booking, Customer Facility Charges assessed to rental car customers, and federal and state grants. The City Council adopts ordinances establishing fee structures for use of the airport facilities, including airline rates and charges, at the beginning of each fiscal year. 161 Table of Contents The Phoenix Convention Center enterprise fund receives most of its resources from designated 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.between the City and State of Arizona to expand and modernize the facility. Capital Construction Funds The Capital Construction Fund was established in 1998-99 and provides funding for critical street transportation and drainage infrastructure improvements, including projects focused on street pavement maintenance, and bicycle, pedestrian, stormwater, and drainage facilities. Capital Construction funds are programmed into project categories for each year of the Capital Improvement Program, with individual projects identified and budgeted in the earlier years of the Capital Improvement Program. 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 2023-28 Capital Improvement Program includes $314.4 million of these funds, which are programmed for regional, community and neighborhood parks, and Sonoran Preserve land acquisition. Transportation 2050 Funds The voters approved Proposition 104 (Transportation 2050) in August 2015. This initiative authorized a three-tenths of one percent increase in the transaction privilege and use tax rate to fund the City’s Comprehensive Transportation Plan including new light rail lines, bus expansion and street improvements. Collection of Transportation 2050 sales tax began on January 1, 2016. The 2023-28 Capital Improvement Program includes $1,036.7 million in Transportation 2050 pay-as-you-go funds, as well as $121.0 million in Transportation 2050 bond funds. Five-Year Streets Plan Each year the Street Transportation Department updates its five-year plan and funding program for street, bicycle, pedestrian and stormwater construction and major maintenance projects. This program is primarily funded through the Arizona Highway User Revenue (AHUR) fund, including state-shared revenue from gas taxes and vehicle license taxes, but also includes funding through the Transportation 2050 voter-approved initiative. The update begins with the Budget and Research Department providing an updated current year and five-year forecast of AHUR and other revenue streams, and requirements for AHUR and other revenue resources to support operating expenditures and debt service to determine the amounts available for pay-asyou-go capital projects. Also included in the program are any needed updates to voter-approved bond projects as well as projects funded through intergovernmental partnerships. Programming of Impact Fees 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 $229.5 million in available impact fees in the 2023-28 Capital Improvement Program. Additional impact fees will be programmed in future capital improvement programs as these fees are collected. 162 Table of Contents SUMMARY OF 2023-28 CAPITAL IMPROVEMENT PROGRAM BY PROGRAM (In Thousands of Dollars) 2023-24 2024-25 2025-26 2026-27 2027-28 Total Arts and Cultural Facilities Aviation Economic Development Environmental Programs Facilities Management Finance Fire Protection Historic Preservation & Planning Housing Human Services Information Technology Libraries Municipal Court Neighborhood Services Non-Departmental Capital Parks, Recreation & Mountain Preserves Phoenix Convention Center Police Protection Public Art Program Public Transit Regional Wireless Cooperative Solid Waste Disposal Street Transportation & Drainage Wastewater Water 902 1,192,245 18,088 262 53,895 1,031 52,714 26,563 122,276 7,763 52,360 9,229 7,000 10,888 661,407 156,596 45,697 17,759 9,529 516,207 6,001 38,135 386,637 385,029 606,925 239,550 8,564 250 28,469 1,881 18,875 25,245 1,550 2,000 103,325 44,250 12,168 6,493 315,919 6,001 8,618 173,501 336,130 299,468 196,058 7,555 250 18,655 13,650 25,245 1,265 103,824 44,031 10,441 8,500 3,070 139,708 6,001 19,280 208,120 222,928 292,578 132,363 7,314 250 16,975 8,150 25,245 955 104,320 54,644 4,440 14,000 811 269,147 6,001 16,413 157,270 373,664 302,018 202,352 6,980 250 16,975 9,850 25,245 955 104,819 51,150 6,487 5,000 134,900 6,001 4,636 163,510 225,803 221,358 902 1,962,568 48,501 1,262 134,968 1,031 54,594 26,563 172,801 7,763 153,339 13,954 7,000 12,888 1,077,696 350,671 79,232 45,259 19,903 1,375,881 30,005 87,082 1,089,039 1,543,554 1,722,347 Total 4,385,138 1,632,257 1,321,158 1,493,979 1,186,271 10,018,803 163 Table of Contents SUMMARY OF 2023-28 CAPITAL IMPROVEMENT PROGRAM BY SOURCE OF FUNDS (In Thousands of Dollars) 2023-24 2024-25 2025-26 2026-27 2027-28 Total General Fund Library Parks Special Revenue Funds 114,217 2,115 5,600 45,510 1,300 - 45,404 1,265 - 45,550 955 - 44,822 955 - 295,503 6,590 5,600 Arizona Highway User Revenue Capital Construction Community Reinvestment Development Services Golf Grants Other Restricted Parks and Preserves Regional Transit Sports Facilities Transportation 2050 Enterprise Funds 114,864 24,792 7,924 29,165 1,440 255,622 17,059 120,293 17,839 2,127 454,661 63,334 7,061 4,665 140 87,416 5,181 44,318 4,911 5,650 229,505 93,338 7,061 3,656 140 67,879 3,049 44,031 4,928 5,650 107,963 79,931 7,044 3,415 140 101,214 3,049 54,644 7,075 4,000 180,489 86,671 7,044 3,415 140 73,818 2,715 51,150 7,093 2,100 64,036 438,140 53,002 23,075 29,726 1,440 585,949 31,053 314,436 41,846 19,527 1,036,654 237,893 10,617 17,631 145,256 170,106 1,749,222 42,632 8,583 8,565 92,025 133,731 784,528 40,937 6,962 19,238 99,221 82,278 633,000 70,829 2,464 17,916 87,090 88,766 754,573 187,166 6,290 7,250 90,178 115,615 750,459 579,458 34,916 70,600 513,771 590,496 4,671,782 902 600 - - - - 902 600 394,260 84,608 11,854 116,500 247,782 856,507 82,212 11,053 120 55,499 208,730 143,631 501,245 58,623 14,468 94,898 209,220 377,209 2,998 19,722 215,960 207,141 445,821 31,306 115,715 98,364 245,385 538,093 95,661 11,974 120,995 751,803 906,138 2,426,167 Capital Grants Capital Reserves Customer Facility Charges Federal, State and Other Participation Impact Fees Other Capital Other Cities' Share in Joint Ventures Passenger Facility Charges Solid Waste Remediation Total Other Capital Funds 817,368 9,487 20,558 557,321 224,951 835 42,931 104,407 1,551 1,779,409 87,926 20 20,562 74,438 4,330 69,168 89,564 477 346,485 90,187 8,520 20,560 84,551 200 39,443 67,047 441 310,949 59,996 14,020 20,562 59,201 82,319 57,041 446 293,585 16,475 5,000 20,558 60,069 31,108 56,766 451 190,427 1,071,952 37,047 102,800 835,581 229,481 835 264,969 374,825 3,366 2,920,855 Total 4,385,138 1,632,257 1,321,158 1,493,979 1,186,271 10,018,803 Operating Funds General Funds Aviation Convention Center Solid Waste Wastewater Water Total Operating Funds Bond Funds General Obligation Bond Funds 2001 General Obligation Bonds 2006 General Obligation Bonds Nonprofit Corporation Bond Funds Aviation Bonds Other Bonds Solid Waste Bonds Transportation 2050 Bonds Wastewater Bonds Water Bonds Total Bond Funds Other Capital Funds Other Capital Funds 164 Table of Contents 2023-28 CAPITAL IMPROVEMENT PROGRAM HIGHLIGHTS The Capital Improvement Program (CIP) totals $10.0 billion over the next five years. As shown in the pie chart below, funding for the 2023-28 program comes from $4.7 billion in pay-as-you-go operating funds, $2.4 billion in bond funds, and $2.9 billion in other capital funds. 2023-28 Capital Improvement Program Sources of Funds Other Capital Funds $2.9 Billion Bond Funds $2.4 Billion Operating Funds $4.7 Billion Projects in the first year total $4.4 billion and are funded from pay-as-you-go operating funds ($1.7 billion), bond funds ($0.9 billion) and other capital financing ($1.8 billion). 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 2023-28 Capital Improvement Program by source of funds and the 2023-24 Capital Improvement Program by fund group and program. A brief overview of the five-year plan for each program follows. Arts and Cultural Facilities The Arts and Cultural Facilities program totals $0.9 million and is funded by General Obligation Bond funds. Projects are typically prioritized based on community input obtained during the development of periodic General Obligation Bond programs. The program provides partial funding to develop a Latino Cultural Center. Aviation The Aviation program totals $1,962.6 million and is funded by Aviation, Aviation Bond, Capital Grant, Operating Grant, and Passenger Facility Charge funds. The Aviation program includes improvements at Phoenix Sky Harbor International, Phoenix Deer Valley and Phoenix Goodyear Airports as well as support for Phoenix-Mesa Gateway Airport. Various divisions of the Aviation Department are responsible to identify and request new CIP projects as they are needed for airport expansion and replacement of existing infrastructure. They work with the stakeholders impacted by the project to develop a business case which includes a scope, schedule, and budget, including a return-on-investment analysis, for the project. As part of the business case, a points-based score is developed for the project. Scoring is based on the project’s return-on-investment, cost reduction or net present value; efficiency or productivity improvements; potential for risk transfer or public-private partnerships; regulatory mandates; safety and security risk mitigation; and level of service or community relations needs. The business case is then presented to Aviation’s executive team for approval or revision. 165 Table of Contents If approval is received, the project is placed on the priority ranking list according to the project’s score to await available funding and incorporation into the Aviation CIP. Major projects include: • • • • West Air Cargo Building C Modifications Design and construct a new Crossfield Taxiway U Airside Bus Route Preparation and Relocations of C-Point and Access Gate Design and construction of Terminal 3 North 2 Concourse Economic Development The $48.5 million Economic Development program is funded by Downtown Community Reinvestment, Operating Grant, Arizona Highway User Funds, Other Restricted and Sports Facilities funds. The Community and Economic Development Department identifies new CIP projects by various methods which include: alignment with strategic planning objectives; collaboration with business, government and educational partners; and, engagement with community groups and business associations. The City commits funds and expertise to partner with private and public entities. These partnerships help to expand the City’s economy through the creation of new infrastructure and civic improvements, that trigger regional revitalization, enhance public tax revenues, facilitate the growth of the knowledge workforce, and promote higher education opportunities. Other benefits include achieving affordable and workforce housing objectives, and support of historic preservation and adaptive reuse projects. Major projects include: • • • • • Downtown Redevelopment Area project facilitation and assistance ASU Thunderbird School of Global Management development assistance Historic Preservation and Conservation facilitation and assistance Arizona Biomedical Corridor project facilitation and assistance New workforce training facility Environmental Programs The $1.3 million Environmental Programs CIP is funded by Other Restricted funds. Environmental Programs facilitates eligible citywide general stormwater compliance projects. Stormwater capital improvement projects are implemented to advance the City’s efforts to comply with stormwater management requirements and regulations. Any City department may propose a potential stormwater project, provided that the project meets the criteria outlined in the Stormwater Capital Improvement Project Fund Eligibility and Funding Protocol. The proposed projects are reviewed by the Stormwater Working Group and then the requesting department presents for approval to the Stormwater Executive Committee based on criteria established in the funding protocol, including: risk of regulatory non-compliance, ability for the project to achieve sustained compliance, degradation to the City’s Municipal Separate Storm Sewer System, need for remediation, and other associated risks. Facilities Management The Facilities Management program totals $135.0 million and is funded by General, Other Restricted, Aviation, Convention Center, Solid Waste, Other Bond, Capital Grant, and Other Capital funds. The Facilities Management program includes various major maintenance projects for City facilities and fuel infrastructure. Additional citywide efforts to be implemented by Facilities Management primarily include: security access control, Glenrosa Fleet Building and service center upgrades, energy efficient retrofits, fire and life safety systems, HVAC systems, roofs, parking lots, and electric service entrance systems. Most Facilities Management capital projects are requested and prioritized under the annual General Fund Facilities Project Prioritization Process. New project requests originate from facility lifecycle replacement plans, facility assessments, engineering studies, testing results, citizen requests, regulatory compliance, and identification of asset deterioration by City facilities staff. Projects are reviewed by a committee of subject matter experts from various departments and are evaluated and prioritized on the basis of human safety, service continuity, damage avoidance, aesthetic deficiency mitigation, regulatory considerations and potential for increasing efficiency. Finance The Finance program totals $1.0 million, funded by Other Bond funds, supporting enhancements to the citywide financial system. Fire Protection The $54.6 million Fire Protection program is funded by General, Other Restricted, Other Bonds and Impact Fee funds. The program consists of infrastructure in growth areas, implementation of new Computer Aided Dispatch System, a Records Management System, and construction of new Fire Station 62 at 99th Avenue and Lower Buckeye Road and construction of new Fire Station 74 at 19th Avenue and Chandler Boulevard. 166 Table of Contents The Phoenix Fire Department plans for CIP projects through a prioritized strategic forecasting process. The most significant projects for the department are construction of future fire stations that have been forecasted through the creation of a twenty-year fire station implementation plan. The forecast plan was developed through analysis of a variety of factors such as: existing fire stations’ location and capacity, key performance indicators, and planned growth. Additionally, other identified new CIP project needs are presented to the Fire Department executive staff in the form of business cases, that are then evaluated based on the potential positive impact on service delivery to the Phoenix community. Development Impact Fee-funded projects are identified in accordance with state statutes, ensuring capital funding for service levels in planning areas is consistent with service levels in developed areas of the City. Identified projects are incorporated in the City’s Infrastructure Financing Plan, which is reviewed by a citizens’ committee prior to public hearings and ultimate adoption by the City Council. Historic Preservation & Planning The Historic Preservation and Planning program totals $26.6 million and is funded by the Development Services fund. The program includes the SHAPE PHX project which targets the Planning and Development Department’s primary land management applications for replacement. This multi-year project envisions replacing KIVA, PlanWeb and other supporting applications with a modern Planning, Zoning, Plan Review and Permitting application that supports community planning, development and regulation. Housing The Housing program totals $172.8 million and is funded by Operating Grant, Other Restricted and Capital Grant funds. The program provides funding for the creation and modernization of public housing units and affordable housing units for lowincome families, individuals, seniors, and special populations throughout the City. Grant-funded modernization projects are planned based on the availability of these funds. Projects include HOME Investment Partnership Program multifamily loan and redevelopment, transformation of the Choice Neighborhood at Edison-Eastlake community, conversion of existing public housing units into Rental Assistance Demonstration (RAD) housing units, and affordable housing and public housing modernization through HUD Neighborhood Stabilization and Capital Fund Programs. A one-time HUD HOME Investment Partnership Program American Rescue Plan (HOME – ARP) award will be used to address qualifying populations through affordable housing production or preservation and non-congregate shelter development. American Rescue Plan (ARPA) funded projects include Wi-Fi connectivity to bridge the digital divide, renovate and modernize a newly acquired hotel to serve veteran populations, remodel and renovate a multifunctional building in the Edison-Eastlake community, support a co-development of 132 affordable housing units, and supplement the financial gap to for-profit and nonprofit organizations to develop or redevelop affordable housing. Housing Department capital improvement projects are identified based on City management’s priority list and the Mayor and Council’s Affordable Housing Initiative, in coordination with planned redevelopment programs, feedback from the Public Housing Resident Advisory Board, the Affordable Housing Development Community, and other stakeholders. The department’s program and fiscal staff actively participate in prioritizing funding availability and addressing community housing needs and contractual terms of co-developers. Human Services The $7.8 million Human Services program is funded by General, Operating Grant and General Obligation Bond funds. Projects are typically prioritized based on community input obtained during the development of periodic General Obligation Bond programs. The Human Services program includes acquisition and construction of shelters, and design of a multi-purpose senior center. Information Technology The $153.3 million Information Technology program is funded by General, Arizona Highway User Revenue, Development Services, Transportation 2050, Aviation, Convention Center, Solid Waste, Wastewater, Water and Other Bond funds. Information Technology CIP projects typically go through an executive review process and are managed by IT project managers. The review process provides City leadership visibility into information technology spending across the organization and helps ensure technology purchases are in alignment with current and future technology needs. Projects are evaluated and approved by various Information Technology Services divisions for security, application, and infrastructure considerations. The Information Technology program includes replacement of FCC-mandated equipment with 700 MHz radios, development of a centralized time and labor data system, implementation of a modernized data center environment to provide a more reliable and secure computing environment, and other enterprise technology projects. 167 Table of Contents Libraries The Libraries program totals $14.0 million and is funded by General, Operating Grant and Impact Fee funds. The program includes branch library improvements and renovations to maintain current standards, and growth-driven infrastructure development pending future funding availability. Improvement and renovation projects are requested and prioritized under the annual General Fund Facilities Project Prioritization Process. New project requests originate from facility lifecycle replacement plans, facility assessments, engineering studies, testing results, citizen requests, regulatory compliance, and identification of asset deterioration by City facilities staff. Projects are reviewed by a committee of subject matter experts from various departments and are evaluated and prioritized on the basis of human safety, service continuity, damage avoidance, aesthetic deficiency mitigation, regulatory considerations and potential for increasing efficiency. Development Impact Fee-funded projects are identified in accordance with state statutes, ensuring capital funding for service levels in planning areas is consistent with service levels in developed areas of the City. Identified projects are incorporated in the City’s Infrastructure Financing Plan, which is reviewed by a citizens’ committee prior to public hearings and ultimate adoption by the City Council. Municipal Court The Municipal Court program totals $7.0 million and is funded by the General fund. The program includes the Court Management System replacement project which targets the Phoenix Municipal Court’s primary business application. This multi-year project envisions replacing the existing 24-year-old system which is no longer sustainable with a modern application. The new application will increase efficiency, expand self-service options for the public, enhance the Court’s ability to offer remote contact and participation, and enable the Court’s ability to move to real-time paperless processing. Neighborhood Services The Neighborhood Services program totals $12.9 million and is funded by Operating Grant funds. The Neighborhood Services program seeks to stabilize neighborhoods and improve infrastructure by acquiring properties for revitalization. By partnering with City departments, projects such as landscaping, sidewalks, lighting and other infrastructure improvements provide enhancements to City neighborhoods. The Neighborhood Services Department considers new CIP projects through the efforts of their Grants Compliance Team, which works closely with program staff, to identify potential CIP projects. Projects may also be proposed by the City Council or City management and evaluated based on availability of funding, eligibility of project area and scope which meets a HUD National Objective. Additionally, qualitative feedback is collected through community workshops, stakeholder consultations, and public requests, for projects such as: facility renovations, improvements to community centers, playgrounds, and other enhancements to community public infrastructure. Large projects, like acquisition of strategic or blighted properties, may be identified through other City programs and initiatives to expand the impact and/or better address the needs of the community such as providing affordable housing or creating Safe Routes to Schools. Non-Departmental Capital The non-departmental capital program totals $1,077.7 million and is funded by General, Other Bond, Wastewater Bonds, Capital Grant, Customer Facility Charge, Federal, State and Other Participation, and Passenger Facility Charge funds. The non-departmental capital program consists of existing and anticipated future capital debt service, including payments of principal, interest, issuance costs and related expenditures such as trustee fees for bonds issued. The capital debt program reflects debt service for capital projects funded in other capital improvement programs. The non-departmental capital program additionally includes a contingency budget for future capital grant awards, a General Fund set-aside to support operating costs on future capital projects, and General Fund reserves to provide local matching funds for potential federal capital grants. Appropriation is included for the State of Arizona's potential defeasance of its share of Phoenix Convention Center debt, under consideration by the State Legislature at the time of City budget preparation. Parks, Recreation and Mountain Preserves The Parks, Recreation and Mountain Preserves program totals $350.7 million and is funded by General, Parks and Preserves, Operating Grant, Golf, Development Impact Fee, Capital Grant, and Capital Reserve funds. The program includes land acquisition; improvement and rehabilitation of city parks, trails, sports fields and pools; installation and replacement of security and sports field lighting; parking lot improvements; construction of ADA accessible amenities; and other citywide park infrastructure improvements. The Parks and Recreation Department identifies new CIP projects through the use of the Parks Land Asset Inventory (PLAI) database. Staff submit project PLAI request forms for the replacement or addition of equipment and structures. Staff review the PLAI database throughout the year; monitor park needs; score amenities based on categories including condition, location and safety, while accounting for emergency needs; and rate and rank each park site based on scores. New park projects and preserve land acquisitions are identified as population growth creates the need for parks expansion. 168 Table of Contents Development Impact Fee-funded projects are identified in accordance with state statutes, ensuring capital funding for service levels in planning areas is consistent with service levels in developed areas of the City. Identified projects are incorporated in the City’s Infrastructure Financing Plan, which is reviewed by a citizens’ committee prior to public hearings and ultimate adoption by the City Council. Major projects include: • • • • • • • • New Parks Construction: Farmland Park, Harvest Park and Laveen Heritage Park Sonoran Preserve Land Acquisition and Protection Paradise Valley Park Improvements Norton Park Improvements Citywide Building Repairs South Mountain Road Repairs Preserve Infrastructure Improvements Aquatic Infrastructure Renovation Phoenix Convention Center The $79.2 million Phoenix Convention Center program is funded by General, Sports Facilities, Convention Center and Convention Center Bond funds. In addition to the Convention Center, this program includes projects and improvements for the Herberger Theater Center and Orpheum Theatre, Symphony Hall, and the Heritage and Convention Center parking garages. General Fund-supported excise tax bonds are programmed for renovations of the 100 West Washington building. The Phoenix Convention Center has a multi-discipline CIP committee comprised of members of the department including management, facility and capital project managers, fiscal, as well as subject matter experts. The committee meets monthly to identify and discuss potential CIP projects. CIP projects are initially submitted, and subsequently modified, through a project request form. The projects are then reviewed and ranked by staff for inclusion to a perpetual 10-year CIP forecast that is constantly evaluated and updated. Project considerations include life safety, revenue generation, facility enhancement, and business and customer impact. Major projects include: • • • • • Symphony Hall Theatrical Venue Improvements Herberger Theater Center Theatrical Improvements Repainting the exterior surfaces of the North and South Buildings Roof repairs for the South Building Construct North and West Building single source heating, ventilation, and air conditioning and light control automated systems • Electric Gear Switch Replacement at the South Building • 100 West Washington renovations Police Protection The $45.3 million Police Protection program is funded by Capital Reserve and Impact Fee funds. The program consists of purchasing replacement aerial fleet assets and future infrastructure in growth areas. Development Impact Fee-funded projects are identified in accordance with state statutes, ensuring capital funding for service levels in planning areas is consistent with service levels in developed areas of the City. Identified projects are incorporated in the City’s Infrastructure Financing Plan, which is reviewed by a citizens’ committee prior to public hearings and ultimate adoption by the City Council. Public Art Program The Public Art Program totals $19.9 million and is funded by Percent-for-Art funds. Established in 1986, the Public Art Program allocates one percent of eligible Capital Improvement Program funding for the acquisition of temporary and permanent artwork for public buildings, infrastructure, and spaces. The program maintains more than 200 permanent artworks and manages and exhibits the City's 1,200 portable works in multiple public buildings. The program works closely with all capital departments, City Council offices and the Phoenix Arts and Culture Commission to determine and approve projects to be included in the annual Public Art Plan. Public art projects included in the Plan are prioritized based on opportunities to integrate artwork into individual Capital Improvement Program projects and their potential impact on the neighborhood and the broader arts community. 169 Table of Contents Public Transit The Public Transit program totals $1,375.9 million and is funded by Operating Grant, Other Restricted, Regional Transit, Transportation 2050, Capital Grant and Transportation 2050 Bond funds. Public Transit staff and management identify project needs by utilizing several planning documents – the Transportation 2050 Plan, the fleet replacement plan, the Maricopa Association of Governments Transportation Improvement Program, and the Transit Life Cycle Program element of the Regional Transportation Plan. Additionally, public assets are considered for potential refurbishment, upgrade, or replacement. Staff from each division submit project requests to Public Transit management for review, prioritization, and funding consideration. Major projects in the Public Transit program include: • • • • • • Bus Rapid Transit program Northwest Phase II Light Rail extension Capitol Light Rail extension South Central Light Rail extension Bus stop improvements, lighting and shade structures Purchase of new and replacement buses, Dial-A-Ride vehicles and commuter vans Regional Wireless Cooperative The Regional Wireless Cooperative (RWC) program totals $30.0 million and is funded through the contributions of RWC member cities. The City of Phoenix’s contribution is funded through excise tax-supported city improvement debt. The RWC program’s objective is to develop and assist subscriber cities with an FCC mandate requiring 700 MHz infrastructure upgrades for narrow-banding capabilities. The RWC identifies capital improvement projects via a governance and policy process. Projects and inventory are tracked, prioritized, and scheduled by the Administrative Manager, the City’s Information Technology Services Department, which presents the projects’ explanations and expected budgetary needs to the RWC. The memberspecific costs are then drafted based on percentage of network use or special assessments and presented to the RWC Board of Directors for action. A CIP Working Group may also be asked to consider and draft large-scale CIP projects as needed. Solid Waste Disposal The $87.1 million Solid Waste Disposal program is funded by Solid Waste, Solid Waste Bond, Capital Grant, Capital Reserve and Solid Waste Remediation funds. The Solid Waste Disposal program includes various projects at the City’s landfills and transfer stations. New projects for the Solid Waste Disposal CIP are evaluated and prioritized using an annual project evaluation process. Staff submit a business case to provide information about the new program or project request. The evaluation report describes project scope and identifies the essential needs criteria for the successful operation of the utility. The Public Works Director and Assistant Directors review the requests and evaluate and prioritize the projects in the following areas: customer service, system benefits and efficiency, project benefits and impact, system reliability, operational flexibility, system security, system replacement and rehabilitation, regulatory compliance, and system growth. In addition to staff reviews, a Citizens Solid Waste Rate Advisory Committee performs an advisory role in reviewing the Solid Waste Utility Financial Plan and advising on the operating and capital program expenses and projects. Major projects include: • • • • Open and closed landfill gas system maintenance and monitoring SR85 Landfill cell development, including excavation, lining, critical systems, and capping of completed cells Major maintenance, repair, and equipment replacement to support transfer stations operations Material Recovery Facility (MRF) equipment replacement Street Transportation and Drainage The Street Transportation and Drainage program totals $1,089.0 million and is funded by General, Arizona Highway User Revenue, Capital Construction, Operating Grants, Transportation 2050, Capital Reserve, Impact Fee, and partner agency contribution funds. The program includes ongoing major maintenance of streets and bridges, new and expanded streets, mobility improvements, pedestrian traffic safety improvements including the Roadway Safety Action Plan, technology enhancements and storm water improvements, and prioritizes an accelerated citywide pavement maintenance program. The Street Transportation Department maintains an ongoing annual project identification and prioritization process. The process begins with the collection of “Call for Projects” forms submitted by staff. These forms require various quantitative data on the projects such as: relative traffic volume, speeds, collision history, existing pre-design efforts or studies, and ADA requirements. The requests are gathered and evaluated. Immediate funding needs for existing funded projects and programs, and local funding matches required to leverage outside funding, are prioritized. Prioritization of new project and program proposals considers immediate life safety needs; the existence of completed pre-design studies with economical, feasible 170 Table of Contents and publicly supported recommendations; and equity in project distribution. Project prioritization outcomes are presented to department management for review. Development Impact Fee-funded projects are identified in accordance with state statutes, ensuring capital funding for service levels in planning areas is consistent with service levels in developed areas of the City. Identified projects are incorporated in the City’s Infrastructure Financing Plan, which is reviewed by a citizens’ committee prior to public hearings and ultimate adoption by the City Council. Major projects planned include improvements to the following locations: • • • • • • 35th Avenue: I-10 Freeway to Camelback Road Happy Valley Road: 67th Avenue to 35th Avenue Buckeye Road: 67th Avenue to 59th Avenue Van Buren Street: 7th Street to 24th Street Lower Buckeye Road: 27th Avenue to 19th Avenue Rio Salado River Bicycle/Pedestrian Bridge at 3rd Street Wastewater The Wastewater program totals $1,543.6 million and is funded by Wastewater, Wastewater Bond, Impact Fee, Capital Grant and Other Cities’ Share in Joint Venture funds. The Wastewater program includes infrastructure, safety, maintenance, technology and efficiency enhancements for the 91st Avenue and 23rd Avenue wastewater treatment plants, Cave Creek Water Reclamation Plant, multi-city and Phoenix sewer line systems, lift stations, support facilities and other related initiatives. The need for a new water or wastewater CIP project is identified by various means such as: an identifiable operational issue, the result of a study, a condition assessment, age of equipment or infrastructure, new technology, growth, increased number of pipe breaks, developer requests, City Council requests, and neighborhood requests. Once it has been determined a project has merit, staff submit a project request form, and the proposed project is included in the department’s annual Project Charter Process. The department’s deputy directors of water and wastewater engineering then determine optimal timing, the approach for lowest cost, and coordinate with the affected operational division. All current and new CIP projects are presented to department executive staff and prioritized based on factors including risk of failure, criticality, timing and funding availability. Staff recommendations are reviewed by the Water and Wastewater rates and advisory citizens’ committee, and then by the City Council’s Transportation, Infrastructure and Innovation Subcommittee. Development Impact Fee-funded projects are identified in accordance with state statutes, ensuring capital funding for service levels in planning areas is consistent with service levels in developed areas of the City. Identified projects are incorporated in the City’s Infrastructure Financing Plan, which is reviewed by a citizens’ committee prior to public hearings and ultimate adoption by the City Council. Significant projects in the proposed capital improvement plan include: • • • • Land acquisition, design and construction for the SROG Interceptor Rehabilitation of 91st Avenue Wastewater Treatment Plant Cave Creek Water Reclamation Plant equipment and systems rehabilitation Condition assessment and repair of sewer lines Water The Water program totals $1,722.3 million and is funded by Water, Wastewater, Solid Waste, Water Bond, Impact Fee, Capital Grant and Other Cities’ Share in Joint Venture funds. The Water program includes infrastructure improvements, technology and efficiency enhancements for 24th Street, Deer Valley and Val Vista water treatment plants, water storage facilities, wells, pressure reducing valve stations, booster pump stations, water and transmission mains and other water related initiatives. Investments in power redundancy and water resiliency programs ensure stable water delivery for customers. The need for a new water or wastewater CIP project is identified by various means such as: an identifiable operational issue, the result of a study, a condition assessment, age of equipment or infrastructure, new technology, growth, increased number of pipe breaks, developer requests, City Council requests, and neighborhood requests. Once it has been determined a project has merit, staff submit a project request form, and the proposed project is included in the department’s annual Project Charter Process. The department’s deputy directors of water and wastewater engineering then determine optimal timing, the approach for lowest cost, and coordinate with the affected operational division. All current and new CIP projects are presented to department executive staff and prioritized based on factors including risk of failure, criticality, timing and funding availability. Staff recommendations are reviewed by the Water and Wastewater rates and advisory citizens’ committee, and then by the City Council’s Transportation, Infrastructure and Innovation Subcommittee. Development Impact Fee-funded projects are identified in accordance with state statutes, ensuring capital funding for service levels in planning areas is consistent with service levels in developed areas of the City. Identified projects are incorporated in the City’s Infrastructure Financing Plan, which is reviewed by a citizens’ committee prior to public hearings and ultimate adoption by the City Council. 171 Table of Contents SUMMARY OF 2023-24 CAPITAL IMPROVEMENT PROGRAM BY PROGRAM AND SOURCE OF FUNDS (In Thousands of Dollars) Program 2023-24 Total Program Operating Funds General Obligation Bond Funds Nonprofit Corporation Bond Funds Other Capital Funds Arts and Cultural Facilities Aviation Economic Development Environmental Programs Facilities Management Finance Fire Protection Historic Preservation & Planning Housing Human Services Information Technology Libraries Municipal Court Neighborhood Services Non-Departmental Capital Parks, Recreation & Mountain Preserves Phoenix Convention Center Police Protection Public Art Program Public Transit Regional Wireless Cooperative Solid Waste Disposal Street Transportation & Drainage Wastewater Water 902 1,192,245 18,088 262 53,895 1,031 52,714 26,563 122,276 7,763 52,360 9,229 7,000 10,888 661,407 156,596 45,697 17,759 9,529 516,207 6,001 38,135 386,637 385,029 606,925 232,286 18,088 262 32,869 20,044 26,563 109,112 7,163 44,223 3,934 7,000 10,888 30,000 129,873 8,927 4,285 515,950 14,373 222,979 138,142 172,262 902 600 - 392,969 16,740 1,031 20,029 8,137 3,033 36,770 5,244 11,744 115,600 243,706 566,989 4,286 12,640 13,165 5,295 628,374 26,723 17,759 257 6,001 12,017 163,659 131,287 190,957 Total 4,385,138 1,749,222 1,502 855,004 1,779,409 172 Table of Contents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