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Smith: Here is a breakdown of the Arizona state ‘expenditure limits’ at Scottsdale City Hall

photo of where expenditure limits are discussed in Scottsdale
A view of Scottsdale City Hall, 3939 N. Drinkwater Blvd. (Photo by Arianna Grainey/DigitalFreePress)
By David Smith | Point of View

Former member of Scottsdale City Council — and previous city treasurer — David Smith shared with the Arizona Digital Free Press his thoughts on the tenets of the municipal ‘expenditure limits’ set by the Arizona Legislature. This is what he had to say:

Despite the name, the Arizona State Expenditure Limitation does not limit local expenditures:

a. It serves as a “wake-up” call to residents if the selected group of local expenditures grow at a faster pace than the combination of inflation and population would predict, and
b. If expenditures do exceed the limit, state funding to the city may be reduced/eliminated.

The state of Arizona authorizes an annual change in each city’s ‘expenditure limitation’ considering three factors for the prior year:

a. Change, if any, in the ‘base’ approved by the city’s voters.
b. Change in the city’s population (estimated annually, then “trued-up” based on the Federal census)
c. Change in inflation (measured by the GDP Implicit Price Deflator)

The last time Scottsdale voters were asked to increase the base was May 16, 2006 (probably to account for anticipated, allowable expenditures for the new Fire Department begun in 2005.) By a vote of 10,873 to 8,193 (57%/43%), voters approved a $12 million increase in the Scottsdale base.

The last “true-up” for population was for the 2010 Federal Census.

That true-up corrected the State’s over-estimation of Scottsdale’s population growth in the previous decade and reduced the city’s allowed expenditure limitation for FY11/12 by $44.5 million from the prior year.
Even with the reduction, Scottsdale’s expenditures subject to limitation in FY11/12 were $114.6 million below the state limitation and remained well below the limit for the next decade:

The questions to explore are not how Scottsdale compares to other Arizona cities nor how Scottsdale today compares to 2006.

The principal question to discuss and understand is: What are the specific cost categories that have increased Scottsdale’s ‘Expenditures Subject to Limitation’ by 37.4% since FY20/21, thereby eroding the expected cushion to only $3.8 million in the Adopted FY23/24 Budget’

Then, and only then, should the question be addressed of whether (and when and why) to ask voters to increase the limit.

Editor’s note: David Smith is a former elected member of Scottsdale City Council and has served as the city treasurer, a Scottsdale Charter position.

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