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Scottsdale City Council OKs new expenditure limitation review policy

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A view of Scottsdale Councilwoman Betty Janik atop the local dais at Scottsdale City Hall, 3939 N. Drinkwater Blvd. (Photos: Arianna Grainey/DigitalFreePress)
Scottsdale City Council eyes increase as expenditure limit at 94% capacity
By Terrance Thornton | Digital Free Press

If the spending for general operations at the city of Scottsdale was compared to the throttle body of an internal combustion engine some might say the local government is running wide open toward the maximum revolutions per resolution.

Scottsdale City Council is moving forward with a new expenditure limitation policy that appears to signal a permanent base adjustment pursuit could be before the local governing board this March.

“We gave a presentation back in December on the state-imposed expenditure limitation at which time the council and mayor requested that we bring a proposed expenditure limitation review policy back for council consideration,” said Scottsdale City Treasure Sonia Andrews during a Jan. 23 public hearing.

“The state-imposed limitation is a limitation on our expenditures for our operating expenses, primarily. Our operating expenditures do not include our infrastructure [or] capital expenses, it also excludes debt service and grant-funded expenditures.”

According to Ms. Andrews, the city of Scottsdale is operating at 94% of the $586,300,525 spending allowance this fiscal year.

“The state adjusts this amount annually by population and inflation growth, but there is no automatic increase that takes into consideration visitors or seasonal residents,” Ms. Andrews said of the general practice of expenditure limits set at the Arizona Legislature and regulated by the Arizona Auditor General.

“That is an important point for our city because we do have significant visitors and seasonal residents that this expenditure limitation does not recognize.”

A municipality’s expenditure limitation, in this case for the city of Scottsdale, is a spending cap based on local voter control to restrict the growth of government revenues and limitations to spending tax dollars. The original tax year used for this process? Fiscal year 1979-80, city officials say.

“We have not sought a permanent rate adjustment since 2006,” Ms. Andrews said of the possible pursuit of a permanent base adjustment materializing at City Hall, 3939 N. Drinkwater Blvd. “We rank toward the bottom in terms of limitation per capita.”

The above is the current ranking of expenditure limitations per capita in the state of Arizona. (Graphic: City of Scottsdale/DigitalFreePress)

Ms. Andrews points out a permanent base adjustment is not a tax increase.

“It is not a tax increase; it does not increase our taxes. It is not an override like a school district override where we exceed our budget that requires a property tax increase along with it,” she explained. “It is simply an expenditure limitation increase; it doesn’t not allow the city to spend more than our revenue allows — it does not allow us to exceed spending beyond what we collect.”

Scottsdale City Council voted unanimously to embolden Resolution No. 13034 into city code, which allows:

Expenditure Limitation Review. The city shall ensure that its expenditures adopted through the annual budget process are below the expenditure limitation established by the state. At a minimum of every five years, the city treasurer shall report to the council the expenditure limitation capacity of the city. In the event that projections through the budget process result In the city reaching or exceeding ninety percent (90%) of the expenditure limitation, the city treasurer shall provide council with formal notification and recommendations for council action.

Scottsdale Mayor David Ortega in late 2023 at Scottsdale City Hall. (Photo: Arianna Grainey/Digital Free Press)
Brief comments atop Scottsdale City Council dais

During the public hearing this past Tuesday, one Scottsdale resident, Austin Fairbanks, spoke out against the possibility of a permanent rate adjustment pursuit coming from City Hall.

Scottsdale Councilwoman Betty Janik points out as services grow, so do the cost of those services in tandem with population growth at any municipality with Scottsdale being no exception.

“We want to see why we actually need the expenditure limitation increase,” she said following the presentation from Ms. Andrews, a Charter officer. “With police, of course those expenses have increased, because we have more police on the force to give us protection for a city that has grown — I think we can eliminate some of those objections if we have the quantitative numbers.”

Scottsdale Mayor David Ortega explains the current expenditure limitation is based on an archaic spending formula.

“It was based on Scottsdale in 1979 and it had certain escalation clauses, but it is an archaic formula,” he said. “We have grown and prospered and we have supported a lot of services that we are needing to fund. What we are looking at today — and what is missing — is having a financial policy that would cover expenditure limitation review.”

Mayor Ortega says from an accounting perspective the city of Scottsdale is approaching the ‘red line’ of its spending limit.

“Eighteen years is way past due for us to have alerts, let’s call it,” he said. “We are learning that we are hitting the red line — it is our duty to regularly look at how we are doing. We have had 50 years of excellent financial policy here in this city.”

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