municipal expenditure
limitations; penalty waiver
DP |
Committee on Commerce and Economic Development |
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DP |
Committee on Ways and Means |
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W/D |
Committee on Appropriations |
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X |
Caucus and COW |
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As Passed the House |
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HB 2508 waives the penalty assessed against the City of El Mirage for exceeding their expenditure limitation without authorization for FY 1998-1999.
The voters amended the Arizona Constitution (Article IX '20 & 21) in 1980, thereby establishing a limit for the annual expenditures of each county, city, town and community college district. The Constitution establishes the process for determining the expenditure limit. The limitation is based on the amount of monies spent by the municipality for FY 1979-1980, adjusted for inflation and population growth on an annual basis. The Constitution also allows municipalities to adjust their expenditure limit by adjusting the base limit. The municipality can adjust the base limit by a two-thirds affirmative vote of the governing board or by initiative. Either way is subject to voter approval. Statute outlines the penalties for exceeding expenditure limits:
|
Amount in
Excess of Expenditure
Limit |
Penalty |
|
<5% of the limitation. |
Equal
to the amount of the excess expenditure. |
|
<5%
but a consecutive instance. |
Three
times the amount of the excess expenditure. |
|
> 5% but < 10% of the
limitation. |
Three
times the amount of the excess expenditure. |
|
> 10% of the limitation. |
Five
times the amount of the excess expenditure or 1/3 of the municipality=s Urban Revenue Share* for the coming fiscal year,
whichever is less. |
* State income tax collections are shared with Arizona municipalities in an Urban Revenue Sharing program. The state shares 15% of income tax collections with incorporated municipalities, based on the previous two years collections. The distribution to municipalities is based on each municipality’s population in relation to each other.
In FY 1994-1995, the City of Tombstone exceeded its expenditure limitation and in 1998, the Legislature waived the penalty. Additionally, the Legislature waived the penalty for excess expenditures for Santa Cruz County for FY 1982-1983.
The City of El Mirage exceeded its expenditure limit for FY 1998-1999. The total limitation was $2,449,934, but the actual expenditure was $4,087,771 [exceeding the limitation by $1,637,837]. In 1999, El Mirage voters passed the "Home Rule," which allows the city to set its own expenditure limits.
The current statutory penalty for El Mirage is five times the excess expenditure amount or 1/3 of the city's Urban Revenue Share for the coming fiscal year [1/3 of their estimated $600,000 Urban Revenue Share], whichever is less. Based on the statutory requirement, the City of El Mirage would experience a penalty of approximately $200,000.
HB 2508 waives the penalty for excess expenditures for the City of El Mirage for FY 1998-1999.
· Provides a waiver to the City of El Mirage for the penalty that was imposed because the city exceeded their expenditure limit for FY 1998-1999.
· The bill is retroactive to from and after June 30, 2001.
HB 2508 passed the Commerce and Economic
Development Committee unamended
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45th Legislature
First Regular Session 2 February
20, 2001
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