ARIZONA STATE SENATE
Phoenix, Arizona
municipal
expenditures limitations; penalty waiver
Waives, retroactively beginning July 1, 2001, the penalties for excess expenditures of
local revenues by the city of Mirage.
The voters amended the Arizona Constitution (Article IX ' 20 & ' 21) in 1980,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; however, either method is subject to voter approval. Arizona Revised Statutes outlines the penalties for exceeding expenditure limits as follows:
|
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.
Presently, the City of El Mirage has exceeded its expenditure limit for FY 1998-1999. The total limitation was $2,449,934, but the actual expenditure was $4,087,771, thereby 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.
H.B. 2508 waives the excess expenditures penalty for the City of El Mirage for FY 1998-1999.
Provisions
1. Waives the penalties for fiscal year 1998-1999, for excess expenditures of local revenues by the city of Mirage.
2. Applies the penalty waiver retroactively beginning July 1, 2001.
Prepared by Senate Staff
March 21, 2001