How is the city's budget created?
The budget process video provides a summary of the city's budget process. A written description titled, Budget Process, Council Review and Input, Public Hearings and Budget Adoption, can be found in the most recent Summary Budget book, Budget overview chapter. The annual budget process generally follows the budget timeline.
What is the city's budget?
The city of Phoenix has one budget for day-to-day operating and maintenance costs (operating budget) and a second budget for the construction of new, or major renovation/repair of existing, facilities and infrastructure (capital improvement program budget).
The operating budget includes costs such as staff to provide city services, contracted services, utilities, fuel, facility maintenance, supplies and equipment. The operating budget is funded primarily through taxes, fees and grants. To learn more about the operating budget, you can explore the most recent versions of the following documents under the Budget Library page:
- Summary Budget book: a description of the operating budget that includes the city's sources of revenue, types of expenditures and a narrative description of each departments services and their budgets.
- Inventory of Programs: the operating budget presented by department and by program, it provides the service levels, costs, staffing and sources of funding for each of the more than 400 services provided by the city of Phoenix.
- Detail Budget book: includes each department's operating budget, organizational structure, and positions, including a summary of service additions or reductions that were part of the City Council adopted budget.
The capital improvement program budget (CIP), unlike the operating budget, is planned over a five-year period because it is funding construction projects rather than day-to-day operating costs. The CIP budget includes all the costs necessary for major construction projects such as land acquisition, project design, project management, and constructions costs. The CIP is funded primarily through taxes, fees, grants, and bonds. A bond is a loan from investors that the city must repay with interest. To learn more about the CIP, you can explore the most recent versions of the following annual budget books under the Budget Library page:
- Summary Budget book: in addition to the operating budget, it includes a summary of the CIP budget under the Capital Improvement Program chapter.
- Capital Improvement Program book: a detailed listing of every planned project in the CIP budget and how it's being paid for.
- Detail Budget book: includes a summary of every planned project in the CIP budget under Part II - Capital Improvement Program and how it's being paid for.
What budget documents does the city produce?
Summary Budget: The Summary Budget book is the best document for those just learning about the city's budget as it covers all major aspects of the city's finances and the services being provided to residents. The Summary Budget presents a summary of the City of Phoenix operating and capital improvement program budgets, including both revenue and expenditures. Included in this book are summarized descriptions for each department of the services they provide, their adopted operating budget, number of positions, and funding sources. It provides a description of the budget adoption process, the city's strategic plan, a history of selected community services and demographic data. It also contains a description of general budget and financial policies, and summary financial schedules.
Citywide Inventory of Programs: a list of all the services the city of Phoenix provides, how much each of those services costs and how they measure their performance. This document provides the adopted operating budget, preliminary estimate for the following year, and service levels for each program within each department. In addition, it provides citywide information on key budget items.
Detail Budget: Just as the name implies, this book presents detailed information about each department's operating budget, organizational structure, and positions, including a summary of service additions or reductions that were part of the City Council adopted budget. It provides a summary of all debt service payments, a breakdown of staff expenditures and pay ranges and a summary of all grant funded programs. It also contains additional details on the capital improvement program budget, various financial schedules, and the ordinances adopting the final budget.
Capital Improvement Program: A listing of every planned project in the Capital Improvement Program budget, this book provides detailed listings of each major land acquisition or construction project planned for the next five years and what source of money will pay for the project.
How can I be involved in the city's budget process?
Residents can contact their City Council member at any time of the year to provide input on the city's budget. The city releases the Trial Budget for community review each spring and holds community budget hearings throughout the city. Residents are encouraged to attend meetings and provide City Council and staff with their input on the proposed Trial Budget. Residents can also send comments on the budget to the Budget & Research Department.
The budget calendar provides dates for budget-related reports going to council. The agenda, reports, results, & minutes from city council meetings can be found under the City Council Meetings page.
How do I get a copy of the city budget?
Where does the city's money come from?
The city's revenue comes from taxes, fees, grants, interest income, and other minor sources. Revenue from taxes includes local sales tax, property tax and state-shared taxes (for example: state sales, income, and vehicle license tax). The city receives grant funding from the federal and state government, and from private organizations. Fee revenue comes from fees the city charges users of particular services such as water, garbage pickup and building permits.
A detailed discussion of the city's revenue sources can be found in the most recent Summary Budget book, Revenue Overview chapter.
How does the city spend my tax dollars?
State and local tax revenue are classified into two categories: General Fund and Special Revenue. The General Fund pays for important services such as public safety, libraries, parks and senior centers. A bar chart titled, Expenditures by Department - General Fund Budget, in the most recent Summary Budget book, Budget Overview chapter, Resources and Expenditure Summary section, outlines which departments are at least partially funded with General Fund Revenue; a schedule in the most recent Inventory of Programs document lists each program that receives General Fund revenue; and schedule 4 - Bond Funds Summary in the most recent Capital Improvement Program book outlines the programs funded by General Obligation Bond funds (funded by property taxes) and non-General Fund Nonprofit Corporation Bond funds.
Special Revenue funds consist of revenue sources that are dedicated to a specific purpose. This includes state and local taxes as well as grants and certain fees. Examples of Special Revenue tax funds include the Transit 2000 tax (public transit services), Public Safety Enhancement (police and fire services), and Arizona Highway User Revenue (state gas tax and other transportation related fees used for street or highway purposes). A schedule titled, Non-General Fund Revenue by Major Source, in the most recent Summary Budget book, Revenue Overview chapter, Special Revenue Funds section, lists all the city's Special Revenue funds; a schedule in the most recent Inventory of Programs document lists each program that receives Special Revenue funds; and a section titled, Summary of Grant Programs and Expenditures, in the most recent Detail Budget book, Part I - Annual Budget Detail chapter, Grants Programs Summary and Expenditures section, lists all the grant funds received by the city.
Why does the city create a budget?
There are three main reasons why the city adopts an annual budget. First, to assist the Mayor and City Council, city manager and departments in allocating scarce resources to meet the community's needs. The budget development process is a priority setting process that recognizes the needs in the community are greater than the resources available to provide those needs. Thus, difficult choices must be made as to how best to spend those limited resources.
Second, the city's budget development process helps to ensure that 100 percent of the city's funds are being utilized to provide needed services. The budget process works to identify savings throughout the year and to build those savings into the next year's budget.
Third, state law requires that all cities adopt a budget and that their annual operating expenditures cannot exceed their annual resources. The city must adopt a balanced budget each year.
To learn more about the city's budget process, watch a short budget process video.
What is the difference between the capital and operating budgets?
The Capital Improvement Program budget is a five-year plan for capital expenses needed to replace, expand, and improve facilities, infrastructure, and other major systems. A five-year plan is used because these projects can take several years to plan and build. Capital projects can be funded with both current revenue (pay-as-you-go) and debt (municipal bonds). Using debt to pay for capital projects is appropriate due to the relatively long life-span of the completed projected.
The operating budget is a two-year plan for ongoing everyday expenditures to provide city services such as staff, utilities and supplies. The operating budget is funded with current revenue such as taxes, fees and grants.
How does the city use performance measures?
City departments report key performance measure data for the monthly City Manager's Performance Measurement Dashboard. The report is available online so that Phoenix residents can see how key city programs are performing.
The data is used by departments in multiple ways, such as to determine anticipated impacts to service levels based on budgetary changes, to indicate where improvements need to be made, the impact of organizational changes on service delivery and as an integral part of strategic planning.
What is the Phoenix bond program?
General Obligation bonds allow the city to pay for major capital investments, such as new fire stations, libraries, streets, sewers, and parks. Bonds are sold to investors and the revenue is used for capital projects. The General Obligation bonds are backed by property tax revenues. As the city collects property taxes each year, the bonds are paid off and the bond investors get their investment returned.
Bond funds cannot be used for expenditures unrelated to the capital projects they are paying for. For example, the everyday operating costs for programs such as softball leagues, classes at senior centers, or police officers are not paid for with bond funds. Such operating expenses are paid for by ongoing revenue such as sales tax and state-shared revenues.
Authority to issue General Obligation bonds must be approved by a vote of Phoenix residents at a citywide election.
How large can a General Obligation bond program be?
The Finance Department analyzes the city's current and projected property valuations, aligns that with constitutional limits on public debt, and considers the importance of maintaining the city's excellent bond ratings. In addition, the city needs to determine the impact that new facilities will have on the operating budget. For instance, new firefighter and librarian positions would have to be added to staff new fire stations and libraries, while new streets and storm sewers have much less impact on the city's operating budget.
The Fiscal Capacity and Operations and Maintenance subcommittees then make recommendations on how much new debt the city can incur, and how much of that debt can be directed to projects that will require increased operating fund expenditures.
Will the authority to issue new bonds raise my taxes?