Town Council Regular Session


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  Item # 1.       
Meeting Date: 04/04/2018  
Requested by: Stacey Lemos Submitted By: Stacey Lemos, Finance
Department: Finance  

Information
SUBJECT:
PUBLIC HEARING:  LOCAL ALTERNATIVE EXPENDITURE LIMITATION ELECTION (HOME RULE OPTION)
RECOMMENDATION:
There is no formal action required at this public hearing.
EXECUTIVE SUMMARY:
Every four years, the Town is required to request voter approval for the extension of the Town's alternative expenditure limitation or "Home Rule Option." This measure was last approved by the voters in 2014, and will be placed on the upcoming August 28, 2018 Primary election ballot for re-approval. With the Home Rule Option, the Town of Oro Valley is authorized to set its annual budget limits locally, based on available revenues, rather than having to fall under an old formula-based, state-imposed expenditure limitation.

Provisions of the Arizona State Constitution and Arizona Revised Statutes impose an annual expenditure limitation, or spending cap, on Arizona cities and towns, including the Town of Oro Valley. The state-imposed expenditure limitation is a formula that uses actual payments of local revenues for FY 1979-80 as the spending base limit and adjusts the limit annually based on population growth and inflation. Article IX of the Arizona Constitution allows a city or town to adopt a local alternative expenditure limitation, or Home Rule Option, with the approval of a majority of the qualified voters of the community. The Home Rule Option allows a community to determine locally what its annual spending limits will be, rather than following the formula-based limit imposed by the State of Arizona.
BACKGROUND OR DETAILED INFORMATION:
The Town of Oro Valley has successfully received voter approval of the local alternative expenditure limitation election (Home Rule Option) since state-enactment of the annual expenditure limitation in June 1980. The option must be submitted to the voters every four years if the community wishes to continue with Home Rule. Voter approval was obtained in 1982, 1986, 1990, 1994, 2002, 2006, 2010 and 2014.

Historically, the state-imposed expenditure limitation formula has yielded a spending limitation, or cap, that is significantly lower than the amount of revenues the Town receives on an annual basis. The Town of Oro Valley's revenues and other financing sources for fiscal years 2019-20 through 2022-23, along with the state-imposed expenditure limitation, have been estimated and are summarized below:
 
Fiscal Year Estimated Revenues Expenditure Limitation Difference
2019-2020 $132,670,853 $40,059,042 $92,611,811
2020-2021 $122,275,100 $41,466,756 $80,808,344
2021-2022 $120,881,163 $42,689,609 $78,191,554
2022-2023 $124,450,003 $44,670,451 $79,779,552

Without voter approval of the Home Rule Option on August 28, 2018, the Town would be limited to spending the state-imposed amounts, even though revenues and other financing sources are estimated to exceed the limits by the differences indicated in the last column of the table. The Town would have to drastically cut services if the Home Rule Option fails to receive voter approval. Meanwhile, the Town's existing revenues would continue to be collected from its various sources and would not be able to be spent on the delivery of services to the community. If the Home Rule Option is not approved at the August 2018 election, no new expenditure limitation election may be held for at least two years.

Tonight is the first public hearing on the proposed Home Rule Option and no formal action is required by Council at this evening's meeting. The second public hearing is scheduled for April 18, 2018, and at that meeting, the Town Council will be asked to act on a resolution that would allow for the Home Rule Option to be referred to the voters of the Town of Oro Valley at the August 28, 2018 Primary election. An affirmative vote of two-thirds (2/3) of the Town Council (5 votes) must be received to place the question on the ballot.

The documents attached to this communication are required to be completed, reviewed and approved by the Auditor General's office in preparation for the Home Rule Option election. A publicity pamphlet must also be prepared for the Home Rule Option election which will need to be reviewed and approved by the Auditor General's office as well. The contents of the pamphlet are specified in state law and include the Summary Analysis attached hereto.

Starting in June, staff plans to conduct a public outreach campaign to educate the community regarding this ballot question as has been done for past Home Rule Option elections. This campaign is expected to include presentations at community meetings, placing information on the Town's website and through established social media outlets, outreach to homeowner's associations, and distribution of print materials, among other efforts.
FISCAL IMPACT:
N/A
SUGGESTED MOTION:
N/A
Attachments
Summary Analysis Worksheet
Summary Analysis
Detailed Analysis


    

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