Gilbert is facing a tight budget for fiscal year 2024-25, based on hits to revenue streams and lingering inflation, town officials told council May 7.
Nonetheless, the town was able to hold the line on the secondary property tax rate at $0.98 per $100 assessed valuation. But to do it, it will have to dip into its reserves to fully pay the property tax levy of $33.28 million, Budget Director Kelly Pfost said.
“So I don't get to try and pinch $264,640 off of that, do I?” a wistful Councilmember Jim Torgeson said, referring to his successful effort last year to cut the levy last year and thus reduce the rate by a penny.
“We are well pinched this year,” Pfost replied.
Torgeson said he was going to try again this year, “but it doesn’t sound like it’s a good year to do it.”
The problem stems from a lawsuit, Qasimyar v. Maricopa County, on how the county bills some property taxes. The county was ordered to pay $1.6 million in refunds as a result of the successful challenge, a settlement much higher than Gilbert officials anticipated when it built the budget.
The county will take out Gilbert’s portion before it ever comes to the town, Pfost said.
The forces doing the pinching on the rest of the budget are a decline in state shared income tax — the money the state gives municipalities from state income tax collections — and the loss of the residential rental tax. Gov. Katie Hobbs signed into law in August a ban on municipalities collecting such taxes, starting in 2025.
State shared income tax for Gilbert is about $73 million for the current fiscal year, but the town expects it to drop to about $59 million in 2024-25 and further still in 2025-26 before starting to rebound.
The residential rental tax was worth about $8 million to the town, Pfost said.
“It impacts how we look to the future and prepare our budgets to make sure that we don't spend ongoing dollars or one-time dollars for ongoing things,” she said.
Additionally, inflation and supply-chain issues, while improving, have not fully resolved, putting further pressure on the budget, Pfost said.
“Going forward we do see ongoing funds being exceptionally tight, and we're going to need to discuss where we can potentially find new revenue sources,” Town Manager Patrick Banger said.
Despite this, the town will have a record budget of $2.34 billion, up from last year’s $2.05 billion.
But Gilbert’s budget always comes with an asterisk. What the town budgets does not reflect what it spends in any given year, primarily because it budgets the full amount for all of its capital improvement projects, though that money is spent over time.
Those projects make up $1.59 billion of the FY2024-25 budget, according to town documents.
How the tightness showed up was in different ways. Gilbert departments make requests for money during its budget process for one-time or ongoing projects in town. Typically, the town is able to fund about 75% of these requests. This year, it was at about 54% — about $38 million recommended out of $70 million requested.
The budget goes for preliminary approval at council’s May 21 meeting. Final adoption will be in June.
We would like to invite our readers to submit their civil comments, pro or con, on this issue. Email AZOpinions@iniusa.org. Tom Blodgett can be reached by email at tblodgett@iniusa.org or follow him @sp_blodgett on X.
Meet Tom Tom Blodgett joined Independent Newsmedia, Inc., USA, in 2022, when the company acquired Community Impact Newspaper's Phoenix-area properties. Raised in Arizona, he has spent more than 35 years in journalism in the state.
Community: He has served as an instructional professional in the Walter Cronkite School of Journalism and Mass Communication since 2005, and is editorial adviser to The State Press, the university's independent student media outlet. He also is director of operations for an 18U girls fastpitch softball team from Gilbert.
Education: Arizona State University with a BS in Journalism.
Random Fact: He lived in Belgium during his freshman year of high school.
Hobbies: Tweeting enthusiastically about ASU softball (season-ticket holder) and grumpily about other local sports (pessimistic fan).
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