Gilbert will ask its voters for permission to spend money it has set aside for capital improvement projects with two questions it is putting on the ballot, one for a “permanent base adjustment” and the other to create a “capital projects accumulation fund.”
Neither is a tax increase, nor any kind of tax at all. Nor do they raise money through other means. They do not involve the town going into debt.
Rather, it goes back to the 1978 California property tax revolt, wherein voters in that state passed Proposition 13, which stymied dramatic property tax increases there.
To avoid the same thing happening here, the Arizona Legislature referred to voters a series of 10 amendments to the State Constitution, which included expenditure limits for municipalities as well as school and community college districts. Voters approved all 10 amendments.
The aggregate expenditure limit has been in the news the past three Legislative sessions because a change in school funding has put districts in danger of going over their limits, which would have dire consequences for school budgets.
Occasionally since 1980, municipalities have gone to their voters for different means of adjusting their limits. This is what Gilbert is going to ask its voters to do this fall.
The impetus for Gilbert is its looming build-out and the need for increasingly expensive capital projects for infrastructure, public safety and town amenities both to deal with growth and to renovate what was quickly put in place during previous times of explosive growth.
Councilmember Chuck Bongiovanni used an analogy of having $100 in his pocket, but being told by his parents he could only spend $50 of it. If he wanted to buy an $80 watch, he would have the means to do it but not the permission.
Gilbert is asking voters for the permission.
He further queried Budget Director Kelly Pfost, “In no way, shape or form should this be called a debt ceiling. Is that correct?”
Answered Pfost: “Correct. It is a total expenditure limit ceiling. In fact, debt is exempt.”
Bongiovanni: “It's not even close to a debt ceiling, correct?”
Pfost: “No, it’s not.”
Council members at the town’s financial retreat worried that local voters will confuse it with Congress’ intermittent wrangling over the U.S. debt ceiling, an act in which Congress allows the federal government to go into ever greater debt.
One way around the limit would be to bond for the projects, as bond money, including the interest paid on it, is not counted toward the limit.
But Gilbert likes to cash-fund most projects. It is the reason the town’s budget is so high compared with neighboring cities. Gilbert will not start a capital project unless it has all the funding on hand to pay for it, and the town accounts for all of that money for current and projects coming up in the next five years in its budget each year.
But that does not mean they can spend it. The expenditure limit, in fact, means even if Gilbert has the money on hand, if it spends more than the limit, the state will penalize it by withholding state shared income tax revenue from the town and redistributing to other Arizona cities and towns.
For Gilbert, that penalty could reach $60 million in revenue per year, according to town documents.
Changing the limit alleviates the threat, Pfost said in response to a question from Councilmember Jim Torgeson.
“There would still be a limit that we couldn't go over, but it would be higher so we would be less likely to exceed it,” she said.
The permanent base limit was set in 1980, when the amendments passed and Gilbert had a population of a little more than 5,000. The limit is adjusted annually based on population growth and inflation, but Gilbert’s explosive growth has forced the town into providing many more services than in 1980.
Voters allowed the town to adjust the base once in 1998, but the town has tripled in size since then, again forcing it to change its level of services.
Gilbert is proposing to ask voters to increase its permanent base by $1.5 million. Per capita, that would still leave the town on the low end of Arizona municipalities, Pfost said.
A capital project projects accumulation fund specifically exempts capital projects from the expenditure limit. Either method would allow Gilbert to maintain its plans toward build-out. Voters do not have to choose one or the other.
Council approved putting the question to increase the permanent base limit to voters as part of the consent agenda May 7.
The capital projects accumulation fund only was given a public hearing May 21. A second public hearing will be June 4, which will be followed by a council vote to put it on the ballot.
Both questions would then be on the Nov. 5 ballot.
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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