February 23, 2021
Phoenix is heading into its next fiscal year with a general fund budget surplus estimated at $153 million. That includes $98 million in one-time funding and $55 million ongoing.
During Tuesday’s policy session, budget staff estimated a 4.2% increase in sales and excise tax collections. They make up about 40% of the general fund. But the forecast does not include non-medical marijuana sales to adults. City Manager Ed Zuercher said recreational sales which started in late January raise questions.
“Are sales of retail of legalized marijuana displacing something that people were already buying beforehand or is it actually new money into the system? We don’t know that yet,” he said.
Phoenix estimates it will collect 5.7% more in primary property taxes and 8.3% more in user fees — those are fees to cover city services like water, sewer and aviation.
Mayor Kate Gallego said the hiring freeze put in place last year, along with deferring vehicle purchases and coronavirus relief funds helped Phoenix get to this point.
“It seems like we’re in a position where we can make modest investment in community programs as well as employee compensation so it looks like we can have a robust budget dialogue and move forward from here ever mindful of pension and our many responsibilities to our community," she said.
The budget assumes no increase in revenue streams and no future fee increases or decreases, no further recession and no negative impact to shared revenues provided by the station.
The city manager will present a trial budget in mid-March and community meetings to gather input will be scheduled for April.
In 2020, Phoenix created an online tool called FundPhx to allow residents to learn more about the process and create their own budgets which are shared with all council members.