Prop 480: Permanent Base Adjustment

Prop480DKLogo_stacked.jpg

At the August 4, 2020, Primary Election, Proposition 480 will be submitted to the voters of Oro Valley. Proposition 480 is a Permanent Base Adjustment to the Town of Oro Valley’s expenditure limitation. 

The Town of Oro Valley has announced it will hold two informational meetings via Zoom video conference for Proposition 480 on Thursday, June 25, 2020. Proposition 480 is a Permanent Base Adjustment to the Town of Oro Valley’s expenditure limitation and will be submitted to voters at the August 4, 2020, Primary Election. The information meetings will be hosted by David Gephart, the Town of Oro Valley’s Chief Financial Officer, who will explain the proposed permanent base adjustment and answer questions. Meeting schedule below:

Prop 480 Informational Meeting #1 - June 25, 2020 at 2 p.m.
https://orovalley.zoom.us/j/93453921690 or to call in via phone, dial 253-215-8782

Prop 480 Informational Meeting #2 - June 25, 2020 at 6 p.m.
https://orovalley.zoom.us/j/93853410838 or to call in via phone, dial 312-626-6799

VOTER INFORMATION

The primary election will be held August 4, 2020. Voters may request an early mail ballot for a specific election or they may request to be placed on the Permanent Early Voting List and receive mail ballots for all elections. The early mail ballots for the Primary Election will be mailed on or about July 8, 2020. For information about your ballot or polling place, please visit the Pima County Recorder’s Office website at www.recorder.pima.gov  or call 520-724-4330.

Quick Facts

·       Proposition 480 does not raise existing taxes.

·       Proposition 480 does not impose new or additional taxes.

·       Proposition 480 provides local control of the Town’s annual budget to meet local needs, instead of using the state-imposed formula based upon the Town’s 1979/80 budget.

·       Proposition 480 does not permit the Town of Oro Valley to expend more than it receives in revenue.

What is the Expenditure Limitation?

The State of Arizona imposes an expenditure limitation on all Arizona cities and towns, including Oro Valley. This expenditure limitation is based on a formula adopted by the State Legislature in 1979.  The formula determines the amount of money that can be used to fund municipal services each year, regardless of the money the Town collects via taxes and fees. 

The limitation is based on expenditures from Fiscal Year 1979/80 and is known as the “base limit.”  The base limit is multiplied by inflation and population; the State Economic Estimates Commission adjusts the inflation and population figures each year.  While the 1979 formula accounts for growth, it falls short of how much the Town has actually grown since 1979.

The Town of Oro Valley’s current base limit is $272,317.  For Fiscal Year (FY) 2019/20, based on Oro Valley’s current base limit, the formula results in an expenditure limit as follows:

                        Base limit:                                            $272,317
                        Inflation adjustment:                            X  3.0822
                        Population adjustment:                        X  30.6332
                        FY 19/20 State-imposed limit:            $25,711,875

Based on this formula—and without approval of the Home Rule option in 2018 discussed below—the Town’s total expenditures for the FY 19/20 budget to fund all departments (Public Safety, Public Works, Water Utility, Parks & Recreation, Magistrate Court, and all other departments) and capital improvement projects would be limited to no more than $25,711,875.  For comparison, the Town’s approved budget for FY 19/20 was $111 million.

What are the Town of Oro Valley's Options?

The State offers four options to allow cities and towns to adjust expenditure limits to accommodate growth and expansion. The two options available to Oro Valley are adoption by voters of a “Home Rule Option” or the “Permanent Base Adjustment Option.”

The Home Rule Option allows the Town to determine its expenditure limit each year, which means it is set at the amount of the Town’s adopted annual budget. The Home Rule Option is in effect for four fiscal years after it is approved. Oro Valley voters adopted Home Rule in the 2018 primary election, as they have every four years since 1982 (1982, 1986, 1990, 1994, 1998, 2002, 2006, 2010, 2014 and 2018.)  

A Permanent Base Adjustment Option would permanently increase the Town’s base limit so that when the State’s expenditure limitation formula is applied, it would result in a limitation that more closely matches the Town’s annual budget.  This permanent adjustment would save the Town the cost of Home Rule elections, and associated staff time, every four years.

Without a Home Rule or Permanent Base Adjustment the Town is prohibited from expending funds above the State’s expenditure limitation, regardless of how much money the Town collects in revenue.

What is the Town of Oro Valley Proposing with Proposition 480?

Proposition 480 is proposing to permanently adjust the Town’s base limit to $1,127,683. Let’s go back to the base limit formula and replace the current base limit with the proposed base limit of $1,127,683.

                        Base limit:                                          $1,127,683
                        Inflation adjustment:                             X  3.0822
                        Population adjustment:                       X  30.6332
                        FY 19/20 limit:                                $106,473,178

Under the formula, the Town’s expenditure limitation for FY19/20 would have been $106,473,178, excluding expenditures from certain revenue sources, such as bond proceeds, interest income, grants and intergovernmental revenues. 

Frequently Asked Questions

If Oro Valley already uses the Home Rule option, why is the Permanent Base Adjustment being brought before voters now?

The Permanent Base Adjustment allows for certainty in budgeting beyond a four-year planning period.  It also saves administration and election costs every four years.

What happens if Proposition 480 is not approved?

If not approved, the Home Rule Option would be in effect for two more years (through FY 2022-23), and future extensions of Home Rule would have to be approved by the voters in subsequent elections.

What happens if Proposition 480 is approved?
If approved, the Town would use the permanent base adjustment formula for budgeting expenditures. This would be permanent, and the Home Rule Option would no longer appear on the ballot.

Will Proposition 480 increase my taxes?

Proposition 480 will not increase taxes. If Proposition 480 passes, the only outcome is that it provides the Town of Oro Valley the ability to budget for and spend the revenues it already collects. The Permanent Base Adjustment option does not empower the Oro Valley Town Council to create new and additional taxes, nor does it enable the Town to spend beyond the revenues it receives.

May a city or town under Home Rule adopt a Permanent Base Adjustment?
Yes. A city or town under Home Rule may adopt a Permanent Base Adjustment. The Economic Estimates Commission will use the adjusted base limit to calculate the city’s or town’s constitutional expenditure limitation for the year following a Permanent Base Adjustment’s voter approval.  Until the Permanent Base Adjustment is applied, the city or town is still subject to Home Rule, if the Home Rule authorization has not expired.

What is the difference between Home Rule and Permanent Base Adjustment?
Home Rule—Arizona Constitution, Article IX, §20(9), allows a City or town to adopt an alternative expenditure limitation (Home Rule) with voter approval at a regularly scheduled election for the nomination or election of its governing board members. Home Rule prescribes the method the city or town will use to calculate its expenditure limitation each year. Voters must approve Home Rule before the first fiscal year to which it applies. Home Rules apply for four succeeding fiscal years, after which the constitutional expenditure limitation becomes effective unless voters adopt a new Home Rule.

Permanent Base Adjustment—Arizona Constitution, Article IX, §20(6), allows a city or town to permanently adjust its base limit with voter approval at a regularly scheduled general election or a nonpartisan election held for the nomination or election of its governing board members. The Economic Estimates Commission will use the adjustment to calculate the constitutional expenditure limitation beginning with the fiscal year immediately following the fiscal year that voters approve the Permanent Base Adjustment. Permanent Base Adjustments apply to all future years; however, voters may adopt additional adjustments.