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Joyce Clark Unfiltered

For "the rest of the story"

Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

In about 75 days Glendale’s voters will be asked to consider approval of the city’s request for $187.9 million in bond authorization. In order to understand this question I am offering a primer of everything you ever wanted to know (or didn’t want to know) on city bonds.

Let me answer one question up front that will be repeated elsewhere in this blog – approval of this bond authorization will not raise your taxes – not your property tax or sales tax.

The type of bonds being offered for authorization are called G.O. (General Obligation) bonds used for paying for the city’s Capital Improvement Program (CIP). In an upcoming blog I will discuss the CIP in further detail. The city uses G.O. bonds to pay for facility, infrastructure and equipment improvements valued at over $50,000.

These bonds are paid back with your property taxes. There are two categories of your property tax: your primary tax levy and your secondary tax levy. By state law, the primary property tax revenue the city collects can be used for anything but the secondary property tax levy can be used for one thing only – to pay off bonds and interest for a specific capital purpose.

In Fiscal Year 2020 the total of the city’s primary tax levy amount is $5,856,524 and the secondary tax levy amount is $20,408,799. Keep in mind the city never collects the full amount of either the primary or secondary tax because some people don’t pay their property tax.

That is why the city has a Capital Improvement Program. The CIP identifies every project that must be funded through the 6% and 20% bond categories from its secondary property tax levy.

To complicate things a bit further there are two separate categories of General Obligation, secondary property tax funded projects. These categories are based on a percentage of the value of a city’s total secondary property tax value. One category is the 6% category (of the total value of the city’s secondary property tax value). Projects that fit in the 6% category are:

  • Economic development
  • Cultural facilities
  • Government facilities
  • Libraries

Then there is the 20% category based upon the same formula – 20% of the city’s total value of its secondary property tax. Projects that fit in this category are:

  • Flood control
  • Open space and trails
  • Parks
  • Public Safety
  • Streets and parking
  • Water and sewer (the city doesn’t use G.O. bonding but instead debt is paid with water and sewer revenue – your water and sewer bills)

What is the city asking for? Your permission to allow the city to issue G.O. bonds at a ceiling of a certain amount.  While you would grant permission that doesn’t mean the city would use it right away. The city council has voiced its refusal to raise property taxes. Property taxes and sales taxes are the backbone and lifeblood of the city’s General Fund. The city’s General Fund pays for two primary things: 1. operating and maintenance costs of running city government and 2. the debt on city issued bonds. Each year the city council must balance these two competing interests seeking funding. The greater the cost of operating and maintaining city government the less there is available to issue bonds for capital improvement projects.

The last time the city asked voters for bond authorization was in 1999, 21 years ago. For example, in the last bond election voters approved bond authorization in Open Space and Trails in the amount of $50,459,000. The city has never used this full amount and still has $38,653,005 left of bond authorization. Obviously this time around, the city is not asking for any bond authority in Open Space and Trails or any other capital project categories where there is still adequate bond authority left.

Can the city just switch the $38+ million left in Open Space and Trails to another capital project category like Public Safety? The answer is by state law, no. Will your approval of the bond authorization sought raise your taxes? Again, the answer is no. The city policy is to issue bonds that can be paid back without raising taxes.

Last fall the city council authorized a citizen bond committee to review all requests for increased spending authorization. These Glendale residents were on the city council approved Bond Committee. These 7 citizens represented every district within Glendale:

  • Jon Froke, Chair
  • Lisa Baker, Vice Chair
  • Michael Boule
  • John Guers
  • Gary Hirsch
  • Ryan Wesselink
  • Michael Socaciu

After careful consideration and having received comprehensive information they have made the following recommendations for voter consideration on November 3rd. Each question requires separate voter approval:

  • Question 1 in the amount of $87.2 million for citywide park improvements, updated playgrounds, upgraded restrooms, Heroes Park completion and the O’Neil Splash Pad.
  • Question 2 in the amount of $81.5 million for street construction and reconstruction of major streets including 59th Avenue, 63rd Avenue, 83rd Avenue, Bell Road, Thunderbird Road and Bethany Home Road.
  • Question 3 in the amount of $9.9 million for our landfill’s expansion and to meet mandated environmental protections and compliance. Normally, these items would be covered by rate payers but the costs are just too high and raise rate payers’ bills dramatically.
  • Question 4 in the amount of $9.3 million for storm and drainage improvement projects.

In an upcoming blog I will go into greater detail about each of these questions.

Remember, just because voters authorize spending in these amounts for these listed items, does not mean the debt will be issued all at once. It will be issued as the General Fund can afford to pay back the debt without raising taxes.

© Joyce Clark, 2020         

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such material. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

 

From the last blog we now know more about Enterprise Fund debt than we ever really wanted to know. It is important to remember that it has a bdu-4-pocket-khaki-tan-jacket-100-ripstop-cotton[1]dedicated source of funding – customer utility bills. Its debt is not paid with sales tax revenue. Since it is separate fund it does not impact the city’s General Fund. It is safe to say that it is not the primary cause of Glendale’s financial problems. Let’s dig into the next pocket and see what we find.

In Pocket #2 is the Highway User Revenue Fund (HURF) bond debt of $4,695,875 – 6% of Glendale’s total debt and Transportation bond debt of $7,331,080 — 8% of Glendale’s total debt. This is an easy one too.

When Glendale builds new roads or maintains and repairs them it uses HURF bonds. They are used to finance the improvement, construction, reconstruction, acquisition of right-of-way or maintenance of streets and highways of the city including traffic control devices as well as bridges and noise walls. Two examples of its use can be seen in the Arrowhead area along the Loop 101. The sound walls adjacent to the Loop 101 and the pedestrian bridge that spans it were paid for with HURF.

Where does the money come from to pay HURF bond debt? Every city in Arizona receives State Shared Revenue and one of the pieces of State Shared Revenue is HURF. For instance, when you fill up your gas tank, part of what you pay is a tax on a gallon of gasoline. It goes to the state. The state, in turn, gives back a small portion of that tax to cities based upon a specific formula. Glendale, as does every other city in the state, receives this money back as state shared revenue.

Transportation bond money comes strictly from Glendale’s voter approved dedicated portion of the city’s sales tax. After voter approval of this dedicated sales tax the city created a long term transportation plan for the money’s use and it is monitored by a citizen oversight commission. It is specifically dedicated and can only be used for transportation related projects from street repair to installing new traffic lights. The revenue is used to build transportation projects including design, construction and right-of-way acquisitions, roadway widening, intersection improvements, transit stops, bicycle connections, park and ride lots and airport projects. The bike lanes and bus stops throughout Glendale were paid for from the transportation sales tax.

We know where the money comes from for this pocket and when we take it out we know the narrow uses for this money. HURF money comes from state shared revenue and Transportation bond money comes from sales tax that can only be used for that purpose. Both of these funds can only be used for street and transportation projects.

In the next blog we’ll explore Pocket #3. Unfortunately things will become murkier as we move from the realm of specifically dedicated uses for bond revenue to the more discretionary uses found in Pockets #3 and #4.

© Joyce Clark, 2014

FAIR USE NOTICE

This site contains copyrighted material the use of which is in accordance with Title 17 U.S. C., Section 107. The material on this site is distributed without profit to those who have not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democratic, scientific and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in Section 107 of the US Copyright Law and who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use,’ you must obtain permission from the copyright owner.

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