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City of ChandlerResourcesFY 2021-22Proposed Budget

Resources IndexResources Summary . 3Summary of Revenues . 7Significant Revenues . 8Local Taxes and Licenses . 8State/County Shared Revenues . 12Charges for Services . 18Miscellaneous Receipts . 24Enterprise Revenues . 28System Development Fees. 33Interfund Charges . 36Property Tax Summary . 39

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City of ChandlerResources2021-22 Proposed BudgetResources SummaryThe Resources section of this document has been prepared to present all sources of revenue in summary form and tooffer a more detailed description of major revenue sources. The Resources section offers historical reference points andhighlights of revenue fluctuations, and serves as the basis for current year estimates.The next four pages of this section provide summarized data of the comparison of the FY 2020-21 Adopted Budget to theFY 2021-22 Proposed Budget. Subsequent pages in this section give a more detailed description of revenues, offeringsummaries of the revenue types, analyses of past revenue collections, and assumptions used in developing the FY 2021-22proposed revenue projections. It is important to note that the FY 2020-21 adopted budget had significant reductions torevenues in most categories to address the anticipated effects of the COVID-19 pandemic.Resources Categorical ComparisonAppropriated Fund Balances 2019-202020-212021-22% ChangeActualAdoptedProposedAdopted toRevenuesBudgetBudgetProposed- 407,086,010 397,897,397(2.3%)Bond 7677.4%1,058,074,33813.6%RevenuesTotal Resources 607,188,379 931,336,929 Encumbrance or Carryforwardfrom Prior YearsNet Adjusted Budget 607,188,379(214,575,475) 716,761,4543(282,846,251) 775,228,0878.2%

City of ChandlerResources2021-22 Proposed BudgetAppropriated Fund BalancesFund Balances represent the difference between revenues and expenditures for each fund. Fund Balances are resourcesthat are carried forward from the prior fiscal year and can be used for expenditures within that fund. The significantvariation in the use of Bonds Fund Balance is due to the practice of issuing bonds every other year. Bond proceeds arededicated to capital projects that span multiple years.Fund balance appropriated (available to spend) for the fiscal year is as follows:General 2020-212021-22% ChangeAdoptedProposedAdopted toBudgetBudgetProposed134,891,664 5.6%Special Revenue35,003,12557,736,24264.9%System Development echnology ReplacementBondsSelf-InsuranceOtherTotal 407,086,0104

City of ChandlerResources2021-22 Proposed BudgetBond SalesBond sales are used to finance various public infrastructure capital projects. General Obligation, Highway User Revenue,and Utility Revenue Bonds all require voter approval, with the available authorization summarized in the second table.The revenue source used for the interest payments and repayment of the bond principal is determined by the type ofbond sold. The City’s current plan is to sell bonds to fund capital projects every other year, when needed, always balancingthe impact on the secondary property taxes. In addition to new debt issuances, the City evaluates refunding andredemption opportunities on a continuous basis. Refunding issues do not require voter approval but are approved by theCity Council.Streets2020-212021-22% ChangeAdoptedProposedAdopted toBudgetBudgetProposed - ,450,000N/AReclaimed 0N/ATotal - As of July 1, 2020, available voter authorization is as follows. Also reflected is new authorization anticipatedfrom a 2021 Bond Election, as well as an estimated bond sale in FY 2021-22:* Other Debt includes Excise Tax Revenue Obligation or Revenue Obligation debt that does not require voter approval, and may beauthorized by Council as described in the City's Debt Management policy incorporated into the Budget Highlights section of theproposed document. When used to fund Water or Wastewater capital projects, the debt service is backed by General Fund excisetax revenues, but paid by dedicated Water and Wastewater user fees.5

City of ChandlerResources2021-22 Proposed BudgetGrantsThis funding source includes federal, state, and local grants for both operating and capital purposes. Grants provide theCity with opportunities to enhance or provide services to the citizens of Chandler. Although the City does not receive everygrant applied for, appropriation must be sufficient to ensure that the budget authorization capacity exists to allow forexpenditure of any awards received during the fiscal year. Grant appropriation will not be expended unless priorauthorization of the grant award is received from the granting agency. Increases reflect anticipated grant fundingopportunities tied to federal relief related to the COVID-19 pandemic.Grants Categorical ComparisonCommunity Services 2019-202020-212021-22% ChangeActualAdoptedProposedAdopted toRevenueBudgetBudgetProposed230,890 Cultural Development(1)Other GrantsNon-Departmental Community Services Cultural DevelopmentPublic Works & UtilitiesOther 042,000,000740.0% 74,303,950259.7%1,400,000 1,400,000N/A(2) (3)Operating Grants Subtotal--Neighborhood ResourcesPublic Safety (3)Housing & Community Development-12,014,119- apital Grants Subtotal 17,291,493 27,943,852 14,700,224(47.4%)Total Grants 29,305,612 48,602,802 89,004,17483.1%Carryforward from Prior Years - 26,604,467 29,946,01412.6%Total Grant Appropriation 29,305,612 75,207,269118,950,18858.2% (1)Other Grants includes Airport, City Manager, City Magistrate, Communications and Public Affairs, Economic Development, Law, and PublicWorks & Utilities, when applicable.(2)The Adopted Budget for Operating Grants (Fund 217 only) is reflected in the Non-departmental cost center. Expenditures occur within theDepartment and the budget is adjusted accordingly, once notification of the grant award is received by the City. The exception to this is positionspecific funding, which is reflected in the Department(s) when appropriate.(3)2021-22 Proposed Budget includes additional federal grant funding in Neighborhood Resources and 36 million in anticipated American RescuePlan Act (ARPA) grant in Non-Departmental.6

City of ChandlerResources2021-22 Proposed BudgetSummary of RevenuesRevenues were projected for the FY 2021-22 budget by taking multiple factors into consideration including direct sourceinformation, economic conditions, past trends, anticipated future trends, and FY 2020-21 estimated revenues. Anticipatedrevenues in FY 2020-21 were affected by closures of facilities and limited capacities due to the COVID-19 ProposedRevenue 143,406,6063,556,211138,754,2451,096,150 144,889,5493,432,995140,724,705731,848 127,809,1523,375,000123,488,152946,000 149,110,9003,342,100145,033,200735,600 20.1%(2.6%)29.8%0.6%29.0%0.2%State/County Shared RevenueState Shared Sales TaxVehicle License TaxHighway User TaxRegional Transportation Sales TaxUrban Revenue SharingLottery 0%(9.5%)(3.8%)18.1%5.6%2.4%3.4%0.0%6.6%0.1%Charges for ServicesEngineering FeesBuilding Division FeesPlanning FeesPublic Safety MiscellaneousLibrary RevenuesParks and Recreation %0.3%1.3%0.1%1.2%0.1%0.5%Miscellaneous .3%0.4%3.4%0.5%0.0%System Development FeesWaterWastewaterGeneral Government Impact .0%4.9%4.3%1.2%1.7%1.5%Interfund 610,6890.2%5.6%Local Taxes and LicensesFranchise FeesTransaction Privilege License TaxOther LicensesSale of Fixed Assets(1)Other Receipts(2)Interest on InvestmentsLeasesCourt FinesEnterprise RevenueWater SalesWastewater Service(3)Reclaimed Water FeesSolid Waste ServiceOther Utility ChargesAirport Fuel SalesProperty TaxTotal Revenue(1)(2)(3)% ChangeAdopted toProposed% 763,2006.1%7.6% 480,800,346 530,291,887 475,648,117 502,703,660 510,712,7677.4%100.0%Sales of land owned are included in 2018-19 Actual Revenue for sale of the City's downtown property in the amount of 847,000.2019-20 Actual Revenue includes receipt of 27 million in federal CARES Act funds.This category includes revenue from Intel Corporation's reimbursement for operation of the Ocotillo Brine Reduction Facility. Amounts reported includereimbursements of 5,476,263 in FY 2018-19 Actual Revenue, 8,025,876 in FY 2019-20 Actual Revenue, 17,338,631 in FY 2020-21 Adopted Revenue, 3,025,555 in FY 2020-21 Estimated Revenue, and 15,402,564 in FY 2021-22 Proposed Revenue.7

City of ChandlerResources2021-22 Proposed BudgetSignificant RevenuesLocal Taxes and LicensesSource: Franchise FeesSummary: Franchise fees paid by Arizona Public Service, Air Products, Southwest Gas Corporation, Cox Communications,CenturyLink, and Western Broadband are based upon agreements entered into between City Council and the individualcorporations. Arizona Public Service pays two percent of gross receipts from the sale of electric energy at retail forresidential and commercial purposes. Air Products pays two percent of gross annual sales of nitrogen gas. Southwest GasCorporation pays two percent of gross receipts from the sale of gas at retail for residential, industrial, and commercialpurposes. Cox Communications, CenturyLink, and Western Broadband pay five percent of gross revenue. This revenuemay be expended for any municipal public purpose.Analysis: The data below reflects recent years of actual revenue with the percent of increase or decrease. FY 2017-18reflects higher collections from all agreements. The FY 2020-21 year-end estimate is an eight month actual and four monthprojection reflecting anticipated collections under the agreements.Projection: The FY 2021-22 proposed budget is based upon specific industry projections and reduced receipt of franchisepayments from cable television providers.Fiscal Year2017-182018-19Amount % 5(3.5)2020-21 (Estimate)3,342,100(2.6)2021-22 (Proposed)2,980,000(10.8)8

City of ChandlerResources2021-22 Proposed BudgetSource: Transaction Privilege (Sales) and Use TaxSummary: The Transaction Privilege (Sales) and Use Tax (TPT) is obtained from a tax on the sale of goods, specifiedbusiness activities and services, and on the purchase price of goods subject to the use tax. It is primarily calculated ongross receipts from taxable activities, but there are some allowed deductions, exemptions, and/or exclusions. This is thelargest ongoing revenue source for the City’s General Fund. Economic activity has a direct effect on collections, andtherefore this revenue source is monitored very closely during times of economic volatility. The majority of this revenueis received in the General Fund and may be expended for any municipal public purpose, with the exception of the AirportOperating Fund receiving a small portion of Aviation Gas and Jet Fuel TPT that may be expended only for the operation ofthe Airport Enterprise.The City analyzes TPT data collected by the State on Chandler’s behalf, continues to educate and assist taxpayers, andperforms audits and collection activities on past due balances to ensure compliance.Analysis: The data below reflects recent years of actual revenue with the percent of increase or decrease. For FY 2017-18and FY 2018-19, we saw significant growth in this category which slowed during FY 2019-20. The FY 2020-21 year-endestimate is an eight month actual and four month projection reflecting continued strong spending despite the COVID-19pandemic.Projection: The FY 2021-22 proposed budget reflects an increase from projected 2020-21 collections as spendingcontinues to show strong economic impact even with the pandemic curtailing certain spending categories. Taxclassifications which were, and will continue to be, impacted by the pandemic include Restaurant/Bar, Hotel/Motel, andAmusements.Fiscal YearAmount% Inc/(Dec)2017-18 7051.42020-21 (Estimate)145,033,2003.12021-22 (Proposed)148,295,6002.29