The City of Phoenix Currently Projects a $76 Million Surplus for 2022/23

The City of Phoenix has released its initial budget overview for fiscal year 2022/23.

Currently, the preliminary budget projections estimate a $76 million surplus in the city coffers. This surplus includes an estimated $44 million in one-time resources primarily caused by higher than anticipated vacancy savings and carryover of the City Council approved Coronavirus Relief Funds used to offset public safety salaries as permitted by the Federal guidelines, and $32 million in on-going resources.

That is very good news for the fifth largest city in the country that has, like other local governments across the country and around the world, had to deal with the adverse effects on society caused by the Coronavirus and all its variants over the last two years.

While this budget forecast is welcome news, Adam Waltz, a Public Information Officer for the City of Phoenix advised that “what has been released thus far is a preliminary outlook. Staff will be finalizing resource and expenditure estimates over the coming months before finalizing the General Fund status.”

 Jeanine L’Ecuyer, the Communications Director for Phoenix Mayor Kate Gallego, also cautioned that “it’s important to bear in mind that this is very early in the city process. What you saw is an overview, and not what the city manager’s official budget proposal will contain. Much will change before a final budget is adopted in late June.”

The City’s budget does not include any funding from the Bipartisan Infrastructure Law. According to Mr. Waltz:

“The City has not received funding from the infrastructure bill for either competitive or formula grants, and the Phoenix City Council has not approved allocation of future infrastructure bill funding to specific projects. As funding is received and projects are identified, and approved by City Council, amounts will be included in the future capital improvement program budget.”

 Among some of the factors that the budget overview states could influence the final budget numbers are: 

• Will the Coronavirus disrupt the fiscal outlook with another variant surge?
• The uncertainty of events beyond local control like the Russia/Ukraine conflict and the uncertainty if it will cause negative economic performance.
• What will be the final city pension contributions be?
• Any possible negative impacts to state shared revenues, property taxes, or unfunded mandates as a result of proposed legislation. That could have an impact on the final budget numbers.
• Other factors like employment rate, local economic growth (that help fuel projected tax revenues,) and inflation could also impact future General Fund revenue collections.
• The estimated General Fund surplus could be used to provide for City Council initiatives and community demands for more programs and services and/or future increases for employee compensation. The CM Trial Budget scheduled to be presented on March 29^th will include proposed items for City Council and community consideration to utilize the one-time and ongoing estimated surplus.

Despite these understandable fiscal caveats, Mayor Gallego and the Phoenix City Council undoubtedly welcome working with an initial projected $76 million surplus and building a budget around that rather than having to deal with a fiscal deficit.