Budget Process FAQ

The Town of Marana and State of Arizona follow a Fiscal Year (FY) that starts July 1 and ends June 30. A Fiscal Year is the period designated by the Town for the beginning and ending of financial transactions or a budget cycle. The 2016 Annual Budget or Fiscal Year 2015-16 (FY 2016) refers to the period that begins July 1, 2015 and concludes on June 30, 2016.

Budget adoption is a formal action taken by the Town Council that sets the Town’s priorities and spending limits for the next year. The Fiscal Year budget is formally adopted by the Town Council at a public meeting in June, though Town staff has been preparing the budget for months in advance.

At any time of the year, citizens can view the Town’s budget online, in Town libraries or at Town Hall. Residents can discuss it with neighbors, city staff, or councilmembers. In addition, the Town Council has several special budget workshops every year citizens can attend; key dates will always be available on the Budget Process page.

Budget appropriation refers to authorizations made by the Town Council that permit the Town to incur obligations and expend resources. When the Town Council appropriates funds, they are saying the community should, for example, spend its money on public safety or make investments that improve the quality of life in Marana. The Town cannot collect or spend money unless it is appropriated, and this ensures the public’s money is spent according the public’s needs as expressed by the democratically elected Town Council.

A municipality, such as the Town of Marana, will sell (issue) bonds primarily to finance capital projects. This is similar to a family taking out a mortgage in order to finance a house. Just like a family, the Town has basic necessities (infrastructure) like roads and office buildings but usually does not have cash available for such major purchases. Municipal bonds are like loans that help make large, important purchases affordable. Bonds also effectively spread out the costs of major projects across their useful life, so all those citizens who utilize them can help pay for them.

The capital budget, or capital improvement plan, is an appropriation of bonds or operating revenue for improvements to Town facilities that may include buildings, parks, streets, and water and sewer lines. The operating budget covers the costs of the Town’s day-to-day operations, such as employee salaries, supplies, and contracts.

A family’s debt service is the payments they make on loans, such as a mortgage and credit cards. Principal and interest payments on outstanding bonds are referred to as debt service. Just like a family cannot skip on mortgage or credit card payments, the Town must always keep up on its debt service, so this will always be a part of the Town’s budget.

Arizona municipalities can only spend funds up to a level specified by the State or local voters via Home Rule. This is meant to ensure local government budgets are balanced. Marana’s voters approved Home Rule that required voters to approve a four-year expenditure limit based on actual revenues the Town has received.

Marana has 66 budget funds to help keep track of and focus resources. These include the General Fund, Transportation Fund, Airport Fund, and Water and Waste Water Fund, to name a few. A family might use several funds, too, in order to help manage their finances and determine how close they are to reaching certain goals. For instance, a family might have a children’s college fund, a retirement fund, vacation fund and household expenses fund (such as an IRA, savings and checking account). A budget fund, then, is a fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources. Marana uses separate funds in order to correctly and legally track revenues and expenditures by program.

Fund balance refers to the remainder or carryover that occurs when actual revenues exceed budgeted revenues and/or when actual expenditures are less than budgeted expenditures at the end of the fiscal year (June 30). If the Town budgets (plans to spend) $15 million on roads next year but only spends $14 million, there is a $1 million fund balance.

Strategic Plan Priorities, developed by the Town Council, are statements of community values that direct the Town’s operations and help demonstrate progress towards a shared vision. Town staff uses these priorities to assist in program development, creating annual budget requests, and building department business plans.

Marana’s revenue comes from a variety of sources, including sales tax, state shared revenues, user charges and other levels of government.

The state of Arizona shares a portion of its tax revenues (from sales, income and motor vehicle in-lieu taxes) with Arizona cities and Towns. This funding is divided among the cities and Towns using population formulas supplied by state law. These state-shared revenues comprise a large portion of most city and Town budgets, including 24% of Marana’s General Fund.

State-shared revenue enables local governments to continue providing basic services, such as police, without burdening the residents with additional local taxes. All cities and Town’s receive a proportional amount of funding based on population. Since cities and Towns are not equally wealthy, state shared revenue is of great assistance, especially to cities and Towns with lesser wealth or greater service needs. Because state-shared revenue distribution is a specified percentage of state revenue collections, as state revenue declines, city and Town revenue declines.

Consequently, in difficult economic times, cities and Towns 'feel the pinch' just as the State does.

User charges are fees paid in direct receipt of a public service by the party who benefits from the service. Fees paid for recreation classes or leagues are examples of user charges. These make up approximately 9% of the General Fund.