Accrual Basis Accounting - The most commonly used accounting method, which reports income when earned and expenses when incurred, as opposed to cash basis accounting, which reports income when received and expenses when paid. For the city's Comprehensive Annual Financial Report (CAFR), Phoenix recognizes grant revenues on a modified cash basis. Generally Accepted Accounting Principles (GAAP) recognizes grant revenues on an accrual basis.
Additions - see Supplemental
Adopted Budget - Original budget given at the beginning of the fiscal year.
Appropriation - An authorization granted by the City Council to make expenditures and to incur obligations for purposes specified in the appropriation ordinances. Three appropriation ordinances are adopted each year: 1) the operating funds ordinance, 2) the capital funds ordinance, and 3) the re-appropriated funds ordinance.
Arizona Highway User Revenue (AHUR) - Various gas tax and vehicle licensing fees imposed and collected by the state and shared with cities and towns that must be used for street or highway purposes.
Assessed Valuation - A value placed upon real estate or other property by the county assessor and the state as a basis for levying ad valorem property taxes.
Balanced Budget - Arizona law (Title 42 Arizona Revised Statutes) requires the City Council to annually adopt a balanced budget by purpose of public expense. State law defines this balanced budget as the primary property tax levy, when added together with all other available resources, must equal these expenditures. Therefore, no General Fund balances can be budgeted in reserve for future fiscal years. Instead, an amount for contingencies (also commonly referred to as a rainy day fund) is included in the budget each year. The City Charter also requires an annual balanced budget. The Charter further requires that the total of proposed expenditures shall not exceed the total of estimated income and fund balances.
Base Budget - The preliminary operating budget for the next fiscal year that provides for ongoing expenditures for personnel, commodities, contractual services and replacement of existing equipment. The base budget provides funding to continue currently authorized services and programs. The City of Phoenix process for developing the base budget is Zero Base Budgeting.
Beginning Balance - see Fund Balance
Block Watch Fund - This fund is the Block Watch portion of the Neighborhood Protection Fund. This fund is a portion of a voter-approved 0.1 percent sales tax increase approved in October 1993. Grant funds are awarded to communities for innovative methods to deter crime-related problems in their neighborhoods. The city disburses these funds through an annual application process.
Bond Rating - An evaluation of a bond issuers credit quality and perceived ability to pay the principal and interest on time and in full. Two agencies regularly review the City of Phoenix and generate bond ratings; Moodys Investors Service and Standard and Poors Corporation.
Bonds - Bonds are debt instruments that require repayment of a specified principal amount on a certain date (maturity date), together with interest at a stated rate, or according to a formula for determining the interest rate.
Budget - A plan of financial operation for a specific time period (the city of Phoenix's adopted budget is for a fiscal year July 1 - June 30). The budget contains the estimated expenditures needed to continue the city's operations for the fiscal year and revenues anticipated to finance them.
Capital Budget - See Capital Improvement Program
Capital Funds - Resources derived from issuance of bonds for specific purposes, secondary property tax revenue, related federal project grants and participation from other agencies used to finance capital expenditures.
Capital Improvement Program (CIP) - A plan for capital expenditures needed to maintain and expand the public infrastructure (for example, roads, sewers, water lines or parks). It projects these infrastructure needs for a set number of years and is updated annually to reflect the latest priorities, cost estimates or changing financial strategies. The first year of the adopted Capital Improvement Program becomes the Annual Capital Budget.
Capital Outlay - Items costing more than $5,000 and having a useful life of more than two years are defined as capital outlay.
Capital Project - New facility, technology system, land acquisition, equipment acquisition, or improvements to existing facilities beyond routine maintenance. Capital projects are included in the Capital Improvement Program and become fixed assets.
Carryover - Funding for an expenditure originally planned for in the current fiscal year, but because of delays, is moved to the following fiscal year.
CDBG - See Community Development Block Grant
Central Service Cost Allocation - Allocation of general staff and administrative overhead costs to the benefiting activity.
CIP - See Capital Improvement Program
City Manager - See Council-Manager Form of Government
City Managers Budget - See Preliminary Budget
City of Phoenix Employees Retirement Systems (COPERS) - A pension plan for full-time employees who retire from service with the city of Phoenix.
Civic Improvement Corporation (CIC) - Non-profit corporation established in 1973 as the main financing arm of the city of Phoenix to issue debt obligations secured by enterprise fund revenues or excise tax pledges.
Commodities - Commodities are consumable goods such as office supplies, small tools, fuel, etc., that are used by the city. Commodities also include repair and replacement parts and materials that do not meet the definition of Capital Outlay.
Community Development Block Grant (CDBG) - Grant funds allocated by the federal government to the city of Phoenix to use for the prevention and removal of slum and blight, and to benefit low- and moderate-income persons.
Comprehensive Annual Financial Report (CAFR) - The official annual report of the city of Phoenix that includes statements of revenue, expenditures and changes in fund balances. These financial statements are prepared and presented in conformity with accounting principles generally accepted in the United States of America (GAAP), as prescribed in pronouncements of the Governmental Accounting Standards Board (GASB).
Contingency - An appropriation of funds to cover unforeseen events that occur during the fiscal year, such as flood emergencies, new federal mandates, shortfalls in revenue and other similar eventualities.
Contractual Services - Expenditures for services performed by outside firms or individuals.
COP - City of Phoenix
Cost Allocation - The method of distributing expenses for general staff and administrative overhead to the benefiting activity.
Council-Manager Form of Government - An organizational structure in which the Mayor and City Council appoint a city manager to be the chief operating officer of a local government. The City Council sets policies and the city manager is responsible for implementing those policies effectively and efficiently.
Court Awards Fund - Revenues provided by court awards of confiscated property under both the federal and state organized crime acts. These funds are used for additional law enforcement activities in the Police and Law departments.
Cycle Time - The amount of time, from the customers perspective, it takes to complete a defined task, process or service.
DBE - Disadvantaged Business Enterprise
Debt Service - Payment of interest and principal on an obligation resulting from the issuance of bonds.
Depreciation - The decline in the value of an asset due to general wear and tear or obsolescence.
Employee Bargaining Unit - A group of employees who agree to have an individual represent the collective group in labor negotiations and issues with management.
Encumbrance - A reservation of funds to cover purchase orders, contracts or other funding commitments that are yet to be fulfilled. The budget basis of accounting considers an encumbrance to be the equivalent of an expenditure.
Enterprise Funds - Funds that are accounted for in a manner similar to a private business. Enterprise funds usually recover their costs (including depreciation) through user fees. The city has five such self-supporting funds: Aviation, Water, Wastewater, Golf and Solid Waste. In addition, the Phoenix Convention Center Fund, which is primarily supported by earmarked excise taxes, uses enterprise fund accounting to provide for the periodic determination of net income.
Estimate - The most recent forecast of current year revenue and expenditures. Estimates are based upon several months of actual expenditure and revenue information and are prepared to consider the impact of unanticipated costs and savings, or other economic changes.
Excise Tax Fund - This fund is used to account for tax revenues ultimately pledged to pay principal and interest on various debt obligations. This fund includes local sales taxes, state-shared sales taxes, state-shared income taxes and sales tax license fees.
Expenditure Limit - See State Expenditure Limit
Expenditures - Refers to current cash operating expenses and encumbrances.
Fiscal Year - The time period designated by the city satisfying the beginning and ending period for recording financial transactions. The City of Phoenix has specified July 1 to June 30 as its fiscal year.
FTE - See Full-Time Equivalent Position
Full Cost Accounting Principles - Accounting method that includes all costs of delivering a service or producing a product, including overhead and central services costs.
Full-Time Equivalent (FTE) - A position converted to the decimal equivalent of a full-time position based on 2,080 hours per year. For example, a part-time clerk working for 20 hours per week would be equivalent to one half of a full-time position or 0.5 FTE.
Fund - An independent account made available for a specific purpose.
Fund Balance - As used in the budget, the cumulative difference between resources and expenditures over the life of the fund. The beginning fund balance is the balance at the beginning of the fiscal year.
FY - See Fiscal Year
G. O. Bonds - See General Obligation Bonds
GAAP - See Generally Accepted Accounting Principles
General Funds - Resources derived from state and city taxes and fees that have unrestricted use, meaning they are not earmarked for specific purposes.
General Obligation Bonds (G.O. Bonds) - Bonds that require voter approval and finance a variety of public capital projects such as streets, buildings, parks and improvements. The bonds are backed by the full faith and credit of the issuing government.
Generally Accepted Accounting Principles (GAAP) - Uniform minimum standards of financial accounting and reporting that govern the form and content of basic financial statements as set by the Governmental Accounting Standards Board.
GFOA - Government Finance Officers Association
Grant - A contribution by one government unit or funding source to another. The contribution is usually made to aid in the support of a specified function (e.g., library materials or drug enforcement, but it is sometimes for general purposes).
Home Rule - The right of voters in a municipality to adopt a charter granting the municipality authority over issues of local concern and ceases the state legislatures participation and interference in local affairs.
HUD - U.S. Department of Housing and Urban Development
Impact Fees - Fees adopted by the City Council in 1987 requiring new development in the city's outlying planning areas to pay its proportional share of the costs associated with providing necessary public infrastructure.
Improvement Districts - Special assessment districts formed by property owners who desire and are willing to pay for mutually enjoyed improvements such as streets, sidewalks, sewers and lighting.
In Lieu Property Taxes (or In Lieu Taxes) - An amount charged to certain city enterprise and federally funded operations that equal the city property taxes that would be due on plant and equipment if these operations were for-profit companies. This includes the Water, Wastewater, Solid Waste and Public Housing funds.
Infrastructure - Facilities that support the daily life and growth of the city, for example, roads, water lines, sewers, public buildings, parks and airports.
Initiative - A reserved power in the Arizona Constitution that gives citizens the right to initiate legislation by circulating a petition and obtaining signatures equaling 15 percent or more of the total number of voters who voted in the last election for mayor.
Interfund Transfers - Transfers of resources between funds that are neither recorded as revenues to the fund receiving or expenditures to the fund providing.
Levy - See Tax Levy
Mandate - Legislation passed by the state or federal government requiring action or provision of services and/or programs. Examples include the Americans with Disabilities Act, which requires actions such as physical facility improvements and provision of specialized transportation services.
Modified Accrual Basis - Method under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period the associated liability is incurred. Most government accounting follows this method.
Neighborhood Protection Fund - This fund, also referred to as Proposition 301, is used to account for the funds generated by the 0.1 percent increase in the sales tax approved by voters in October 1993. The funds are to be used for the expansion of police, fire, and block watch programs. The breakdown of funding is as follows: Police 70 percent, Fire 25 percent and Block Watch 5 percent.
Net Direct Debt Ratio - The ratio between property tax-supported debt service and secondary-assessed valuation. The Net Direct Debt Ratio is one way to gauge the ability of a local property tax base to support general obligation debt service.
Operating Funds - Resources derived from continuing revenue sources used to finance ongoing operating expenditures and pay-as-you-go capital projects. Does not include resources derived from issuing bonds or other forms of debt.
Ordinance - A formal legislative enactment by the City Council. If it is not in conflict with any higher form of law, such as a state statute or constitutional provision, it has the full force and effect of law within the boundaries of the city.
Outstanding Bonds - Debt, including interest and principal, which is not paid off.
Pay-As-You-Go Capital Projects - Pay-as-you-go capital projects are capital projects that are funded with operating funds instead of bond funds (debt).
Percent-for-Art - An ordinance that allocates up to 1 percent of the city's capital improvement budget to fund public art projects.
Personal Services - All costs related to compensating city employees including employee benefits costs such as contributions for retirement, health, industrial insurance and federal taxes such as social security. It also includes fees paid to elected officials, jurors, and election judges and clerks. It does not include fees for professional or other services.
Phoenix Parks and Preserve Initiative Program (3PI) - The initiative sets aside one cent of sales tax for every $10 of purchases to improve and renovate existing parks, and to expand and improve the city's desert preserve system. Sixty percent of initiative proceeds are dedicated to improvements and renovation of city parks and acquisition of land for future city parks; 40 percent is dedicated to land acquisition and development of the city's desert preserves including trails, trailheads and signage.
PLT - See Privilege License Tax
Preliminary Budget - A balanced budget presented to the City Council by the city manager (sometimes referred to as the City Manager's Budget) based upon an earlier Trial Budget, City Council and community feedback and/or changing economic forecasts. Any City Council changes to the Preliminary Budget are incorporated into the final adopted budget.
Primary Property Tax - A tax levy that can be used to support any public expense.
Privilege License Tax (PLT) - The city of Phoenix's local sales tax, made up of more than 14 general categories.
Privilege License Tax Fees - Includes fees charged for Privilege License Tax (PLT) licenses and the annual fee per apartment unit on the rental of non-transient lodging. Fees recover the costs associated with administering an efficient and equitable system. A PLT license allows the licensee the privilege to conduct taxable business activities and to collect and remit those taxes.
Program - A group of related activities performed by one or more organizational units.
Property Tax - A levy upon each $100 of assessed valuation of property within the city of Phoenix. Arizona has two types of property taxes. Primary property taxes support the city's General Fund and secondary property taxes pay general obligation debt (bonds).
Proposition 1 - See Public Safety Expansion Fund
Proposition 301 - See Neighborhood Protection Fund
Public Safety Enhancement Funds - The Public Safety Enhancement funds are used to account for a 2.0 percent increment of the 2.7 percent sales tax on utilities with franchise agreements. The Police Public Safety Enhancement Fund is dedicated to Police and Emergency Management needs and receives 62 percent of the revenues generated. The Fire Public Safety Enhancement Fund is dedicated to Fire needs and receives 38 percent of the revenues generated.
Public Safety Expansion Funds - This fund is used to account for the 0.2 percent increase in sales tax approved by Phoenix voters in 2007. The funds will be used to add 500 police personnel and 100 firefighters to the City of Phoenix. The Police Department receives 80 percent of revenues, the Fire Department receives 20 percent.
Reappropriated Funds - Funds for contracts entered in a previous fiscal year but which are still in progress.
Recoveries - Canceled unused prior year encumbrances.
Regional Wireless Cooperative (RWC) - An independent, multi-jurisdictional organization that manages and operates a regional radio communications network built to seamlessly serve the interoperable communication needs of first responders and other municipal radio users in and around the Phoenix metropolitan area.
Resources - Total amounts available for appropriation including estimated revenues, recoveries, fund transfers and beginning fund balances.
Restricted Funds - See Special Revenue Fund
RPTA - Regional Public Transportation Authority
Salary Savings - Budget savings realized through normal employee turnover while positions are vacant until new employees are hired.
Secondary Property Tax - A tax levy restricted to the payment of debt service on bonded debt.
Self-Insurance - Self-funding of insurance losses. With the exception of airport operations, police aircraft operations, and excess general and automobile liability for losses in excess of $7.5 million, the city is self-insured for general and automobile liability exposures.
Service Level Trend - The tracking, over a specified time period, of an output measure showing a statistical workload change or the degree of achievement for stated program objectives.
Special Revenue Fund - A fund used to account for receipts from revenue sources that have been earmarked for specific activities and related expenditures. Examples include Arizona Highway User Revenue (AHUR) funds, which must be used for street and highway purposes, and secondary property tax, which is restricted to paying back general obligation bonds.
Sports Facilities Fund - A fund established to account for revenue raised from a designated portion of the hotel/motel tax and tax on short-term motor vehicle rentals. These funds pay the city's portion of the debt service and other expenditures related to the downtown sports arena.
State Expenditure Limit - A limitation on annual expenditures imposed by the Arizona Constitution as approved by the voters in 1980. Certain expenditures may be exempt by the State Constitution or by voter action. The limitation is based upon a city's actual 1979-80 expenditure adjusted for interim growth in population and inflation.
State-Shared Revenues - Revenues levied and collected by the state but shared with local governments as determined by state government each year. In Arizona, a portion of the state's sales, income and vehicle license tax revenues are distributed on the basis of a city's percentage of the state population.
Supplemental A request for resources in addition to the base budget to provide new or enhanced programs or services.
Tax Levy - The total amount to be raised by general property taxes for purposes specified in the Tax Levy Ordinance.
Tax Rate The ratio at which a business or person is taxed. For example, in 2012 the City of Phoenix property tax rate was $1.82 for each $100 of assessed valuation.
Technical Review - A detailed line-item review of each city department's budget conducted by the Budget and Research Department.
Transfers - Transfers are the authorized exchanges of cash or other resources between funds.
Transit 2000 Fund - This fund is used to account for the 0.4 percent sales tax dedicated to public transit approved by voters on March 14, 2000. Also included in this fund are public transit fare box collections.
Trial Budget - A proposed balanced budget presented in early spring for discussion by the City Council and the community before the city manager submits his or her Preliminary Budget in late spring.
Truth In Taxation - A state law passed in the 1996 legislative session requiring cities to publish a truth in taxation notice if the proposed primary property tax levy, excluding amounts that are attributable to new construction, is greater than the amount levied by the city in the preceding tax year. The required notice must be published twice in a newspaper of general circulation and must meet the format requirements, which are included in the state statute.
User Fees or User Charges - A fee paid for a public service or use of a public facility by the individual or organization benefiting from the service.
Zero Base Budgeting - A process whereby a budget is developed at the program level and starting from zero the next years budget is estimated assuming only those costs necessary to provide the currently approved level of service. This initial estimate is referred to as the base budget. The estimated cost for providing each program is reviewed and justified on an annual basis. The process includes the identification of potential reductions and additions, which are ranked in priority order. Presentation of the budget is also provided on a program basis.
