New year could challenge city, school fiscal picture - SanTan Sun News SanTan Sun News

New year could challenge city, school fiscal picture

January 3rd, 2023 SanTan Sun News
New year could challenge city, school fiscal picture

By Ken Sain
Managing Editor

The previous year was a pretty good one financially for both the City of Chandler and the Chandler Unified School District.

While this new year may not look scary, city and school officials this year face fiscal challenges that will likely comprise one of the top stories of 2023.

But the new year promises other notable possibilities to keep an eye on locally – including possible steps by the city to regulate short-term rentals and the long-awaited opening of a tourist-attracting superstore.

City finances

Chandler was doing so well with its finances in 2022 that it made a one-time payment of $50 million toward its debt in the Arizona Public Safety Personnel Retirement System.

The ongoing expansion at the Intel Ocotillo campus gets a lot of credit for the extra tax dollars coming in. City officials say they see more tax dollars every time Intel launches a major expansion and its current project is no exception.

Intel began the $20 billion expansion in September 2021 to add two new manufacturing areas to make semiconductor chips.

In addition to that construction, there has been a multifamily housing construction boom in Chandler, with a number of new apartment complexes taking shape in the city

At some point, that construction will end and all those extra tax dollars generated by development-related levies will go away.

Dawn Lang, the city’s chief financial officer and deputy city manager, said that the city usually retains about half of the extra income the construction generated when it ends.

But that’s not the major reason why the city is worried about its financial future. That reason resides in the state Legislature, where Republican lawmakers – who hold slim leads in both chambers – may consider changes to local tax control.

Incoming Senate President Warren Petersen, R-Gilbert, wants to eliminate both the rental and food taxes – a move he says will help ease inflation’s impact on Arizonans.

Chandler gets about $20-to-$25 million a year from its taxes on rentals and food delivered for consumption.

Elimination of the two levies comes at a time when the city, just like any household or business, is paying higher prices as a result of inflation.

The loss of revenue from food and rental taxes also poses bigger threats beyond this year for Chandler in that the extension of the county’s half-cent sales tax for transportation could end after 2025 because lameduck Gov. Doug Ducey vetoed a bill that would have put its extension on the ballot this year.

While the new Legislature could approve putting the tax extension on the 2024 ballot, city officials already worry about the potential impact of its loss on transportation and other capital projects.

Ryan Peters, city strategic initiatives director, said the money that Chandler receives from the tax varies, depending on what capital projects they have planned that year.

“If we’re programmed for an intersection that particular year, it can be $20 million,” he said. “If we don’t have any intersections programmed for that year, it can be zero.”

Long term, the city is considering adding rapid bus transit, but without those transportation tax dollars, enacting such a levy is unlikely.

The veto also puts in doubts state projects that were planned for the Chandler area, including widening the Loop 101 and Loop 202 freeways to improve rush hour bottlenecks.

School district finances

Depending on how things go, Chandler Unified School District officials may look at their city counterparts and wish they had their budget problems.

The district in a few months could be be forced not to spend 17% of the money it already has because of the Aggregate Expenditure Limit, a state constitution amendment passed by Arizona voters in the 1980s that is based on a formula heavily dependent on previous year’s enrollment.

In all, some $1.2 billion statewide is at stake if the spending cap isn’t waived and districts can’t spend money they already have in the bank. They will be forced to make cuts in current school year spending beginning April 1.

School officials in Arizona already have said it will be hard not to make most of those spending cuts without laying off teachers and other staff.

“It could mean up to $62 million for Chandler Unified School District,” said Lana Berry, the district’s chief financial officer. “It’s 17%, it doesn’t matter if you’re a big district, or a small district. It’s a massive cut.”

The last Legislature passed the AEL exemption just before the deadline. This new Legislature seems less willing after outgoing Gov. Doug Ducey declined to call a special session to address the spending cap.

A number of state legislators are said to be unhappy that school boards backed a failed petition drive to overturn their decision to funnel more education dollars to private schools.

And they may use the AEL to let them know how unhappy they are.

Arizona consistently ranks among the bottom in the U.S. in funding education. Public schools have fought to keep whatever tax dollars are collected and against giving it to non-public education.

State legislators supporting expanded vouchers said that competition will improve education for all.

Tourism businesses

There are two major businesses scheduled to open in 2023 that will likely draw visitors to Chandler.

Scheels, a North Dakota-based sporting goods company coming to Chandler this fall, is known for its massive store sizes that accommodate a 16,000-gallon aquarium and a Ferris wheel.

The company plans to open its first Arizona location at the Chandler Fashion Center on Sept. 30, replacing the Nordstrom store.

Scheels’ 30 locations around the nation offer a candy shop, a restaurant, arcade games and sports simulators that have become a proven tourist magnet.

Another new business coming to the area may draw even more people.

Construction of the SanTan Mountain Casino has taken longer than expected, but as of December, they expect it to open in late spring or early summer. It was originally planned to open by the end of 2022.

The casino is located just outside of the city’s borders at Hunt Highway and Gilbert Road.

It will be operated by Gila River Resorts & Casinos, which also has the Wild Horse Pass, Lone Butte and Lee Quiva properties.

Short-term rentals

Last summer the Legislature gave municipalities the authority to issue licenses and permits for short-term rental properties.

City of Chandler staff has already been researching that topic and plans to bring some recommendations to the council in 2023.

Both the short-term rental industry (Airbnb and Expedia Group, which owns VRBO) and cities had asked for the law.

Vacation properties will now have to be licensed and cities will be able to address any problem properties, depending on what regulations they each pass.

Also ahead

Some of the major multifamily complexes that have been under construction will start opening and be filled with new Chandler residents. They include the first phase of DC Heights with 157 units and Encore Chandler with 208 units.

The city plans to improve Wall Street alley downtown, moving utility lines underground and making it more pedestrian friendly with benches and improved lighting.

The city is also undertaking a downtown parking study to figure out what adjustments need to be made for the future.

Grammy-winners Los Lobos and Lala Hathaway ae among the big names in entertainment coming to Chandler Center for the Arts this year.

The new Fire Station 2 is scheduled to open. That’s the city’s busiest station and it is being expanded to handle the work.

And the Chandler Municipal Airport will celebrate its 75th anniversary.