Important: Two Propositions on Primary Election Ballot

August 4, 2020

Southwest Gas Franchise Agreement

* State law requires voter approval of a franchise agreement for gas and electric utilities to operate within a city or town in Arizona.

* A franchise agreement, which is typically 25 years in duration, outlines the terms and conditions for SW Gas to use City road rights-of-way for their facilities.

* The existing SW Gas franchise was entered into on September 12, 1994 and expired in September 2019. SW Gas continues to operate under the terms of the 1994 franchise until a new agreement is approved by Eloy voters.

* The City has negotiated an updated franchise agreement reflecting today’s best industry practices and is submitting the revised agreement to voters for approval at the August primary election.

* Cities and towns in Arizona receive a 2% franchise fee from gas and electric utilities.

* By law, franchise fees cannot be included in utility rates. Approval of a new franchise agreement with SW Gas will not affect services or fees to utility customers.

Permanent Base Adjustment Proposition

* 1980 Constitutional Amendment Limited Annual Expenditures of Arizona Cities and Towns

* Established a Municipality’s Actual Expenditures using FY1979-1980 as Base Year with increased spending limits for population growth and inflation but allowed a city to present a “Home Rule” option to the voters every four years or provide a permanent base adjustment

* Since 1983, the citizens have approved the Home Rule option – Allows the City Council to set its expenditure levels based upon local revenues rather than the 40-year old State Spending formula – Last Approved in 2018

* Per State Law, Cities and Towns must adopt a Balanced Budget

* Eloy’s budget in FY1979-1980 was $14.3 million

* Without “Home Rule,” the State-Imposed Base Spending Limit for FY2019-2020 would be $13.7 million – Resulting in a Reduction in programs and services of $28.3 million – The City’s FY2019-2020 Budget was $42.6 million

Benefits to Permanent Base Adjustment

* Save Taxpayer Dollars on Election Costs every four years

* Allow Self-Governance – Council sets Future Budget Expenditures based upon current revenues and no greater than Permanent Base Spending Limit

* Avoids risk of City having to make draconian cuts in services and programs

* Establishes Permanent Base Spending Limit at $44.3 million

This Proposition Does Not Increase or Change Local Taxes

For more information on these Propositions, please contact Harvey Krauss, City Manager, at hkrauss@eloyaz.gov or 520-466-9201.