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 [email protected] or 520-466-9201.