League of Cities and Towns Requests Invalidation of Budget Contributions
The Arizona League of Cities and Towns has launched a lawsuit against the State of Arizona over mandated contributions included in the plan to balance the FY 2009 budget.
The lawsuit seeks to determine the constitutionality of a provision that requires counties and municipalities to pay a total of $29.7 million into the state general fund, and references a 1992 amendment to the Arizona Constitution that requires increases in state revenue to pass each chamber of the legislature by a 2/3 majority vote. The lawsuit contends that since HB 2209, the FY09 budget bill, passed with only a simple majority, it violates that constitutional requirement.
"Arizona's municipalities have always expressed a willingness to cooperate with the state during these difficult times," stated League President and Chandler Mayor Boyd W. Dunn. "But we cannot allow this precedent to go unchallenged."
League Executive Director Ken Strobeck agreed, stating, "Arizona's cities and towns have a strong history of working constructively with the legislature and the Governor's office on a wide variety of issues and we expect that positive relationship to continue. We view this filing as an important clarification of state law."
AZ Republic Columnist Praises County Fiscal Policy
Local governments better manage shortfalls than the state
By Robert Robb
There is a sharp contrast in how state government is dealing with declining revenues and the way Arizona counties and cities are.
Simply put, Arizona counties and cities are managing the revenue shortfall far more responsibly and with considerably less angst.
To illustrate the contrast, compare the approach of the state to that of other large local governments: Maricopa and Pima counties and the cities of Phoenix and Tucson.
In the first place, the state has a bigger problem. The anticipated shortfall of $1.2 billion represents 12 percent of anticipated tax revenue for the year, for a budget year that just began in July.
The shortfall for this group of Arizona's large counties and cities ranges from 3 percent to 8 percent.
Now, forecasting state revenues is more difficult, since it includes projections for both sales and income tax collections. Arizona counties do not receive income tax revenue. Cities share in the state income tax, but based upon collections two years previous. So, their income tax revenue for any given budget year is known in advance.
Nevertheless, it does appear that Arizona's counties and cities budgeted more conservatively to begin with.
The sharpest contrast is in what they are doing to cope with the problem. All of the big four local governments are taking action now. And the action they are taking is real reductions in spending.
The state, on the other hand, is talking about talking about doing something about the shortfall.
It didn't get around to resolving last year's shortfall until the budget year was nearly over. At that point, the solution obviously wasn't real spending cuts- the opportunity for that had passed. Instead, the solution was to borrow, steal from other funds, and defer payments on bills.
For this year, Gov. Janet Napolitano is proposing much of the same approach, with little emphasis on real spending cuts. And by the time the Legislature gets around to acting, the opportunity for real spending cuts will have narrowed.
It's not that what the state does is important and what the counties and cities do isn't. Except for education, local governments actually provide the more vital services. Cuts there are more likely to affect more people in ways they notice. Yet counties and cities are muscling up and making the tough decisions.
Why the sharp difference?
In part, the state has some structural restraints counties and cities do not. The state cannot directly bond for capital projects. And the Voter Protection Act puts about half the state budget off-limits for cuts.
But that doesn't really explain it. In the first place, the state figures out a way to finance most capital projects. Moreover, Maricopa County has sworn off debt for capital projects, switching to a pay-as-you-go approach.
And most counties and cities treat public safety as sacrosanct as the Voter Protection Act requires the state to treat K-12 education and the state Medicaid program.
Nevertheless, the counties and cities trim spending to match revenues, while the state mostly finagles the books. The counties and cities make tough decisions now so that future budgets are easier, while the state digs a bigger hole.
The real difference is organizational. In the counties and cities, politicians make the final decisions. But their professional staffs decide the size of the problem and present a range of responsible options to deal with it. Great deference is given to the county and city managers and their budget staffs.
There are only a handful of politicians involved. The state budget process, however, is driven by a cacophony of politicians-90 legislators and a governor.
There is too much wailing and complaining at both levels. In reality, even with lower revenue numbers, all these governments will have experienced healthy spending growth over the last five years.
Nevertheless, there is a coherence and a discipline in county and city government that is simply missing in state government.
Napolitano generally gets high marks for her management, to a great extent deserved. Her appointees have been generally competent and her administration generally scandal-free.
On budget matters, however, county and city governments in Arizona are considerably better managed than the state.
NACo Urges Stimulus Funds for Counties
The National Association of Counties (NACo) sent a letter to congressional leadership urging them to pass an economic stimulus package supporting local governments this month.
The letter, signed by Larry Naake, NACo's Executive Director, says that "Main Street America is in economic trouble. America has lost nearly 800,000 jobs in the last nine months...and unemployment is projected to rise to over 7.5% next year."
NACo stressed that counties are tied closely to local economies and can quickly turn stimulus funds into badly needed jobs and economic development. The letter also outlines specific suggested provisions of an economic stimulus package in the areas of infrastructure, water, Medicaid, banking, social services, and criminal justice.
ADEQ Continued in Marathon Sunset Hearing
After two days of hearings, a legislative Committee of Reference recommended that the Arizona Department of Environmental Quality (ADEQ) be continued for two years with multiple caveats. The committee, chaired by Senator Chuck Gray (D-19), curtailed ADEQ's involvement with the Western Climate Initiative (WCI), established legislative involvement in any Arizona cap and trade system, and specified the agency must improve the time it takes to handle permits.
Most of the controversy in the marathon hearing, which spanned over 10 hours and included seven motions relating to the continuation, centered on ADEQ's connection to the WCI. The WCI is a greenhouse gas regulation initiative, spearheaded by Governor Napolitano, that includes a carbon cap and trade system. Members of the committee raised concerns about the agency's ability to engage with the WCI without legislative authorization. They also questioned ADEQ Director Steve Owens about the allocation of a portion of a fine paid by Honeywell, as a settlement for alleged environmental violations, to WCI activities. Director Owens replied that he had made recommendations about the WCI to the governor, at the governor's direction, but that the executive had yet to review them.
The committee also took testimony from representatives for utilities, mines and other members of the regulated community. Toward the end of day two, the hearing covered ADEQ's permitting process and the potential delegation of ADEQ's responsibilities to local governments. Representative Sylvia Allen (R-5) asked Director Owens if it would be prudent to delegate certain responsibilities, like the inspection of swimming pools and underground storage tanks, to the counties. Director Owens replied that delegation had been discussed in the past and that ADEQ continued to consider that as on option, but that concerns existed over the cost that counties would incur in providing those services.
Eventually, the committee voted 4-2 in favor of a two-year continuation, with a prohibition on WCI activities. Representative Amanda Aguirre's (D-24) substitute motion to continue ADEQ for 10 years with no WCI conditions failed.
Register Now for NACo Energy Forum
The National Association of Counties (NACo) will host a forum on energy independence in Baltimore, Maryland on December 10-11. The event will feature important and timely discussions on the county role in our country's energy future, including energy efficiency, economic development and job growth, energy infrastructure development and the environmental benefits of emissions reductions.
Registration ends soon; visit
www.greencounties.org/energyindependence for more information.
Visit the CSA Calendar of Events at
www.countysupervisors.org/calendar.
