Budget provision shocks cities, counties

Surprise budget director Michael Schrock is taking a wait-and-see approach to the state's requirement that cities and counties must turn over nearly $30 million to the state's General Fund.

Youngtown Manager Lloyce Robinson is resigned to the fact that her community will lose $26,000 to the state. Maricopa County Supervisor Max Wilson is just miffed.

The supervisor, who represents the Sun Cities, said he doesn't believe there is justification for a provision in the new state budget, which says, in part, that "in fiscal year 2008-2009, counties, incorporated cities and towns shall deposit $29,748,400 into the state general fund."

"I'm more than concerned," he said. "I don't believe that's the way we ought to run a state government."

Precisely how much each county and municipality kicks in will be determined by the Joint Legislative Budget Committee staff by Aug. 31 and will be based on the formula used to distribute state road money through the Highway User Revenue Fund.

Ken Strobeck, executive director of the Arizona League of Cities and Towns, said the organization that monitors legislation affecting the state's municipalities had no warning about the provision, and questions whether it's even legal under a state law that requires a two-thirds vote from the Legislature to approve any reduction in state-shared revenue.

"A lot of times, when you hear people say ‘It's not the money, it's the principle,' but it is about the money," Strobeck said. "But in this case, we really do think it's the principle of the thing, and the way this provision suddenly appeared."

Attempts to reach state legislators who backed the bill for comment about the local contributions were unsuccessful.

Laura Devany, state Senate Republican spokeswoman, said it's common for General Fund money to not be earmarked for any particular use.

"The way it was explained to me was that it's kind of like asking how your income tax money is being spent," she said.

The Legislature adjourned late last month after approving the $10 billion budget, including the city and county "deposits," which passed the House by a single vote. It has a $43 million year-over-year increase in state-shared revenue with cities, including $17.5 million the Legislature previously agreed to give cities to make up for prior cuts, according to Joint Budget Legislative Committee staff.

The league estimates the state will seek $17 million in General Fund contributions from cities and the remaining $13 million from the counties.

Pat Dennis, intergovernmental affairs officer with El Mirage, said she's not sure what the city will contribute to the state budget "until we get enough information."

Robinson said Youngtown will contribute a little more than $26,000 from the HURF funds.

"We're not as hard hit as many other towns, but the money we have to give could be a vehicle for us or a capital project."

Julie Frisoni, a spokeswoman for Glendale, said city officials are trying to work with the League of Cities and Towns on the issue.

"The city of Glendale is still evaluating what it means on a financial front and working with the league to determine our next steps," she said. "We're trying to educate ourselves and figure out the next move."

The city of Surprise is taking a wait-and-see attitude about the General Fund contribution and how it will fit into its already tight budget.

"Due to economic conditions, it was a tough budget process this year," Schrock said. "The mayor and council worked diligently to adopt a balanced budget in May. Any reductions to our revenues as the result of action by the state, we will carefully review and deal with during the course of the fiscal year."

Wilson's Chief of Staff Scott Isham said Maricopa County will be responsible for $4.7 million of the provision to the state. The county will likely be forced into cutting back certain programs and expenditures as a result.

"We're going to have to cut back on services. Bottom line," he said. "We put a capital freeze on all of our departments. We've been really prudent with our dollars, unlike the state.

"It may not mean a lot to (the state) but to counties and cities it means a lot."