Officials with cities and counties across the state are scratching their heads over a state budget provision that requires them to contribute almost $30 million into the state’s General Fund, without offering any hints as to why.
One section of the General Fund appropriations bill for the new state budget says, in part, that “in fiscal year 2008-2009, counties, incorporated cities and towns shall deposit $29,748,400 into the state general fund.”
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 (HURF).
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 Monday. “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 had previously agreed to give cities to make up for prior cuts, according to Joint Budget Legislative Committee staff.
The league estimates the state will be seeking $17 million in General Fund contributions from cities and the remaining $13 million from the counties.
East Valley cities’ estimates of the possible impact are all over the map — when there is an estimate at all — but dismay appears to be unanimous.
Scottsdale spokesman Mike Phillips said city staff are investigating and planning to work with the League of Cities and Towns on a “unified response” to the new law. Phillips said city officials have no estimate on how much Scottsdale might be asked to pay.
Mesa government relations director Scott Butler said the city is estimating it will be asked to pay $1.9 million into the state General Fund, and expects to be hit especially hard because Mesa, along with Phoenix and Tucson, gets an extra pot of HURF money awarded to cities with more than 300,000 residents.
“We’re deeply concerned about this contribution and feel we have some great legal questions about it to be answered,” he said.
The Gilbert Town Council will be briefed on the situation during its meeting tonight. Town Manager George Pettit said he doesn’t have much information to go on, but that Gilbert may be on the hook for approximately $250,000.
Pettit said cities and counties across the board are struggling financially, so “every dollar matters.”
He said he was disappointed in the message state officials were sending: “On the one hand, they’re saying we should be happy because they didn’t hurt cities and counties. But on the other hand, here’s an IOU.”
Tempe City Manager Charlie Meyer said: “It absolutely confounds me how the state can get its budget approved and send a bill to the cities to balance their budget. But they do get to pass the laws.”
Tempe’s staff is guessing the impact will be in the range of $900,000 to $1 million. Tempe has already implemented a hiring freeze and other measures to balance its budget.
“We scraped together a solution for a $12 million gap, and the budget is not seven days old,” Meyer said.