Gila County's battle to recoup more than $1 million in out-of-county college tuition taxes is a step closer to a victory.
When the money is returned, it will be used to fund Gila Community College and provide for the students on the Payson campus.
A return of the taxes also will mean a David-versus-Goliath triumph for small-town taxpayers. It is their taxes that were scooped up by the state treasurer and are being used to fund community colleges in Mesa, Phoenix, Glendale, Thatcher and around the state.
Legislative Liaison Lionel Martinez is outraged that State Treasurer David Peterson continued to withhold Gila County's out-of-county reimbursement payments for the fiscal year 2004. Martinez has contended, and legal opinions now agree, that the payments should have ceased July 1, 2003.
It is Martinez's opinion that the mistake in withholding the tuition payments occurred because the treasurer is "too lazy or too ignorant or both to do the job."
Gila County's most recent victory was a written reply from Joint Legislative Budget Director Richard Stavneak to State Treasurer David Peterson. In it, Stavneak wrote, "we interpret the Attorney General's (Terry Goddard) opinion to apply retroactively to the beginning of the fiscal year 2004. Gila County, therefore, was not required to make out-of-county reimbursement payments in that year."
Earlier, Peterson -- after learning of Goddard's opinion -- had written to the JLBD asking guidance on how to retrieve out-of-county reimbursement payments made to community college districts in 2004 and return the funds to Gila County.
The state has paid $523,711.50 to districts on behalf of Gila County in February 2004. The state was scheduled to make another $523,711.50 payment in May. Peterson has said that payment was not made.
Martinez says the JLBD was the wrong agency for Peterson to ask for the means to recoup the money.
"(Peterson) should have gone right to the attorney general for advice," he said. "The state treasurer created the problem. He should get the attorney general's help to solve it."
Martinez has come up with what he says is a simple solution to the problem: "Ask for it back (from the community colleges)," he said. "But it's my opinion (the state treasurer) doesn't have the guts to do it."
The financial mix-up began when Gila County voters approved the formation of a provisional community college district in November 2002. According to a ruling by Goddard and Gila County Attorney Daisy Flores, the formation of the district meant the county was not obligated to pay out-of-county tuition beginning July 1, 2003.
The Office of the State Treasurer, however, continued to withhold tuition reimbursement payments from the county's Transaction Privilege Tax through April 2004.
In a June 24 letter from Gila County Manager John Nelson to Peterson, Nelson demanded the immediate return of "erroneously withheld monies and that any further withholdings cease immediately."
Legal opinions and rulings have indicated that the tuition reimbursements should be returned to Gila County, but a debate rages about where the money should come from.
"We don't have the statute authority to go in and get the money," Deputy Treasurer Blaine Vance said. "We are waiting for the JLBC to tell us how to rectify this."
The JLBC director countered by saying, "We would advise you to seek the counsel of the Attorney General."
Martinez contends Peterson should ask the colleges to return the money.
Meanwhile, Gila Community College President Barbara Ganz, who says the money is desperately needed by the school, wants just one question answered: "Where does the buck stop?"