Reliance On Taxes Makes State Budget Unstable

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Despite the largest fiscal deficit in state history, which resulted in big payouts from the counties to save the state, lobbyists for the county say it could have been worse.

In fact, Gov. Janet Napolitano announced in early August that the initial $7.8 million cut affecting the Department of Public Safety lab fees would be offset by $5.2 million in grant money from DPS. That reduces the local share to $2.6 million.

According to the County Supervisor's Association of Arizona, DPS hasn't decided how the remaining costs will be divvied among entities.

This year's disastrous state budget, which was among the worst in the nation, is likely to continue "well into the future," Craig Sullivan, executive director of CSA, told the Gila County Supervisors at a recent legislative update.

Sullivan spoke bluntly about the state's borrowing from its counties. "These impacts could have significant harm in local budget operations," he said. The state receives nearly 98 percent of its funding from sales and income taxes. That structure undermines fiscal stability during downturns, Sullivan said.

The fiscal year 2008 deficit reached $1.3 billion, and fiscal year 2009 is projected to be at least $2.2 billion. The state budget passed addressed a $1.9 billion deficit, according to CSA.

"Our greatest fear was that the state would balance their budget on the backs of the county," Sullivan said.

Gila County, in its recently passed budget, set aside $725,000 for the state, which included $111,750 for DPS lab fees, up from $0 last year. All told, counties paid $73 million to the state.

"I believe that Gila County follows best management practice. I believe the state of Arizona does not," Supervisor Tommie Martin said after the meeting.

Of the $725,000 Gila County paid, Martin said, "it's like a back-handed victory but there were times when they were talking two or three times that amount." At one point, according to CSA, legislators were proposing that counties pay $160 million to the state.

CSA is a non-partisan organization that lobbies on behalf of Arizona counties and serves as an informational conduit.

Much talk has been circulating around the possibility of shipping state prisoners to county jails.

Sullivan said CSA is negotiating with the governor and with the Department of Corrections to thwart that plan.

Martin said that housing state prisoners in county facilities would cause an unmanageable burden and could require the county to release petty thieves. "We will have no room." The state is not proposing to compensate the county for extra prisoners.

Supervisor Shirley Dawson noted that while "locking them up makes those of us whose houses they're casing feel more comfortable," many criminals repeat their crimes. "We're not getting an answer on why these people keep coming back to us," she said.

"I know the Maricopa County Sheriff fills up a lot of jail beds," Dawson added.

New photo radar, proposed statewide to catch speeders, have attracted ire as counties wonder who will pay for the extra burden on the justice system, Sullivan said. CSA is working to minimize the impact.

Victories included provisions to direct up to $3 million of lottery funds to a program designed to help communities at risk for wildfires develop protection plants. Up to $10 million of lottery money can be diverted to a fund that works to help communities, particularly rural ones, pin down long-term water supplies.

Sullivan said that while ongoing shortfalls could create problems for the fiscal year 2010 budget, CSA is working to neutralize adverse affects.

"Getting out of it with fewer lumps or fewer bruises is a victory right now," Martin said.

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