The unbearably prolonged state budget deadlock may still unhinge the precariously balanced budgets of Payson and other towns throughout the state, said Arizona League of Cities and Towns Executive Director Ken Strobeck at a special Payson council session on Thursday.
The Republican state legislature this week sent back to Gov. Jan Brewer almost the same budget she vetoed some six weeks ago, still lacking the temporary 1 cent sales tax increase she’d requested.
If Brewer vetoes the budget, the state government could all but grind to a halt. If she gives up and signs the bill, it will trigger cuts that will affect schools and towns — and very likely a lawsuit from the Arizona League of Cities and Towns, said Strobeck.
“We all expected it would be over and done with by now — it’s very unusual that it’s not,” he said. “They included many different budget wrinkles and puzzles and additions and deletions, but it’s basically the same budget they sent her in early July.”
Brewer’s proposal fell one vote short, with all the minority Democrats voting against both Republican proposals. The alternative Democratic budget relied on raising the extra money Brewer wanted by applying the existing sales tax rate to services.
Strobeck said the League has fought against three major provisions of the Republican budget bill, only one of which actually affects the budget deficit.
The Republican proposal would require cities and towns to turn over to schools $22 million they collect from vehicle license fees.
That proposal, in turn, represents an end run around the legislature’s unsuccessful effort to take $17 million in money allocated for cities and towns to offset the deficit last year.
“We sued the state last year over a similar assessment of $17 million, because it was not approved in an appropriations bill and not passed with two-thirds majority. This time the legislature is saying give the money to a local school district — and since it doesn’t enrich the general fund, it doesn’t require a two-thirds vote. So our executive committee says if she signs those bills, we may consider another lawsuit.”
Two other provisions in the just-passed legislation may also have a big impact on cities and towns — although they won’t do a thing to balance the state budget.
One provision of the budget bill would impose a two-year freeze on the collection of impact fees.
Payson currently imposes some $10,000 in impact fees on every new house built, most to pay for the Blue Ridge water pipeline, with smaller assessments for other infrastructure costs. Although construction has all but halted in the Rim Country in the past year, the impact fees provide a crucial source of money to expand infrastructure for future growth.
Strobeck said it was probably illegal for the legislature to adopt a new law that wouldn’t help balance the budget at a special session called specifically to adopt that budget.
Finally, the legislature adopted a law that would reduce the property tax rate for business from about 22 percent to 16 percent over the next two years. The shift won’t raise any more money for the state, since local government entities like towns and schools set the property tax rate at certain levels to raise a certain amount of money. The sharp decline in the business property tax rate will result in a rise in the share of the property tax paid by homeowners — which currently face a maximum rate of 10 percent.
“Individual homeowners would have to pay an increasing share of bond debt service,” said Strobeck.
Once again, the League is considering legal action. “It really doesn’t have anything to do with the state budget — it has to do with local property taxes,” said Strobeck.