The version of the state budget adopted by House and Senate Republicans would blow a big hole in the bottom of Payson’s already floundering budget boat, said Payson Mayor Kenny Evans.
Among other cuts, the legislature’s budget would divert some $500,000 in vehicle license taxes from Payson to the state’s school district. Moreover, the budget would impose a three-year ban on collecting impact fees, which Payson relies on to pay for infrastructure for new homes and to finance the Blue Ridge Reservoir pipeline.
However, Evans remains confident that Republican Gov. Jan Brewer will follow through on her threat to veto the legislature’s budget. In the governor’s budget, towns, the universities and school districts would face much less drastic cuts but the state would impose a temporary one-cent increase in the sales tax.
Evans said the budget as it stands would prove “devastating” to cities and towns.
“I’ve had an assurance from the governor that she’s going to veto that,” said Evans, who spent a portion of last week in the governor’s office discussing her plans to set up a special task force to review local government financing.
“We can spend our days and nights fretting and complaining about what might be out there — it’s pretty apparent to me that the House and Senate bill was passed with some real arm-twisting. Some of those who voted for it chose to do so only because it would get them into negotiation with the governor.”
Payson has spent two months working on a budget that includes a 5 percent increase in the operating budget and a huge increase in grants — mostly due to its success in winning federal stimulus money.
The town’s budget for 2009-10 adds a couple of positions and gives raises in certain special cases, but skimps on road building and maintenance, capitol improvements and spending generally. After repeated hearings, the town council had come up with a budget with a roughly $600,000 projected surplus —most of it as a result of a $500,000 loan from the water department.
However, the legislature’s budget would wipe that cushion out in a single blow.
Moreover, the legislature included a three-year ban on impact fees as a way to help the devastated housing industry. Payson and the Northern Gila County Sanitation District combined impose some $15,000 in impact fees on every new home. That includes a $7,500 per unit water impact fee, which has so far generated about $5 million of the $30 million the town needs to build the Blue Ridge pipeline to deliver 3,000 acre feet of water annual from a reservoir atop the Rim.
“The theory goes that all of the troubles and problems of the homeowners industry were created by impact fees,” said Evans. But if the ban on impact fees stands “the town would have to pay for that infrastructure directly — which means the taxpayers already here would have to pay for it.”
The council’s budget discussions have featured long, pained discussions about budget trade-offs — including whether the town could afford to spend $17,000 to attract a $300,000 grant to upgrade Main Street and whether to cut the town’s contract with the Humane Society by $50,000.
The cuts forced by the adopted state budget would send the council back into the budget pit.
Brewer’s budget would raise $1 billion with a one-cent sales tax increase. The state’s sales tax would jump to 6.6 cents on every $1, making it the eighth highest sales tax rate in the country. Brewer also proposed borrowing $650 million against future lottery revenue, deferring a $100-million payment on the state Medicaid system and raising $200 million by setting up lease arrangements on prisons and other state buildings.
The legislature’s budget avoids any tax increases or additional loans, but would raise $595 million by privatizing state prisons.
Brewer’s budget uses the extra money to lessen the blow on a host of state agencies and local governments. Cities and towns would keep the money they have traditionally received, universities would lose $43 million, the department of education $295 million and community colleges $10 million.
The governor’s plan would cut state agencies by $600 million, but provide an extra $944 million for increased education enrollment and patient loads in the Arizona Health Care Cost Containment System (AHCCCS).
By contract, the legislature’s budget would cut universities by $100 million, community colleges by $40 million, the department of education by $220 million, state agencies by $660 million and city and town funding by $42 million.