As Arizona Balances Budget, Rural Counties Feel The Pinch

Friday, June 19, 2015
Will Stone

How are tax dollars being spent?

For the residents of Winslow, the answer should be on an aging levee on the muddy banks of the Little Colorado River.

Brian Cook, who works for Navajo County, stands on top of the wall of earth and concrete that buffers the town from flooding during the monsoon season.

“There’s a bunch of ways that the levee can fail, and I would just hate to see the dwellings underwater,” said Cook. “E911 services, the phones, the hospital, the senior centers.”

This isn’t speculation. In 1993, the levee failed in a big way. More than a hundred homes were inundated.

Cook said the levee “was decertified in 2008 by FEMA for not meeting the requirements of a levee.”

This is why the county and the U.S. Army Corps of Engineers are planning a multimillion-dollar reconstruction project, but what seemed financially viable has hit a roadblock.

Manager of Navajo County Jimmy Jayne said in recent years, they have had to redirect money from the project in order to balance the budget.

“For the coming fiscal year, we are looking at taking almost a million dollars out of the county flood control district to help mitigate the impacts of the state legislature on Navajo County,” said Jayne.

According to the Arizona Association of Counties, between 2009 and 2014, the state legislature shifted more than $430 million onto counties. This year, Navajo County is paying an additional $750,000 as a result of this year's state budget. For a relatively poor and rural place, where unemployment hovers around 11 percent, that is a lot of money and has meant raiding the tax dollars set aside for the levee.

“The governor and the legislature haven’t actually balanced the state budget," said Jayne. "They simply shifted costs to local governments, largely counties in Arizona.”

Nearly 80 percent of the county's revenue from property taxes goes right back to the state. Other counties in northeastern Arizona are in a similar position with even the more urban counties feeling the strain.

Pima and Maricopa Counties are both raising taxes this year, in part, because of cost shifts.

Brad Carlyon is the Navajo County Attorney and President of the Board of Directors for the Arizona Association of Counties.

“With a certain segment of the legislature, they’re so focused on getting smaller government that they see this as a way to force smaller government on counties and municipalities because they know that we do not have the tools to increase our revenue,” said Carlyon.

During the recession, Carlyon said they became more efficient, but there is nowhere else to cut. He has lost seven attorneys from his office which has a host of constitutionally mandated services with everything from prosecuting to help regulating livestock and poultry.

“I’m working with the state livestock inspector, not the county livestock inspector. Why isn’t the attorney general then doing that?” asked Carlyon.

But some experts like Kevin McCarthy, who is head of the Arizona Tax Research Association, argue a broader perspective is in order.

“The Great Recession's impact on the state general fund was significantly higher than it was on local government. The state lost almost 40 percent of its revenue through the recession," said McCarthy. "You didn’t see that at the county level.”

McCarthy says counties get most of their revenue from property taxes, not sales or income taxes. He is also critical of counties for siphoning away tax dollars from special taxation districts and using that for another purpose.

“They lean on some of these other revenues sources because, politically, it’s easier for them to do than coming out and saying, 'The state has shifted X amount to us, and we are going to raise property taxes to make up or that,' and have a very open and transparent dialogue with their taxpayers,” said McCarthy.

He cited Maricopa County as an example. Recently, Pima County sued because of $18 million in cost shifts, forcing it to raise taxes.

But based on the state formula, Navajo County is at its limit of about 80 cents , which is one of the lowest in the state, and could not raise taxes anymore.

Republican State Senator Sylvia Allen represents much of northeast Arizona. She points out counties are, by statute, an administrative arm of the state and different from cities. She said she hated making cuts this year, but believed government should be as lean as possible.

“We’ve taken on so many responsibilities," said Allen. "I look at counties. What is the constitutional thing counties should do? And that’s provide for law enforcement and for roads."

Allen doesn’t agree with all the cost shifts, such as the decrease in funding for highways and the obligation for counties to pay for sexually violent offenders and juvenile detention.

Carlyon said they are nearing a crisis and could go over the "fiscal cliff" very soon. That already happened in Graham County, where the state had to bail the county out last year with $500,000. The county will be asking for the same this year.

"We’ve tried to protect law enforcement and the sheriff’s office, same within our jails because one, it’s a huge liability," said Carlyon. " [And] two, it’s life."

"But we've cut everybody else. We’ve got to start going there next, and we can’t afford to go there next.”