Maricopa County mulls budget cuts, property-tax hike

The Arizona Republic
Tuesday, January 29, 2013
Michelle Ye Hee Lee

The debate over Maricopa County’s fiscal 2014 budget and property taxes has begun, with the new Board of Supervisors seated and already delving into budget issues.

As those discussions unfold — the new county budget will be adopted in June and the property-tax levy set in August — county supervisors must start to weigh the political consequences of raising the property-tax rate, cutting the county budget or doing a little of both.

County budget officials last week released preliminary projections for the 2014 budget and options for supervisors to consider in setting the annual property-tax rate and levy. The projections were based on pessimistic forecasts by economist Elliott Pollack.

The current fiscal year’s tax levy is $425million. The maximum tax the county legally can levy in fiscal 2014 is $578.8million. If supervisors choose to keep next year’s property-tax rate the same as this year’s, county budget officials project it will bring in $36 million less than this year.

Even though property values are starting to recover, tax bills are based on assessed valuations that are 18 months old.

Though it is early in the budget cycle, estimates will become more accurate once assessed valuations are released Feb. 10.

The matter of property-tax revenue already has come up in budget discussions, with the county board’s two new supervisors vowing to stick to their fiscally conservative campaign promises when analyzing the budget.

The board last week directed budget officials to seek from all county departments estimates of how to cut their budgets by 3, 5 and 10 percent.

County Manager Tom Manos said it would be difficult for departments to cut deeply, particularly because the county’s operating budget has been cut by $169.3million over the past five years.

“I accept that in every department, we can find ways of doing things better, and we can capture some savings. But I think if a department would have to make 10 percent cuts, that would be very difficult to do and likely would impact the way we do service to the community,” Manos said.

There is limited room to cut, as well, because 93 percent of the county’s $2.3billion budget is spent on mandated services.

Assessed valuations have been plummeting in recent years. To balance decreasing property valuations, the Board of Supervisors has grappled with the tax rate and levy to ensure the county has enough money to function without overburdening taxpayers.

The board raised its tax rate in fiscal 2012 to offset decreasing property valuations but still took in $21.7 million less in overall property-tax revenue. This fiscal year, the board kept the rate the same but took in $52.5million less than the previous year.

The county-controlled portion of a property-owner’s tax bill is relatively small — 12 percent. School districts control the largest chunk, at 56 percent. Even if the county-controlled portion of a resident’s property-tax bill were to remain the same or decrease, the resident could see a higher bill based on other taxing jurisdictions’ levies.

Still, Maricopa County’s property-tax decisions tend to draw public scrutiny.

“You may be seeing public debates (at Maricopa County) that you may not see in other jurisdictions for a couple of months,” said Kevin McCarthy, president of the Arizona Tax Research Association.

Board Chairman Andy Kunasek so far has taken a moderate stance in the property-tax debate, indicating he would be open to discussing a rate increase to keep revenue flat. Much, however, will depend on the county’s ability to meet its mandates, he said.

“If I can get away with (cutting the) tax levy by 10 percent, I would do it. If, to ensure public safety, I have to raise taxes 10percent, I would do that. I don’t think we’re going to be able to do the first one, and I don’t think we have to do the last one,” Kunasek said.

Supervisor Steve Chucri, one of two new board members, has been outspoken against raising taxes since last fall’s campaign. Chucri said he wants to find ways to cut spending or delay capital projects.

“To automatically presume a tax-rate increase is the only way to go, it’s just way too premature to believe that or to swallow that,” Chucri said. “As of this point, it’s my intention to keep that rate flat and to not raise it.”

With less than a month on the job, Chucri said he and Denny Barney, the other new board member, still have much to learn about the county budget. Barney agreed, saying incumbent board members may have a “gut feeling” that the new members do not regarding next year’s property taxes.

Barney said he wants to analyze the effect on the county budget of outside factors such as the state-budget debate between the Governor’s Office and the state Legislature. Supervisor Max Wilson said it is too early to make presumptions about the upcoming budget, and he wants feedback from the other elected county offices on their budgetary needs.

Supervisor Mary Rose Wilcox, said it is unrealistic to cut the budget by as much as $36million. The county is below its maximum taxing limit and has room to raise the rate, she said.

“I really feel that levy is meant to be flexible to accommodate the ups and downs in the economy,” Wilcox said. “It’s not like we’re irresponsible. I think we’re just trying to make sure the county stays stable. And then, when we can lower property taxes, we can do it. But if we do it now, that means we’re going to keep on doing that. Thirty-six million (dollars) this year, how much next year, and when do we stop?”