Tax Research Group Dissects 2014 Navajo County Budget

Arizona Journal
Friday, December 20, 2013
Nick Worth

The Arizona Tax Research Association (ATRA) has unveiled the results of its review of fiscal year 2014 adopted county budgets.
In the report, ATRA summarized all the tax rates in Navajo County for special districts, property taxes and sales taxes, as well as other sources of revenue, such as Highway User Revenue Fund (HURF), and expenditures.

ATRA is a self-described watchdog group, which calls itself “the largest and most respected independent and accurate source of public finance and tax policy information.” The group also represents taxpayers before policymakers at the state and local level.

ATRA President Kevin McCarthy attended the July 23 meeting of the Navajo County Board of Supervisors, where he questioned a discrepancy in the truth in taxation property tax rate for the county of 64.01 cents as opposed to the budgeted rate of 69.96 cents.

Two days later, McCarthy contacted County Finance Director James Menlove to let him know ATRA had miscalculated and that the primary property tax rate of 69.96 was correct.

About the miscalculation, Menlove said at the time, “It’s easy to do. It’s a complex process.”

In its review of the county’s fiscal year 2014 final budget, ATRA states the county’s general fund increased 1.7 percent from $39,325,245 to $39,984,750, and that the beginning balance of the general fund is $4 million, or 10 percent of the total.

According to ATRA, the primary and secondary net assessed values in Navajo County dropped 7.3 percent and 7.5 percent, respectively, and the property tax rate increased by approximately 05.94 cents from 64.01 cents to 69.95 cents.

“Because the assessed values have decreased, our taxes actually have remained flat,” said Menlove.

In a July 31 article in The Tribune-News, Menlove said the 69.96 cent property tax rate is based on 2013 calendar year assessments and that those assessments have decreased. He also noted that the county is only allowed a two percent increase in taxes per year, but that Navajo County has foregone those increases since 2009.

“We are not collecting more taxes,” Menlove said at the time. “We have not increased the amount of taxes the county collects for the past four years.”
The report also notes that the Navajo County Flood Control District tax rate “remains the same at $0.3000 in FY 2014, which will generate a levy of $1,915,695.” This figure is 10 percent less than last year’s levy of $2,132,540.

The Flood Control District fund had a balance of $7 million, and ATRA states in the report that the county is building up the balance for repair of the Winslow levee, which is expected to cost $25 million to $30 million to repair.

The Library District levy is $636,455, up 30 percent over last year’s levy. The library district’s tax rate increased from five cents to 7.04 cents.
For the Public Health Services District, the tax rate increased from 19.63 cents to 21.51 cents, which brought a 1.3 percent increase in the district’s levy.
Under the heading of “Other General Fund Revenues,” ATRA lists an increase of 4.4 percent in auto lieu taxes, a vehicle license tax that is imposed in lieu of personal property tax on vehicles. State shared sales tax revenue is also up 4.7 percent.

The half-cent sales tax revenues decreased 2.7 percent and Payment In Lieu of Taxes (PILT), a payment from the federal government to compensate those counties with national forests in their boundaries, decreased 6.6 percent from just over $1 million to $983,382.

The report also states that lottery funds of $550,000 were reinstated for fiscal year 2014.

According to ATRA, HURF revenue increased 8.1 percent, or $507,564, from last year, while the Public Works/HURF budget decreased $704,000.

The two percent across the board raise called for in the county’s fiscal year 2013 budget was replaced with a one-time salary adjustment of $500 to all full-time employees. The total impact of the adjustment was $300,000.

ATRA states the county is anticipating a two percent salary adjustment for all employees, which will be decided on by the board this month. If approved, the impact would again be $300,000.

The report states that the total budgeted payroll for Navajo County dropped from $40,951,915 to $39,595,983.

The county was expecting to pay 6.5 percent more than last year’s $500,000 for health insurance, but because many employees switched to a high deductible plan, the cost to the county actually decreased by almost $100,000.

ATRA’s report also makes note of the ongoing $4.4 million jail construction project and the new $4.5 million Public Works Complex construction project.

Finally, the report from ATRA states that the county plans to issue $10,625,000 in new revenue bonds in 2014. Slightly over $1 million of that will be used for detention facility improvements and $4.5 million will go toward the Public Works Complex construction costs. The remaining $4.8 million is earmarked for refinancing the 2008 outstanding revenue bonds.