Archive for May 15th, 2009

Dear Editor, Your headlines seemed like a dream come true:  “Lower tax, few cuts in county budget” [Arizona Daily Star 4-28-09], declaring a “drop in property taxes” for a “total budget … down $6 million…”

Not explained is that the $6 million dollar “reduction” is offset by an increase of almost $22 million in the total property tax levy amount, from $399 million in 2008-09 to $421 million in 2009-10.  A more accurate headline could have read “County to collect over $15 Million more from the taxpayers!” 

This is because increase assessed values counters any real reduction in taxes.  This year’s current tax rate is based on $746 Million in increased primary property assessments for 2007 — figures derived before the recession hit.  Our property is being over-valued and over-taxed.  Last year, Supervisor Ann Day and I submitted an alternative budget to the Board majority.  In our introduction we explained:

“[W]hile the Primary tax rate decreased from $4.072 to $3.602 between 2002 to 2007, the amount of revenue collected by the county increased by over $70 million dollars…”

Your newspaper had clarified this in an article [10/22/08] with the headline: “Though tax rate dips, we’re all paying more.”  The article explained how, even with the drop in tax rates:” taxpayers are paying twice as much in property taxes as they did a decade ago.” 

Equally ominous is the hidden long term and ever increasing debt. Our debt service has jumped this year by $10 million to a total of $110 million dollars, which currently makes up over 37% of our primary property taxes.  And Pima County’s debt is going up with non-voter approved debt through “Certificate’s of Participation.”  In fact, Pima County’s current outstanding principal debt is almost twice as large as all other Arizona counties debt combined ($757.6 million vs. $339.7 million).  Next year the county wants a $500 million dollar bond sale next year for our Wastewater Department.  Who do you think gets to pay these debts?

And speaking of other debt obligations, University Physicians at Kino Hospital is now asking for an extra $30 Million dollar subsidy, with up to $39 Million in each of the next five years (even though the original agreement assured decreased payments and self-sufficiency).  But as the county reduces support for the cost of health screenings, the County Administration increases its budget by $2.7 million.  While we increase fees for our children to play in county parks, this same budget increases Economic Development subsidies by an extra $14 million.   

This raises the question of “sustainability” – a term used often with regards to the environment, but which should apply to our taxpaying citizens. 

Because as we continue to bleed our taxpayers dry by continuing to raise taxes and fees on everything without a mandatory cap, the number of homeowner’s facing foreclosure remains at record levels in Pima County.  We need to learn to live within our means rather than attempting to instill false impressions about “rate reductions.”  But to do so, we need to have an honest accounting of our revenues and expenses.

There are three steps that could be taken immediately to help in the process:

1.     We need the majority on the Board to stop refusing to appoint their representatives to the outside Citizen’s Budget Advisory Committee.  Other people without a vested interest in the growth of government need to make an objective review of the Pima County budget.  Since 1997, the Board has never allowed this committee to have a quorum.

2.     There needs to be at least three public meetings on the budget, preferably at night – not just one meeting, scheduled for Tuesday morning, May 19^th, when most working people can’t attend, in which all departments are superficially reviewed and a tentative budget is quickly adopted. 

3.     Finally, the county budget should be posted in both the Arizona Daily Star and the Tucson Citizen for the general public to be able to review.  We paid TNI over $600,000 last year; we can afford to have their readers see our budget.

There are no legitimate reasons why Pima County government can’t be more transparent with the use of taxpayer funds.  Perhaps, with a more informed public, deceitful declarations regarding property taxes will be subjected to a bit more scrutiny.  One can only hope.

Ray Carroll

Pima County Supervisor

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Garfield Traub Proposal Not In Tucson’s Best Interest

In another apparent attempt to show the Legislature in Phoenix that there is some positive movement in Rio Nuevo, the Tucson City Council has voted to approve the development agreement presented by Garfield Traub.  The Counsel has a history of taking precipitous steps which unnecessarily cost taxpayers money. The bond sale last year that took an extra $18 million in interest debt from citizens’ pocketbooks is a prime example. Now they have voted to guarantee a $240 million debt without a final guaranteed maximum price (GMP) or a funding model that will be in effect once that GMP has been determined. Fiscal prudence, especially while wrestling with a significant budget shortfall, would indicate the wisdom in deferring this decision until Garfield Traub was in a position to better identify the true cost of the project, identify a specific funding model and allow the City to assess whether gambling on the proposal with taxpayer guaranteed debt made sense.

In April 2007 the City Council received completed studies and endorsed a redevelopment plan as a new energy for a new place. Greg Shelko (downtown development director) described the committment. “The mayor and council have bought into building these buildings (the arena, hotel and TCC expansion). The issue now is not revisiting the projects, but how to finance them.” (May 2008)

That plan involved a process that included prestigious consultants, local business input and neighborhood involvement.  It clearly laid out a concrete vision and method to achieve the “Big Three” – hotel, arena and convention center.   Years (and millions of taxpayer dollars) later that plan has been pushed aside in favor of a new idea.   No new energy and no new place.

What makes this vote even more curious is that it is taken while there is a “shovel ready” project sitting, ready to go, that would put the taxpayers at no financial risk. That is the remodeling of the Hotel Arizona.  It is anticipated that that project would be profitable to the City nearly immediately, would not force the City to guarantee long term debt on behalf of the taxpayers, would provide remodeled rooms under a major hotel name brand at approximately 1/2 the room rate the Garfield Traub project is requiring, and would have those rooms remodeled in time for next spring’s Gem & Mineral show.

The Garfield Traub proposal admits to the need for “additional revenues” in order to make their own projected debt service (the comfort of a 1 1/2x debt service level of support). Those additional revenues will come from a 6% transient tax and a 2% surcharge on guests at the Sheraton. That money would otherwise be available to the City to fund core priorities such as public safety, road maintenance and transit needs. In a time of tight fiscal constraints, giving away general fund money on a real estate deal that is based on uncertain final costs is unsound financial management. This proposal may make sense in the future but with current market conditions it is doomed to failure.

Unlike the plan presented three years ago, the Council is now relying on quick, one-shot successes. To revitalize downtown the leadership of Tucson needs the entire downtown region needs to be viewed in a holistic plan going forward. We sit atop ancient water and sewer lines. We have no plan upon which to base the eventual capacity requirements. We have no plan upon which to determine where and to what extent we will need power, telephone service, fiber optic, water, sewer – where will there exist aesthetic water elements that will call upon more capacity, where will we build the wide, well-lit walkways with drought resistant foliage to provide shade and to support artisans, and families who will visit such a well thought out entertainment district? Will we install the modern street car tracks on top of our present infrastructure and later be required to tear out those tracks in order to upgrade the systems now in place?

If presented with such an holistic plan, the Legislature in Phoenix would see that the City is finally moving forward with a plan, phased appropriately, has taken the mid-stream step of remodeling a moderately sized hotel to anchor further business development in the downtown area, and on that basis provide sales tax revenue to fund the cultural elements of Rio Nuevo going forward.

It is not too late to rebuild downtown Tucson.  Now more than ever Tucson needs Leadership.  The Council vote to embrace a risky, poorly-financed hotel deal is a step in the wrong direction.

Steve Kozachik, Ward 6 City Council candidate.

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Don’t Rock the Leaking Boat

By Donovan Durband

Two days after State Representative Frank Antenori warned the Rio Nuevo District Board not to rock Rio Nuevo’s boat by obligating Rio Nuevo or its TIF revenue stream to any contracts or projects prior to the Legislature’s passage of the State budget—which would include an amendment pertaining to the disposition of Rio Nuevo—an article in the Arizona Daily Star demonstrated the precariousness of Rio Nuevo’s position in the State Legislature.

The Star article told of a proposal in the House Appropriations Committee to redraw the TIF district’s boundaries to exclude the area containing its two cash cows—Park Place Mall and El Con “Mall”.  The proposal was roundly criticized by Southern Arizona legislators from both parties and from both houses of the Legislature.

Rep. Antenori vowed that the proposal was an error that would be fixed with an amendment to be offered by Senator Jonathan Paton of Tucson.  It would need to be fixed if there is any chance to capture substantial revenues to repay the bonds that Rio Nuevo has already sold or to build the infrastructure that is needed in Downtown or, more remotely, to build the museums and cultural facilities that were part of the 1999 Rio Nuevo ballot measure, the Master Plan adopted in 2001, and a Funding Allocation Guide approved by Mayor and Council in May 2007.

The Appropriations Committee scare amply demonstrates the wisdom of following Antenori’s advice to sit tight, be quiet, and do nothing that would provoke the rest of the Legislature—whose extreme disappointment with Rio Nuevo is now well-documented—into killing the whole thing.  Antenori, Paton, and Tucson-area members of both parties in the Legislature are trying to fend off those from other parts of the state that would just sacrifice the TIF (except for the future revenues needed to repay the December 2008 bonds) to the State’s ginormous budget deficit.

I was involved in the effort to secure the extension of the TIF in 2006, and I saw first-hand what a hard sell it was.  The district boundaries were a sore point then, and they continue to be today.  The Legislature did not trust Tucson city government to make the project happen then, and trusts it even less today.  Justified or not, that’s the way it is.

After the TIF extension was signed into law, I proposed that the TIF be prioritized to leverage private commercial investment through expenditures on infrastructure, so that we could grow our TIF in downtown, creating much more funding than just what the malls produce, so that we could build ALL of the projects that were in the master plan. 

Our Tucson Downtown Alliance board approved the proposal unanimously, and it was met by nods of agreement among the business community, other organizations, and members of the newspapers’ editorial boards.  The idea was not to pit one project against another, but do them in such a sequence as to make it possible to do all of the projects eventually.

While some good things are definitely happening in Downtown, and have been for years, very little of the progress to-date is directly attributable to wise investments of the TIF itself, so it is not surprising that the State would be questioning the efficacy of this investment in State sales tax dollars.  Millions have been spent teeing up projects on the West Side that were halted by the city manager in 2008.  Only the renovation of the Fox and Rialto Theatres, the construction of the TCC box office, the Presidio Heritage Park, Avenida del Convento, and a roundabout outside the TIF district boundaries on Grande Avenue are completed TIF-funded projects.  Soon the Depot Plaza garage will join that list.  See for yourself at http://www.tucsonaz.gov/rionuevo/.

I hope that by the time this magazine is printed, the Legislature has passed a budget with a Rio Nuevo amendment that leaves the TIF funding stream fully intact through its sunset date in 2025.  Almost certainly, though, for that to have happened, the Legislature didn’t get spooked again by news of Tucson leaders trying to redirect control of the project or to redirect funding to anything but a convention complex.  We have to stop denying that there have been problems, take our medicine, and hope for the best.

And, equally certain is the likelihood that the amendment required the creation of a new oversight board for the TIF that answers not to the City of Tucson, but to the State of Arizona.  Hopefully, this board will be made up entirely of Tucsonans who will demand transparency and accountability, who understand how to invest the funding strategically, and who want the best for Downtown.

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