Archive for July, 2009
By Emil Franzi, Special to The Explorer
I haven’t evaluated Governor Jan Brewer’s performance until now. I like her and her record as a state senator and Maricopa County Supervisor. As Secretary of State, I questioned her position on the Pima County RTA election, but that’s no deal breaker. If experience matters, she has plenty.I waited to see which bills she’d sign. Those peripherally restricting abortion and expanding self-defense, none of which would have gotten by dogmatic liberal Janet Napolitano, had her support. That leaves the budget as the sticking point between her, GOP legislative leaders, and conservative voters.
They don’t want a tax hike. She does, but it’s on the right tax (sales), requires a vote of the public (unlikely to pass) and could be structured to sunset automatically. If the ballot choices also include repeal of the idiotic measure passed by voters a few years back that doesn’t allow the legislature to change anything ever passed by the voters, many conservatives could at least support putting it on the ballot.
That measure was then Prop 105. Those defending it make the absurd assumption that the voters were so prescient when they passed certain initiatives that those measures should never be touched by representatives chosen by the same or newer voters who suddenly are dolts for making those other choices. It’s irrational. Worse, it leaves billions in the state budget off limits, and forces cuts elsewhere.
Governor Brewer is aware of the problem but does not seem to frame it as part of her push for a higher sales tax. In a recent appearance before the Tucson Rotary Club, she mentioned “Prop 105″ as part of her agenda but never explained it.
I’d like to ask her more about it, but this governor’s real problem isn’t the sales tax or even the inordinate amount of time she wastes talking to the education lobby and some others who would close a public school before they’d lay off one of its vice principals.
Her problem is lack of accessibility to folks she needs on her side.
I am not the only talk show host in town or in Arizona who cannot get her to make an appearance. While Tom Danehy and I are rather casual in our interviews of pols and have been known to renovate the pompous, we’d treat the governor – any governor – with respect at least the first time and throw her some beach balls. No deal. Her handlers are apparently scared to death to let her out alone.
Worse, she cannot meet one-on-one with legislators she needs to pass anything. Even key members of her own party find a staffer sitting between them in private meetings. She could try making book with the Democrats, but their budget plans are incoherent. They oppose raising sales taxes because they’re “regressive.” Next page they offer a list of items they want to add to that tax. Cognitive dissonance? Why is taxing my shampoo regressive, but taxing my haircut OK?
We don’t know if she’s running. Republicans need to. Democrats are focusing on Attorney General Terry Goddard and other viable candidates. Republicans have viable options, too. State Treasurer Dean Martin, recovering from the personal tragedy of losing his wife and child, may not be ready yet but is still on the board. Congressmen Trent Franks and Jeff Flake have both made subtle noises. Tucsonan and former GOP State Chair John Munger would be available. All of them do talk shows.
If there is any hope for Governor Brewer’s staff to keep their jobs past 2010, I suggest they at least lengthen her leash.
School grades are in and they actually look pretty good. The full story HERE.
Looks like Sunnyside, TUSD, Flowing Wells and Charter schools are all at performing levels but lagging Marana, Amphi, Sahuarita, Vail and Tanque Verde.
I expected the Sunnyside and TUSD results but the Charter schools was a surprise. Vail and Tanque Verde are doing a great job.
I took the Pima County based schools, weighted their results and averaged the weight over the number of actual schools in each district and got the following results:
1. Unincorporated Pima County makes up 36% of the total county population.To compare, Maricopa County has 6% of their population in unincorporated areas. Austin is 18%, Albuquerque is 17%, Salt Lake 16%, Portland 2%, Seattle 12%. With such a big population to serve we loose out in state shared revenues and must provide services like police and potholes to a much larger area than comparable counties around the country.
2. An aweful lot of DEBT.The Grand Total of Debt for all the counties in Arizona is $1.15 billion. Pima County’s combined primary and secondary debt load (open space bonds, sewer, transportation etc.) equals $757 million of the $1.15 billion. All other counties combined have the remaining $339 million. Our debt load is more than double all other the other counties in Arizona COMBINED.
3. How Serious Have Cuts Been? Pima County has cut most departments this year. Most have seen a 10% reduction, EXCEPT:
County Administration went from $100 to $102 Million
Community and Economic Development went from $70 to $85 million
Debt service went from $100 to $110 million
4. Does Pima County have a bonding problem? A breakdown in PAST voter approved bond packages:
1997 – $362 million in general obligation bonds in May 1997 and
$350 million in transportation bonds that November (27 of the 34 projects approved in
the 2006 RTA vote where carry overs from the 97′ bonds)
$105m sewer ($65m Ina and $4.5 Roger)
2004 - $582m general bonds and ($174m open space – $81m health & community – $183m
$150m sewer ($17m Ina and $25 Roger)
2006- $54m (Kino and jail)
2009? – PROPOSED – $700 to $900 million
$345m open space
More on Pima County’s sewer option from Dave Divine – January 29, 2009, The Tucson Weekly:
“How many times have we given them money for Roger Road?” Schuh asks. “I understand we have to have some taxes, but (we seem) to have a group that never seems to get the job done.”
Huckelberry counters, “The money we’ve put into the plant has been for odor control and keeping it operational so it wouldn’t collapse.”
5. Lots of people work at Pima County:
Pima County is the 8th largest employer in our region with 6235 employees. Pima County has more than DOUBLEthe employees per population served than Maricopa County, Travis County (Austin) Bernalillo County (Albuquerque), Salt Lake County, Multnomah County (Portland) and Clark County (Las Vegas).
6. Kino Hospital-The County is legally mandated to provide a psychiatric hospital. When the County ran Kino as a psych unit, they lost $34m. In a deal to increase services and reduce the County’s cost, Kino management was shifted over to UPH. The deal was to be a total of $125m in total guarantees over a 10 year period. . It looks like at the pace we are going, we are due to hit the $125m in year 5 with no end to the subsidy in site.
7. Open Space priorities. Pima County voters have approved close to $400m in open space purchases to protect outlining areas. The purchases are part of the goals of the Sonoran Desert Conservation Plan. The proposed bond package will include another $345m bringing the total open space commitment to almost 3/4 of a billion dollars. Without discussing the merits of the open space commitments this land will be permanently taken off the tax roles and require some level of ongoing management in perpetuity.
8. How efficient is the County at running things?
• Pima County Sportspark, 6901 N. Casa Grande Highway, will shift to being managed by a contractor instead of the county, Payan said. The county will keep up the grounds Mondays through Fridays but has asked for bids on managing the site after hours, including scheduling the sports leagues and running the concession stands, Payan said.This arrangement will allow the county to recover the costs of maintenance, and leave the management costs to a third party for up to $500,000 savings, Huckelberry said.
The number of employees in Pima County who earn more than $100,000 a year has nearly doubled since 2006. That’s despite the rocky economy and layoffs of thousands of people in the area during that time.
In 2006, 76 staffers in the county earned six-figure salaries.
Now the count is at 142 — an 87 percent increase at a time when the county is slashing costs to deal with declining tax revenues and state cuts. ……
County Administrator Chuck Huckelberry says the number of highly paid employees is appropriate for the variety of services the county provides.
Looks like your property your Pima County property tax bill is going up….again. I was down at the board of supervisors meeting this morning and got an ear full of angry protesters at the end of their ropes with government taxation.
From KVOA.com -
By a vote of three to two, the 4.35 percent primary tax increase was approved. For example, for the owner of a $200,000 home, the increase will raise their bill from $635 to $663, an increase of $28 dollars.
I’ve looked at all angles of this one and I’m still not sure how the tax will be implemented but I am sure you and I will pay more.
Just to bring you all up to speed – There are a number of taxing entities that your property gets taxed by. The list varies by area of town and ranges from Pima County primary and secondary tax rates, to school districts, to flood districts, to fire departments to library districts to city property tax levies. Deciphering them is not an easy task.
The amount you owe to any of the above starts with the VALUE of your property. The VALUE is determined by the elected Pima County Assessor. Bill Staples, our elected assessor, pours over recent sales, market trending and comparable properties to match you properties characteristics to those near you. Once the property VALUE is determined then an ASSESSED VALUE is established. The ASSESSED VALUE is what the government entities use as a base to levy the tax.
Steve Emerine, a former Pima County Assessor and deeply missed voice of reason in our community explained that the ASSESSED VALUE is typically 80% to 100% of actual value. Maricopa County set their assessed value at 82% of actual. According to Steve we were in Pima County hovering at 93% of actual value. So movement on this % of actual has income consequences to the community. The higher ASSESSED VALUE is to ACTUAL VALUE the more money coming into the government coffers.
The other variable that government entities have power over is the property tax rate. The rate is the amount they charge you per amount of assessed value, usually $100 increments. In Pima County the primary assessed property tax rate is $3.31 per $100 value. It happens to be one of the largest in the state but that’s a different story.
So taxing entities get increased revenues at least three ways that I can think of:
1. Real Estate values go up.
2. The difference between ACTUAL VALUE and ASSESSED VALUE gets closer
3. The rate per $100 gets adjusted by voter mandate or elected officials.
Today at the Pima County Board of Supervisors meeting, property tax payments by you and me went up. I’m still not certain what actually happened. From what I’ve heard and read the tax rate is actually going down so that leaves and adjustment between assessed value and actual value. I’ll do more digging tomorrow to verify. Anyone out there with some insight it would be appreciated.
Breaking news! You’ve heard it here first - Senator Al Melvin, vice chair of AZ Senate Appropriations broke the news on this mornings WakeUpTucson show that a potential deal has been struck with Govenor Brewer on the budget impass. The details are as follows:
The voters will get an up or down vote on all of the following. The items will not be individually voted on but the voters must up or down the entire package:
The package will be called the Arizona Budget Recovery Plan
- A sales tax increase (a sticking point for the Gov.) which would be 1 cent for year one, .3/4 of a cent year two and 1/2 of a cent year three. The Governor wanted 1 cent for all three years.
- Suspend the Prop 105 voter approved mandates to increased spending on education and many other state programs.
- Permanent repeal of the $250 million commercial property tax assessment.
- 2012 reduction of $200 million in personal income tax
- 2012 reduction of $200 million in corporate income tax.
Arizona’s corporate tax burden ranking nationally will move from 23rd to 7th. Maybe that will bring in some new businesses and revenue…..from California!
The hits just keep on coming in the Texas v California debate. I love the fact that the Texas legislature only meets in odd number years and for 140 days at a time. If they aren’t meeting they can’t pass laws. From Tom Patterson of the The East Valley Tribune:
Why does Texas thrive while California flounders? Gov. Rick Perry sums up the Texas philosophy as “Don’t spend all the money.” This governor, unlike the tax-and-spendaholic Gov. Arnold Schwarzenegger of California, added to his hard-line reputation by recently vetoing a pre-kindergarten spending bill. While California grovels for money, Texas recently turned down a $556 million unemployment fund subsidy from the feds because the expensive strings attached would have boosted state spending long after the “stimulus” money left.
Spending discipline is the key to Texas’ low, economy-boosting taxes. Not only do Texans lack steeply progressive taxes, they pay no state income tax at all.
Yet somehow, in spite of a penurious government, the state not only survives but prospers. As Perry explains, economies grow when governments “don’t spend all the money, keep taxes low, have a fair and predictable regulatory climate, keep frivolous lawsuits to a minimum and fund an accountable education system . . . then get the hell out of the way and let the private sector do what the private sector does best.”
Even Perry admits that’s easier said than done. In Texas, government is intentionally hobbled. The constitution permits only limited, specific powers. The governor’s powers are few and he must share authority with the lieutenant governor. Legislators’ salaries are a measly $7,200. The Texas Legislature meets only in odd-numbered years with a firm limit of 140 days. California legislators are the nation’s highest paid and they meet year-round. Texas’ state government is simply not able to be as intrusive and oppressive as are many other states.
The moment of truth for Texas came after the 2002 election, when outgoing Democrats went on a spending binge that left the state with a $10 billion deficit. Many clamored for a tax increase (sound familiar?), but Perry told the Legislature to not bother sending him one. Instead, they made deep across-the-board spending cuts. The results speak for themselves. Today, Texas has a $9 billion surplus to help it through the revenue shortfall all states are experiencing.
Now Arizona is facing crunch time. We can continue the tax-and-spend slide into economic decline. Let’s hope our leaders make the tough decisions that will keep our private sector strong and eventually get us out of this morass.
Check out OpenSecrets.org for a break down of major donors by ideological or industry group. Do you think there is a coorolation between donations and political influence?
Lawyers gave $232 million in 08′ – 76% to Dems
Gun Rights gave $2.4 million in 08′ – 88% to Reps
Pro-Life $1.3 million in 08′ – 99% to Reps
Pro-Choice $3.2 million in 08; – 88% Dems
TV/Movies $48 million in 08′ – 78% to Dems
Pharma $29 million in 08′ – 50-50% Dem Rep
Insurance $46 million in 08′ – 55% Reps
Health Professionals $95 million in 08′ – 52% Dems
Education $88 million in 08′ – 82% Dems
Couldn’t resist – Inside Tucson Business ran a story on another list that we really don’t want to end up on. We are in the top 10 most expensive cities to do business in ….NATIONWIDE. Apparently there is a recalculation on how cities are measured and we as a region didn’t fair too well.
We are going to find out how if there is a typo in this statement…. “small businesses saw their annual taxes jump from $744 to $200,000, Jensen said in an e-mail.” Seems a little to big to make sense. Maybe $744 to $2000?
We made a similar list a year ago when ASBA ranked Tucson as the most unfriendly city in the state to do business in. ASBA has over 3000 members statewide that apparently aren’t afraid to point out that Tucson needs to clean up it’s act.
Tucson among 10 most expensive to do business
Published on Saturday, July 25, 2009A new study ranks Tucson among the 10 most expensive cities in the United States in which to do business.
The 15th annual Kosmont-Rose Institute Cost of Doing Business Survey released July 20 puts Tucson and Phoenix in an alphabetical list that also includes Akron, Ohio; Chicago; Jersey City, N.J.; Los Angeles; New York; Newark; Philadelphia; and San Francisco.
The survey, done by Claremont McKenna College, Claremont, Calif., ranked 411 cities in terms of their relative cost to do business. Categories include taxes, fees, economic incentives, transportation amenities, the existence of special enterprise zones, and public-private partnerships. Survey officials said two of the biggest determinants of a city’s cost of doing business tended to be business license fees and property taxes.
Research associate Brad Jensen said what caused Tucson to jump so much was a 2007 change in the way taxes are calculated setting an annual tax of $200,000 for the first $10 million in receipts of the first 100 employees and doing away the old system that was graduated based on the number of employees. Under the change, small businesses saw their annual taxes jump from $744 to $200,000, Jensen said in an e-mail.
The survey was originally developed to compare costs among 250 cities in California but has been expanded to include 161 cities outside the state.
Laura Shaw, senior vice president of marketing and communications for the economic development agency Tucson Regional Economic Opportunities Inc., said she couldn’t comment specifically on the new study because she hadn’t seen it but said a Forbes study released in March this year ranked Tucson No. 105 out of 200 cities.
Once again, Texas cities came out looking pretty good. Four out of 10 cities are in Texas and four out of 10 are in Oregon of all places.
The press release from the Kosmont-Rose Institute took some pot shots at California.
California cities such as Los Angeles, Oakland, San Francisco, and Santa Monica received “Very High Cost” ratings, and as in past years, Los Angeles County continues to be the location of the Survey’s most expensive jurisdictions with 11 of the 50 most expensive cities being in the County. Communities in western states such as Washington, Colorado, and Nevada consistently provide low cost areas in which to do business.
“California and many of its cities are now grappling with the triple witching hour of property tax losses, sales tax recession, and income tax losses,”said Larry Kosmont, president and CEO of Kosmont Companies and founder of the Survey. “Even well-run cities are having a hard time fending off tax increases, particularly since the financially faltering State wants to take back local redevelopment money and gas tax from their local cities and counties. However California should not raise anymore taxes at a time when businesses are already suffering, unless we want to see the exodus continue of companies leaving the State to other more business friendly locations.”
Since the Survey’s inception, California has consistently been one of the most expensive states in which to operate a business and as a result the state has earned a mixed reputation for its treatment of businesses. Recent trends support these conclusions. State workers’ compensation costs are once again on the rise after some years of stability, and a new one percent increase in the sales tax went into effect for the state of California on April 1, 2009. Further, several California counties and cities have recently increased their local sales tax rates. As a result, the California sales tax ranges from 8.25 percent in counties without add-on sales tax to a hefty 10.75 percent in some cities in Los Angeles County.
Even more challenging to a healthy economy are finances at the State level. With the State bleeding red ink due to a 26.3 billion dollar shortfall, and the overall economy in a downturn, the California legislature will need to carve out a budget deal premised primarily on drastic service cuts. However, many worry that the budget will continue to ignore the unfunded programs that are not sustainable due to ongoing revenue deficits that make voter approved commitments such as Proposition 98 education mandates unachievable. This makes the State’s future appear dim to many business leaders.
“California faces tough choices and spending reforms that are needed to resolve budget deficiencies, sufficient for California to become financially solvent, will not be easy ones to accept,” said Kosmont. “Pension and In Home Supportive Service reforms could save the State billions of dollars, however these and other reforms can be perceived as harsh. Ultimately, the California legislature needs to decide if they want to bring credit stability to a system that the business and financial community views as unmanageable and less creditworthy as each day passes.”
Hazel – care to retire to sunny Tucson and give us a hand?
Debt free – $700 million in reserves
6th largest city in Canada
31 years in the office
11 straight election victories
88 years old
92% approval rating
Run over by a truck (she’s fine, the truck repaired)
A PLAN for the city
Why haven’t you retired? “There’s still challenges for our city.”
As Arizona stares down a bigger looming budget than our neighboring state of California it’s encouraging to see the Golden State making some tough decisions. Remember their voters shot down any new taxes a few months back basically telling the politicians to figure it out.
Here’s a great opinion from WSJ about California’s next move.
The top points:
Democrats were even forced to implement welfare reforms that most of the rest of America put in place 15 years ago: a work requirement and a four-year limit. The agreement eliminates about $2 billion a year in automatic benefit increases and saves another $1 billion by auditing in-home health-care payments that are notorious for fraud. “Only in California,” says Mr. Schwarzenegger, “is welfare still a way of life.”
Earlier this year, when the deficit hit $40 billion, the governor and legislature raised sales and income tax rates, making the Golden State the single costliest place in America to operate a business. Right on time, sales and income tax receipts are down $10.47 billion so far this year even with the higher rates.
Even oil drilling off the coast of Santa Barabara!
Instead, the new budget deal sensibly allows more oil drilling off the shores of Santa Barbara, albeit only on “existing platforms.” This will bring in $100 million more a year and could be the first step in shaking the state from its antidrilling phobia despite huge offshore energy reserves.
Tax system overhaul…
California will only generate more tax revenues through new businesses and jobs, and that will require a tax rate much lower than its top marginal rate of 10.55%. With 50% of Golden State income tax revenues coming from the richest 1% of residents, the state needs lower rates to avoid revenue boom and bust. The liberal obsession with income redistribution has destroyed California’s tax base. (Memo to President Obama, if he’s paying attention.)
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