P.L.A.N. Update - Budget Balancing Acts‏

State Budget Hits Hard

Budget documents began circulating mid-week, detailing the current majority plan to close the State’s $2.7 billion deficit. The proposal would cut or eliminate functions of state government to the tune of $1.1 billion. The remaining gap would be filled with $1 billion in new revenue from the temporary sales tax increase (assuming it is adopted), and defer $450 million in K – 12 and university spending.

In addition, the draft plan requires cities to "contribute" $20 million in sales tax revenue sharing to counties. This measure is meant to partially offset the costs associated with shifting the state’s juvenile corrections responsibility to counties. Phoenix and other cities do not operate juvenile courts, so we're asking why cities should pay.

We expect the Governor to call a seventh special session this coming Monday to adopt this budget plan. If the apparent agreement holds through the weekend, the bills should be released on Monday, with a vote to follow on Tuesday. Our estimate is that Phoenix's share of such a "contribution" would be $6 million. Local Transportation Assistance lottery funds are also being swept in the budget plan. If the full amount is diverted, Phoenix's share of these transit dollars would be another $8 million. This State budget plan will most certainly would result in the Council having to revisit potential cuts to Police, Fire and other vital City services including transit. Please remind your state legislators of the importance of revenue sharing and ask them to vote against this bad idea.

Phoenix City Council Adopts Final Budget Proposal

The city of Phoenix Trial budget was initially presented to the City Council on February 2. Since then, 18 community meetings took place where residents shared their thoughts and ideas on the proposed balanced budget. After a full day of consideration at the Council Policy Session, the Phoenix City Council adopted the final budget package on March 2. If the Legislature is successful in diverting shared revenue and transit funds, the budget will have to be rebalanced.

Source: City of Phoenix

P.L.A.N. Update - Shared Revenue and Libraries‏

Fair Allocation of Library Taxes?

Did you know that Phoenix property owners pay taxes to the county library district, but the vast majority of those dollars support libraries in other communities? In 1986, the Legislature passed a law allowing creation of library districts with the power to levy property taxes to pay for libraries and library service. One year later, the Maricopa County Board of Supervisors formed the Maricopa County Library District (MCLD). In the 1980s Maricopa County was mostly unincorporated but has evolved to be very urbanized. Many cities and towns in Maricopa County provide their own libraries and library services, but state law provides that taxes collected by library districts cannot be passed to cities and towns. The result is that city residents in Maricopa County pay the library tax but city libraries cannot directly use any of those revenues.

In 2008, Phoenix residents paid $6.7 million in property taxes into the MCLD. That same year, Phoenix received about $600,000 (less than 10% of contributions) in services or revenues from the MCLD: $435,189 in reciprocal borrowing revenue and $165,000 in online database support.

Phoenix residents’ contributions are approximately 32% of total revenues collected in Maricopa County through library district taxes. In the past 12 years, Phoenix residents have contributed more than $50 million to the MCLD.

Currently, the Phoenix Public Library and its branches serve a residential population of more than 1.5 million. The service population of unincorporated Maricopa County is less than 250,000.

Last year, Phoenix cut its library hours by 30%. This year, Phoenix is proposing to close up to six libraries in addition to other library service cuts.

SB 1373 county library districts; cities; taxes will allow a city or town to receive at least 75% of the library taxes its residents pay to a library district in Maricopa or Pima County for the city or town to use for its libraries. The library district would keep 25% of the library tax collected in cities and towns to use for district purposes. The bill would restore fairness and allow Phoenix libraries to stay open.

Right now the bill is languishing -- call your Senator today and ask that this bill get a hearing.

Shared Revenue Alert

It's been quiet so far as we watch for potential raids on city revenues, but now comes SB 1108: Technical Correction; Children (Sen. Russell Pearce, R – Mesa) which is scheduled to carry a “strike everything” amendment this Tuesday entitled "State Shared Revenues." The amendment isn't yet available on the Legislature's website, but the title is ominous. This bill will be heard in the Senate Appropriations Committee. We encourage you to remind your state legislators of the importance of shared revenues to cities and towns to be able to provide police and fire protection and other important services.

Increased Penalties for Graffiti Crimes

HB 2738: Criminal Damage; Classification (Rep. Anna Tovar, D – Tolleson), increases penalties for those convicted of graffiti crimes. The lower limit was $250, but this bill makes reckless damage of property in the amount of $1 to $999 a Class 1 misdemeanor. HB 2738 unanimously passed the House Judiciary Committee this week and must be approved by the Rules Committee before Third Read approval before the House. The City of Phoenix thanks Representative Tovar for sponsoring this important measure.

Source: P.L.A.N.

P.L.A.N. Update - Special Session #6 - It's All About the Budget‏

Legislature Completes Work on Sixth Special Session for State Budget Fix

Governor Brewer called her sixth special session to continue chipping away at the current fiscal year’s budget deficit, pegged at $1.5 billion. The Governor’s call included:

• Adjustments to state agency budgets, including sale/leaseback of additional state buildings;
• referring to voters a three-year, one-percent increase in the state’s sales tax;
• prorating income tax deductions for out-of-state filers; and
• bonding against lottery revenues.

Revenue sharing was not discussed as a revenue option. While the Senate was able to quickly move the budget bills, the House took more time. The bills that refer a three-year one-cent sales tax, extend and securitize the lottery, and collect more taxes from out-of-state filers were approved. On Wednesday, things took an interesting turn. The sole outstanding measure, a $450 million rollover payment for K–12 and public universities, was linked with passage of the Speaker’s jobs bill, HB 2250: Arizona’s Job Recovery Act. The Senate apparently did not agree with this maneuver, so adjourned the special session sine die. The House followed suit on Thursday. The $450 million rollover education payment can still be considered in the current regular session or a future special session. The current year budget is still short almost $700 million, so more work remains.

Phoenix City Council Adopts A Two-Percent Emergency Food Tax

The Phoenix City Council took special action on Tuesday, Feb. 3, to adopt a two-percent tax on purchases of food for home consumption. City management estimates that the food tax revenue will provide $62.5 million over the next 15 months to help reduce the revenue shortfall facing the city. Today, every city bordering Phoenix collects a food tax; Phoenix's two-percent tax rate ranks 5th lowest among the 18 cities in Maricopa County that already collect a food tax. The city began this year's work on the budget with a $245 million budget shortfall. With the food tax, several efficiency measures and one-time financial transactions, this shortfall has been reduced to a more manageable $60 million. The Council's action reduces the number of cuts needed to balance the city's budget.

Last week the Trial Budget was presented to the City Council and released to the public. In our last message, we included links for the budget and for the schedule of community budget hearings where you can make your voice heard.

Legislation of Interest

HB 2250: Arizona’s Job Recovery Act (Rep. Kirk Adams, R–Mesa) makes numerous changes to state income tax, property tax assessment ratios, and the enterprise zone program, as well as dedicating new resources to job training and economic development. While the intent of the bill is to spur job creation, elements of the bill will reduce Phoenix revenues when they are fully phased in:

$12-$18 million loss in revenue sharing
$6 million impact in primary property tax collections (affecting the city's general fund)
$20 million hit in secondary property tax collections each year for five years (affecting bond payments), and
$220 million reduction in future bond capacity

As the City works to address this year's budget challenges, it's more important than ever to protect future revenue. HB 2250 will reduce future revenue and make it harder to recover from this downturn in the years to come. We look forward to working with the supporters of this measure to find middle ground that will stimulate the state’s economy without unduly placing public safety, streets, parks and library services in jeopardy.

Source: P.L.A.N.

P.L.A.N. Update - A Busy Legislative Week With More To Come‏

Bills, Bills, and More Bills

Friday was the 19th day of the Second Regular Session of the 49th Legislature. Every year the legislature attempts to complete its business in 100 days. Given the massive budget shortfall we certainly don't expect it this year, but it's an election year and anything could happen.

So far this session, 941 bills have been introduced. The deadline in the Senate to introduce bills is 5 p.m. on Monday, February 1 and the last day to introduce bills in the House of Representatives is Monday, February 8. Both chambers have posted this year's timelines for bill handling on the Arizona State Legislature website at Important Deadlines for the House of Representatives and Arizona State Senate Timelines.

Last week we shared some bills of interest that were scheduled for a hearing. Here's an update on their status:

SB 1166: Property Tax Classification; Historic Residences (Sen. Linda Gray, R-Glendale) was heard by the Senate Finance Committee on Wednesday. This bill would repeal the reduced property tax classification for historic residential property. Under current law, qualifying historic residences are assessed at 5% rather than the 10% assessment ratio that applies to other homes -- the effect would be to increase property taxes on those historic homes. After much testimony, the bill was held in committee.

HB 2161: Payday Loans; Regulation (Rep. Andy Tobin, R-Paulden) regulates the payday loan industry and authorizes continued operations beyond the current 2010 sunset date. This bill was held in the House Banking and Insurance Committee on Monday.

On Wednesday, the House Commerce Committee heard testimony on HB 2246: Regulation of Fireworks (Rep. Andy Biggs, R-Gilbert) a measure that would permit sales of “consumer fireworks.” The City’s Fire Marshal was on hand to testify against the bill, sharing Fire’s concerns on the increased risks to the community. After intense debate, the bill passed by a vote of 4 – 2. Next stop, House Rules Committee.

SB 1165: DUI; License Suspension (Sen. Linda Gray, R-Glendale) adds a number of dangerous drugs to the list of substances that are known to impair a driver and if found in a person's blood will lead to suspension of his or her drivers license. This bill has picked up support from many interests, including the Governor’s Office of Highway Safety. The bill passed out of the Public Safety and Human Services Committee on Thursday and will be heard next in Senate Rules.

Potential New Reductions in Bus, Rail, and Dial-A-Ride Services

In last week's message we described the Governor's budget proposal including a suggested "sweep" of lottery revenue that ordinarily would come to Phoenix to help pay for local bus, rail and Dial-a-Ride service. State law directs a portion of the proceeds from lottery sales to the Local Transportation Assistance Fund (LTAF) and Local Transportation Assistance Fund II (LTAF II). Each city or town in Arizona receives a share of these funds based on population. Phoenix receives approximately $7 million annually in LTAF and $2 – 4 million annually in LTAF II, where the dollars support operations for the core of the Valley-wide public transit system.

Public transit helps people (including those with disabilities) traveling to school, work, shopping, medical appointments and other necessary activities. If LTAF funds are swept by the legislature in FY 2011, Phoenix would have to eliminate two bus routes, the entire neighborhood circulator program, and reduce system-wide bus frequency. If LTAF II funds are also taken, Phoenix would have to reduce bus service frequency to once per hour after 8 p.m. and shorten the peak frequency bus service period by one hour system-wide.

Please let your legislator know to protect these funds so that that transit services will not be cut further.

Phoenix Trial Budget - Make Your Voice Heard

The City Manager's Trial Budget was released to the public Thursday afternoon. The Trial Budget provides the City Council and the community a proposed plan to balance the City's $241 million deficit through cuts to City programs and services. The Trial Budget can be viewed online at http://phoenix.gov/BUDGET/index.html.

The City Council will review the Trial Budget at its meeting on February 2nd. Then, between February 10th and 24th, the Council will hold community hearings so residents can provide input. Based on the feedback, the Council will adopt a final budget on March 2nd that will take effect on April 5th. The Schedule of Community Budget Hearings is posted online with the Trial Budget.

Remember to SHOP PHOENIX and tell your legislators to protect City revenues that pay for important services such as police, fire, libraries, parks and street maintenance. Thanks for all you do for our community.

Source: P.L.A.N.

P.L.A.N. Legislative Alert -- Historic Neighborhoods‏

SB 1166: Property Tax Classification; Historic Residences (Sen. Linda Gray, R - Glendale) -- This bill would repeal the reduced property tax classification for historic residential property. Under current law, qualifying historic residences are assessed at 5% rather than the 10% assessment ratio that applies to other homes -- the effect of this bill would be to increase property taxes on those historic homes.

There are approximately 6,000 homes in Arizona that qualify for this tax treatment; approximately 2,900 of them are in Phoenix. The City's Historic Preservation Office is recommending that the Mayor and Council oppose this bill.

Senate Finance Committee Member

Ken Cheuvront LD15
602-926-5325
kcheuvront@azleg.gov

Source: P.L.A.N

P.L.A.N. Update - Governor Brewer's Budget Plan‏

On Friday, Governor Brewer unveiled her budget strategy to address the $1.4 billon shortfall in FY 2010 and projected $3.2 billion deficit for FY 2011. The plan:

establishes a three-year temporary one-cent increase in the state sales tax (to be adopted by the Legislature rather than referred to voters)

reduces spending in various programs such as K-12 education, universities, and health care for low-income and disabled Arizonans;

eliminates KidsCare, cash assistance for certain low income families, and the Department of Juvenile Corrections, which would transfer its responsibilities to Arizona's counties;

implements a five percent, across-the-board pay cut for state employees; and

redirects lottery monies to the State's general fund.

The Governor's office explained that if the Legislature adopts the proposed temporary sales tax increase itself rather than referring the issue to voters the State could avoid approximately $263 million in cuts during the current fiscal year. This part of the Governor's plan would require a two-thirds majority vote of both houses of the Legislature.

Given our own Phoenix budget woes, the City is grateful that revenue sharing monies are not affected in the Governor’s proposal. The Governor also announced a $20 million grant program funded with federal stimulus dollars to pay for public safety positions in local government. Unfortunately the proposal does include a 100% sweep of Local Transportation Assistance Funds funded by the State lottery -- that sweep would result in an $8 million hit to Phoenix’s transit program that pays for local bus, rail, and Dial-A-Ride service.

Bills Of Interest Scheduled for Hearing Next Week

SB 1165: DUI; License Suspension (Sen. Linda Gray, R -- Glendale) adds a number of dangerous drugs to the list of substances that are known to impair a driver and if found in a person's blood will lead to suspension of his or her drivers license.

HB 2161: Payday Loans; Regulation (Rep. Andy Tobin, R -- Paulden) regulates the payday loan industry and authorizes continued operations beyond current 2010 sunset date.

HB 2246: Regulation of Fireworks (Rep. Andy Biggs, R -- Gilbert) allows sale and use of "consumer fireworks" by the general public.

Remember to SHOP PHOENIX and tell your legislators to protect City revenues that pay for important services such as police, fire, libraries, parks and street maintenance. Thanks for all you do for our community.

Source: P.L.A.N.

P.L.A.N. Update - A New Year, A New Legislative Session‏

Opening Day!

Monday, January 11 is Opening Day for the Second Regular Session of the 49th Legislature. Governor Brewer will deliver her State of the State Address at noon before a joint session of the legislature.

As of this message, 122 bills have been "prefiled" or introduced. We anticipate an avalanche of bills to be dropped in both chambers next week. So far, eight committee hearings have been scheduled over the first three days. To find the daily legislative calendar, go to ALIS Today. There, you can customize dates to select a specific range of dates.

On the financial front, the state still faces an estimated $1.5 billion shortfall in the current fiscal year, and a $3.4 billion shortfall for next year. If shared revenue for cities is discussed as an option to balance the state's budget, we'll alert PLAN subscribers to contact their legislators to help protect these monies that pay for police, fire, parks, libraries, and other important city programs.

We will also continue to keep you informed about issues that the legislature debates that affect your neighborhood. You are the very best advocate for your neighborhood and city and we appreciate the opportunity to help you be effective. Thank you for all you do.

Remember to SHOP PHOENIX and tell your legislators to protect city revenues!

Source: P.L.A.N.