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Brown-Thumb Budget

Despite rosy projections, the county budget's weedpatch of deficits is choking any hope of tax relief.

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It was a typical early June day, a blazing Sunday in 1997. Dan Eckstrom and Sharon Bronson were talking with some ministers in their then-loosely shared cabinets over iced tea at the clubhouse of a northwest-side golf course during a fundraising tournament Eckstrom staged for fallen South Tucson policeman John Valenzuela.

There was little golf talk. Instead, the two Democratic Pima County supervisors and their advisers were scheming to speak out against tax increases contemplated in the County Administrator's new budget.

It was agreed: Eckstrom and Bronson would out-Republican the Board of Supervisors' two Republicans, Mike Boyd and Ray Carroll, and embarrass tax-and-spend Democrat Raúl Grijalva along the way by calling for cuts in spending and taxing, and by organizing firm opposition to a threatened half-cent sales tax. Tournament fun was over for an aide who was dispatched to county offices downtown to send out notices of an Eckstrom-Bronson press conference the next day.

Sure enough, the two Democrats spoke the next day, without much detail, about the need to cut spending, cut property taxes and ward off any sales tax. But all that was forgotten 11 weeks later when Eckstrom and Bronson joined Grijalva to push through the county's first tax increase in five years.

Taxpayers have suffered ever since. The Democrats, who have demonstrated the in-and-out-of-love nature of supervisors' relationships, passed a similar tax increase--about $7 for the owner of a $100,000 home and $17.50 for the owner of a $100,000 business property--the next year. More extensive damage came in August 1999, after the board's poor fiscal management prompted a downgraded bond rating and a burgeoning health-care system deficit.

No longer willing merely to ratchet up taxes over time, the board wound up inflating them by 11 percent to a record high of $4.07 per $100--a $407 bill for the owner of a $100,000 home. That meant a $40 increase in that property's bill for the portion of property taxes used to pay for the daily operations of county government. A business with a similar assessed value faced a $100 increase.

While paying $43 million more this year over the 1997 collection, taxpayers have bailed the county out of what once was a nearly $60 million hole. Higher tax rates, plus new construction and higher property values, have enabled the county to buy down $45 million in loans: $30 million to the Bank of America and $15 million to county Waste Water Management, a rich county department from which supervisors took $30 million two years ago. Tax revenues will allow repayment of that balance by June 30, the end of the 2000-01 fiscal year, and will accelerate the payoff of $36 million in accumulated debt at the county's Kino Community Hospital. The budget also erased the half-million dollar debt built up by losses at the Rillito Race Track, which offers horse racing each year.

Annual spending by the county since the tax increases began has increased from $644 million to $842 million. Taxpayers have rescued the bond rating. They propped back up the rating from Moody's Investor Services (the downgrade in 1998 cost taxpayers about $300,000 in additional interest as the county began selling bonds from the $711 million approved by voters in 1997). Also, Standard & Poor's revised its outlook for the county from "negative" to "positive."

Both rating agencies cited the tax increases, as well as the board's tardy decision to eliminate its meddling and highly political Health Care Commission and restore direct control of Kino Hospital and the health system to county administration, as reasons for the improved outlook.

County Administrator Chuck Huckelberry, the engineer who has led administration for eight of his 25 years with the county, served up a budget last year that was virtually untouched by supervisors. It used the huge increase in tax revenues to pay off debts, increase spending by $63 million, boost sheriff's patrols and deputy pay, and give smaller raises to all other members of the county's 7,000-person workforce.

Supervisors with election challenges were giddy. And the media bought the overly optimistic pronouncements without questions. For example, Bronson declared repeatedly that Kino would end the year in the black for the first time.

But even Huckelberry was saying last fall that Kino was on target to end the year $3 million short. Indeed, a report that uses figures from the first five months of the fiscal year shows Kino nearly $2.1 million below budgeted spending of $54 million, but $5.56 million short on revenues. Patient stays and services have decreased. The net, according to the report released January 11, is nearly $3.5 million short.

"Kino is out of intensive care," Huckelberry says, "but by no means off the floor."

While Bronson, during a campaign that narrowly provided her with a victory over Republican businessman Barney Brenner, said Kino's collection problem was fixed with a new computer, the problems only got worse, but in the opposite direction. The hospital continues to struggle to correctly bill insurance providers and state and federal indigent health care plans. Kino had previously been billing patients for service never provided. For instance, surgery patients were sometimes billed by emergency-room doctors even though they never went to the emergency room nor had any contact with emergency physicians. It was particularly hard to hide the problem when Kino's own administrator, Scott Floden, was dunned for services his insurer paid after he chose to be treated at Kino for injuries from a bike accident.

Still, the effect of that deficit is not great for taxpayers, who have shown willingness to provide the extra money to a hospital that has a record of providing top care to a portion of the community's poorest. A $3 million deficit translates into $9 a year for the owner of a $100,000 home.

Federal help is required for a big portion of those costs. A new report by University of Arizona researcher Tanis Salant shows that emergency medical services provided at Kino for illegal immigrants cost the county, on a "conservative" calculation, more than $1.8 million last year.

Taxpayers have had little hope of finding out exactly how well the county has done. For example, the Tucson Citizen, in a front-page story January 20, proclaimed that the county would be in the black and have a surplus as high as $20 million. The Citizen reported that take despite the fact that the most recent county budget report, released nine days earlier, shows an ending fund balance of only $6 million.

The same story called the debts a "hellish budget crunch" two years ago. "Hellish"? For whom? Spending increased. Parks and pools were not closed. Workers got more money. Aside for the closure of the money-losing birthing unit at Kino and a delay in opening the Juvenile Detention Center, there was little squeezing.

One thing is sure: Huckelberry will not push for a tax cut.

Tax cuts pushed through by a Republican-controlled Board of Supervisors from 1993 through 1996 were folly, Huckelberry says. They left the county with $77 million less to provide services for an increasing population. Moreover, they amounted to little, if any, savings for homeowners. For homeowners in the high-tax Tucson Unified School District, with more than half the county's residential property, the cuts in some years were meaningless because of a state law that caps total primary property taxes at $10 per $100 of assessed value. Primary taxes were too far above that limit to result in a savings.


DEFICITS BEYOND Kino's persist. Democratic Sheriff Clarence Dupnik's chronically understaffed department is overspending by nearly $2 million. Contract attorneys have pushed the deficit in the county's indigent legal defense offices to more than $1.8 million. Fuel costs for patrol cars and the rest of the county fleets are over budget by $821,000, thanks to the sharp increase in gas prices--45 cents higher per gallon than the $1.05 per gallon the county had budgeted.

And Tucson Electric Park, the spring training home for the Arizona Diamondbacks and the Chicago White Sox as well as home to the AAA Tucson Sidewinders, is nearly $6 million short. Of that, $3 million is in construction overruns with the rest from operational deficits from contracts that heavily favor the teams.

"Triple-A hasn't paid a dime, really," Huckelberry says.

Financing the ballpark, touted by baseball promoters as one that would pay for itself, required the mortgaging of the county jail for $35.6 million. Still remaining is $33.2 million.

However dubious an investment the ballpark may seem, few would decry spending money on law enforcement. "No one argues that the sheriff needs more money for deputies. Having 1.3 deputies per 1,000 in population is too low. It's way below the national average," Huckelberry says. "They could stand to have 20 new deputies a year just with annual growth."

Then there's the land they would help patrol. Open-space purchases the county has already made for expansion of Tucson Mountain Park, Tortolita Mountain Park and Colossal Cave Mountain Park will require nearly $3 million over the next three years. Voters in 1997 approved $27.9 million in bonds for open space, and $15.6 has been spent. Another $3 million was authorized for acquisition of part of Fairfield Homes' Canoa Ranch south of Green Valley. A development agreement and zoning agreement that will include open-space acquisition are expected to be reached next month.

Huckelberry also wants to raise county employee pay more significantly than the traditional 2.5 percent and 5 percent raises.

"I want to get our workers, the front line people, the working stiffs, up to the local government market rate. City workers get more and county workers are just as good," says Huckelberry, whose contract extension approved last month includes a $12,700 raise for total annual pay of $184,900.

And the county's ending balance, even if it grows to $8 million by June 30, will not be great enough, Huckelberry says. "I'd be comfortable with $15 million and very comfortable with $20 million. We used to carry $20 million.

"Until that is done and the other unmet needs are rectified, I will forestall any talk of a tax decrease," Huckelberry says.

The only route to a property tax cut, he says, will be with approval of a half-cent sales tax that would likely raise $50 million a year. A unanimous vote of the Board of Supervisors is required to levy such a sales tax, which doesn't seem likely. Democrats have enthusiastically favored a sales tax since 1998, but Republican Ray Carroll, who represents the anti-tax regions on the east side and Green Valley, remains opposed.

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