Pima County leaders have long complained that the state forces local governments to pay for state-provided services. Now they plan to make their case to every property owner in the county.
In this year’s tax statements, county officials plan to include a breakdown of how primary property taxes are spent, and how much of local collections support state services.
“Over the years, more and more things have been shifted to the county,” Pima County Administrator Chuck Huckelberry said.
Along with tax statements, the county plans to send a chart that shows as much as one-third of primary property tax collections, or more than $104.4 million this year, will be transferred to the state.
Much of that total comes from support for indigent health care and AHCCCS.
The total primary levy, used to fund ongoing government services, in the current tax year is expected to be $334.5 million. The county secondary property tax is used to pay debt from past bonds.
The county’s primary property tax rate is $4.3877 per $100 of assessed value. The total property tax rate for this fiscal year, including secondary, flood control and fire district assistance taxes, is $5.9632.
That equals a 20-cent increase over last year’s total rate.
The Legislature has in recent years forced counties pay for services the state traditionally provided, Huckelberry said.
Criminal-justice programs have been the frequent target for cost shifts.
The Legislature created the restoration-to-competency program in 1995 as a way to determine if criminal defendants were mentally able to face prosecution and work to restore it if they weren’t.
The state initially paid the costs of the program but gradually began to require counties to pay larger portions, ultimately forcing counties to fund the entire program.
Rather than pay the state for the service, which was administered at huge per-defendant expense at the Arizona State Hospital in Phoenix, Pima County began its own restoration-to-competency program in jail.
Program costs this year are estimated at more than $1.7 million.
The state has required counties to pay for the housing and treatment of defendants classified as sexually violent at Arizona State Hospital. This year the costs for Pima County are expected to exceed $1.2 million.
This year, state lawmakers required counties to pay a portion of the costs to operate the state juvenile justice system.
The formula is based on overall county populations, rather than the number of juveniles each county has in state facilities. For Pima County, this means $1.8 million to support state juvenile corrections.
County officials have said the funding formula is unfair because Pima County operates its own juvenile corrections facility and sends few children to state-run facilities.
Pima County’s battle with the state over cost shifts escalated this year, with the county filing a lawsuit challenging the practice.
The legal challenge focuses on the state’s budget, which in effect could require Pima County to transfer between $17 million and $22 million to Tucson Unified School District.
State law caps the collective primary property tax rates in areas of overlapping taxing authority to 10 percent of the full cash value of owner-occupied residential properties. If the rate exceeded this, homeowners were given a credit on their property taxes.
In parts of Pima County, this occurs where the county, city, community college and school districts overlap.
In the past, the state had reimbursed school districts if the cumulative rate exceeded $10 per $100 of assessed value.
The current state budget limits the reimbursements to $1 million per county and requires the county government to fund the schools’ overages.
Pima’s lawsuit says, in part, that the state forces the county to levy a tax on county residents and transfer it to another government. In some cases to a government that many Pima taxpayers have no connection with, like residents of Green Valley, Vail, Marana, Oro Valley or Ajo whose taxes would be given to TUSD.
Pima County first sought to have the state Supreme Court hear the case but justices declined. The suit has now been filed in Superior Court. In legal filings with the Supreme Court, John Lopez IV, the state’s solicitor general, agreed the Legislature has transferred some of its costs, but said the counties can mitigate the impacts by lowering their own taxes.
Gov. Doug Ducey’s spokesman, Daniel Scarpinato, echoed the argument, saying state leaders made difficult budget decisions this year in an effort to eliminate deficits.
“The governor made the leadership decision to balance the budget,” Scarpinato said. “It is up to other elected officials and leaders to make their own decisions.”
He added Pima County leaders should not resort to “playing politics and political propaganda” in its dispute with the state.
Ethan Orr, a former Republican state legislator from Tucson, said the state has tried to hide expenses by forcing local governments to pay for state services.
“I think the state has pushed unfunded mandates onto the school districts, cities and counties,” Orr said.
He said it’s been a long-standing practice in the Legislature to transfer costs to lower governments, particularly during periods of economic decline, but one he opposed when he was in elected office.
Former Republican lawmaker Pete Hershberger agreed. “The state Legislature says, ‘We didn’t raise your taxes,’” Hershberger said. “It’s disingenuous.”
He said the end result of state cost shifts has been higher taxes at the local level to cover the expenses.
Huckelberry said state leaders who claim there’s no statewide property tax are misleading the public, because $1.18 of the county’s $4.38 primary property tax rate directly supports state programs.
“The state says we don’t have a property tax,” he said. “Well, not really.”
