Tuesday, February 3, 2009

Not This Year

Neither the jail tax nor the county complex of new buildings is going to happen this year, county supervisors decided on Monday. An increase in the jail district excise tax is being put off to avoid competition with a tax increase sought by the City of Prescott and to ensure a “win” at the ballot box. The capital improvements program is being scaled back and delayed because of the economy and a new commitment by one of the supervisors to a pay-as-you-go capital improvements program.

Thurman first apologized for not asking Sheriff Steve Waugh to weigh in on the jail tax timetable. Sheriff Waugh said he favored a September 2009 timeline, but said whatever the board decides is up to them. He added “it’s a crap shoot no matter when we do it whether it’s in September or whether it’s in March, whether it’s in May…September would probably be my choice.” But ultimately, said Waugh “I defer to you folks.” He emphasized the need for preparation, advertising, who the voting public would be at each possible date, and which would yield “your highest possibility of success.”

District 1 supervisor Carol Springer said emphatically that she doesn’t want the jail tax and the City of Prescott’s bid to raise their sales tax on the same ballot.

“I kind of have changed my decision,” said Springer and cautioned against “trying to compete with them [the City of Prescott] for obviously limited taxpayer dollars.” She asked to take the discussion off the table “until Prescott makes its decision and then we can kind of go from there.”

District 2 supervisor Tom Thurman agreed, citing spring 2010 as the earliest likely date.

District 3 supervisor Chip Davis spoke out strongly in favor of the tax and said he wished it had passed in November.

“I want the increase to pass,” said Davis, and he emphasized the importance of conveying the right message to the public so they vote the tax in. “I sincerely, sincerely, sincerely hope we can convey to folks the necessity of doing this…More than anything I want to win…I want the increase to pass.”

Davis said for the tax increase to pass the best course would be to wait for the economy to turn and not compete against other entities looking for taxpayer dollars.

“This investment is really long-term. We need to start saving our capital funds right now for what is going to probably be a 40 or 50 million dollar facility.” He supported taking it off the table for a little while and advised the others to “keep our ear to the railroad track and see how the economy is doing.” He added, “When we do it we need to win.”

Board chairman Thurman said that although the board had decided to put off seeking the increase they should continue to “campaign” for it throughout the waiting period.

If there was agreement on the jail tax deferral, there were fireworks instead just moments before when the board discussed the county’s capital improvements program.

Strong disagreement arose between Supervisor Springer and Supervisors Thurman and Davis when the firms hired to do the site engineering and design for the juvenile detention facility at the Prescott Lakes Parkway location made their presentations.

Thurman billed the actions as a “quick and painless way to start” with the juvenile detention center being the only building they would go forward with at this time. It has a projected price tag of 15 million dollars.

Supervisor Springer revisited the action taken by the other two supervisors at the last board meeting to return the 50 million dollar loan she and Thurman had voted in last year. The lease-purchase agreement was to be used to fund a large county complex of buildings at the Prescott Lakes site.

“The two of you decided at the last meeting to turn that loan back,” said Springer. She added that they had not taken into account the interest the loan money was earning when they expressed concern over the interest payments of $26,000 a week as a reason for returning the loan. Chairman Thurman later called on county administrator Julie Ayers to clarify the composition of the current weekly payments and Ayers said the $26,000 “did include an offset for the interest.” The loan allowed for a three-year period of interest only, one of which has already passed. In two years the payments would also have included principle as part of the payments and go up substantially.

Thurman expressed concern over the county’s ability to make the loan payments, interest plus principle, in two years if the economy has not recovered. “It’s going to be a huge burden for the taxpayer in Yavapai County to have to keep that 50 million dollars,” said Thurman. “I can’t build administrative buildings and have them half empty and have to go back to our departments and tell them they have to cut funding and we’re going to have to start laying people off.” Thurman said he has heard it could easily be four years before the local economy could see a real recovery.

After laying out what she believed to be the county’s reserves Springer went on to say “I’ve worked hard these last 4 years, as you have, on this program. I think it’s absolutely necessary to have this capital program go forward but you put me in the position of having to choose between having Yavapai County remain in a solvent financial position or choosing to go forward with the capital program. So I can no longer support a capital program of any kind,” and admonished the other two supervisors “you are putting Yavapai County in a very precarious position and I can’t support it.”

Springer’s math went something like this:
$15 million in the capital projects fund
$7 million in the contingency fund
$50 million in the lease-purchase agreement (loan) for 20 years at a 4.45% fixed rate

This totals $72 million that had been earning interest. The county has already spent $15 million of the $50 million loan, so the $15 million in the capital projects fund would be spent in the repayment of the loan would leave us with the $7 million contingency fund money. The juvenile detention facility is projected to cost $15 million. Springer contends all the revenues coming in from county sales tax would be going into this one building project.

Thurman argued that the county does have the revenue stream to pursue a pay-as-you-go approach to the juvenile detention center. The plan he and Davis are supporting would mean that engineering and design services would go forward, which Thurman estimated would take approximately a year, and then the board could evaluate whether the funds were available to begin construction early next year.

“We do have this revenue stream, 30 percent, to pay for a lot of these items,” said Thurman but he added “We don’t know where we’re going to be January or February of next year.” Thurman added that if the economy hasn’t come back by then his recommendation would be to shelve the plans. He added that he couldn’t go along with pursuing the original building program, which included two administrative buildings.

Springer again insisted that by turning back the loan and using cash on hand to fund the scaled back building program would mean “we’ll have no reserve at all.”

“We can afford it. That’s not going to be a problem,” countered Thurman, adding the county may have to make some sacrifices in its regional road program to implement the plan.

Supervisor Davis agreed with Thurman. “It’ll be a phased process” of engineering, then design, said Davis adding the county will watch the economy while going through that process. “We won’t pay the whole lump sum tomorrow. I think that’s one of the misconceptions,” said Davis.

He also laid out the county’s finances, which differed from Springer’s accounting by 12 million dollars and pointed out that the 30% set aside from sales tax for capital improvements should generate about 4.2 million dollars a year and over 5 years would move the building program forward.

“We’re not throwing darts at a board to figure out what our decision making process is… We can stop anytime. Davis reasoned that paying $41,000 a week on interest is like paying an employee a year. Yavapai County has historically paid for buildings as they went by taking the capital available and applying sales tax as you go. This philosophy, said Davis “puts us on a slow, progressive stable movement forward.”

Thurman concurred, “I think that revenue stream is there.” He also stressed the importance of having the plans for the juvenile detention facility ready to respond when the economy does come back and that the cost of doing those plans now would be less than it might be in a better economy.

The juvenile detention facility as currently being discussed would have 80 beds and be expandable to 120 or even 160 beds.

To hear an audio recording of this meeting click here (Internet Explorer only).

[Musings: When supervisors present different numbers for existing funds and projected revenues it's, in a word, confusing. There seems to be a lack of preparedness, misinformation or perhaps both when two supervisors present widely divergent financial figures at a meeting. Members of the board often lament the fact that because of state statutes regarding open meetings the only time they get to confer is at public Board of Supervisors meetings. Well, it's also the only time the public gets a regular (or should we say "irregular") accounting of how the board is spending its money. How about a simple finance report each month for the benefit of both the board and the public given by county administrator Ayers listing how much money we have in the bank and revenues for that month? Make it clear, make it simple, make it for general consumption not for members of the finance department. Perhaps that would eliminate some of the confusion for all of us.]

2 comments:

  1. I would be curious just how much of the capital expenditures on correctional facilities (jail, juvenile) results from unfunded mandates thanks to the federal govt.

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  2. Good point, JulieG. Well, let's find out. I will pose that question to Sheriff Waugh, County Supervisor Julie Ayers and all three Supervisors. Let's see who responds and what answers we get.

    ReplyDelete