BISBEE — After viewing a presentation prepared by the Cochise County budget manager during budget talks, Supervisor Tom Crosby was disturbed the property tax rate in the county could be raised to pay for Public Safety Personnel Retirement System.
During a work session last month, budget manager Dan Duchon prepared a slide indicating how the county could pay down the PSPRS debt of $36.7 million by increasing the property tax rate by 2% over four years, reducing the debt by 15%, but the supervisors did not discuss it.
To stop any consideration of raising taxes, Crosby wanted Supervisors Ann English and Peggy Judd to commit to a resolution stating the county would not raise the tax rate for the 2021-22 fiscal year. They said no during the regular meeting on April 28.
Instead, they wanted to wait until state legislators finalized the state budget since there could be ramifications if a proposed tax cut to businesses was approved. A decrease in state revenue coming to the county could mean an increase in property tax to recoup the loss. Rural, less populated counties like Cochise would definitely be impacted, English said.
Wednesday in a work session, Crosby came back with another proposal: Properties in the cities of Cochise County that have police departments “shall not be taxed by Cochise County at a higher rate in fiscal year 2021–2022 than the rate in fiscal year 2020–2021.”
Crosby said part of the problem with the county’s PSPRS debt is the supervisors, past and present, who contributed to the debt owed to the fund by hiring too many public safety Tier 1 employees, which are deputies hired before Jan. 21, 2012, and increasing staff salaries to market rate to reduce turnover in the Cochise County Sheriff’s Office.
“This exacerbated the county’s Tier 1 liability,” said Crosby. “In my opinion we’re headed for a period of inflation which, so far, has been unaccompanied by high investment interest rates. In my opinion all taxes are inflationary and property tax is particularly injurious to businesses as is a production tax as opposed to a preferable consumption tax. More to the point, for encouraging business growth in the county, a person owning a business and a residence property gets hit twice with no corresponding vote at the polls.”
PSPRS took two major hits in the investment market, the first in 2001-02 and again in 2008-09, losing more than $1.7 billion. Now, the counties and municipalities have to make up the loss. For rural counties and municipalities the debt owed is millions of dollars.
In a table Duchon prepared, it showed the county’s liability of $36.7 million represents 19.7% of the total county budget. Sierra Vista owes $42.2 million, or 49% of its budget. Benson owes $4 million, 18% of its budget. Bisbee owes $21.3 million, 96.8% of its budget. Douglas owes $31 million, 76% of its budget. Willcox owes $4.4 million, 44 percent of its budget.
It showed the county in a better position debt wise than the cities.
“This taxation/service overlap between two governments, serving nearly the same population, results in a rising tax burden without corresponding service improvements,” Duchon stated.
English asked, “So you are trying to separate a tax rate increase proposed by the board and I don’t think that’s possible.”
Chief Civil Deputy County Attorney Christine Roberts told Crosby, “You don’t get an a la carte menu for taxes. Tax is what the tax is for all the people in the county. I don’t believe this is something that can be done.”
County Treasurer Catherine Traywick added, “It cannot be done as far as the county rate goes. It does apply to everyone in the county. The county cannot levy a separate amount for people in incorporated and unincorporated areas of the county. Everyone pays the same rate. The General Fund tax levy hits all the property owners.”
Judd was surprised to hear Crosby’s suggestion the tax rate could go up based on Duchon’s slide.
“We haven’t had a discussion on that,” she said. “Or if we did I don’t remember. I don’t want to raise tax rates. I suggest we have a meeting to discuss PSPRS debt solutions.”
English said this was a second attempt to get them to look at a tax rate that if raised would only go to the unincorporated areas of the county.
“The treasurer and the attorney have both said we can’t do that,” she said.
Judd said the county has seen a continued rise in property valuations, particularly from new construction, which has allowed the supervisors to maintain the same tax rate over the past several years. With this year’s increase in property values, there may be no need to raise taxes to cover the budget.
“I don’t think this would be a year where we would raise tax rates,” said Judd. “I’m not trying to disrespect Supervisor Crosby. He definitely is passionate about keeping our tax rates low. I’d like to decrease tax rates if I could.”
She agreed with English that the tax rate could not be discussed under the agenda as posted.
Crosby disagreed saying, “I can bring it up whenever I want to bring it up.”
English replied, “You have given us your opinion and want us to consider not raising the tax rate. We heard that loud and clear. If that was the point of this discussion, I think we heard that. Supervisor Judd and I have said this isn’t the time to make decisions. This is a work session.”
In a work session, the supervisors can only give direction to staff and no decisions are made or votes taken.
English said when the time comes to make a decision on the tax rate after the 2021–22 budget is ready for approval, they can talk about the tax rate.
Crosby said, “My opinion is you make the budget fit the taxes not the other way around.”
English replied, “I hear your perspective, but we are bound by strict laws of the state and we never know until that legislature sine dies what they have done to us this year. They do everything they can to make it look like they are lowering rates for the state while they are pushing the responsibilities on us down here. We couldn’t have set a budget a month ago because we didn’t know what the state is going to do to us until sine die. They’re looking right now at tremendous cuts. That’s their mantra. It puts the responsibility on us to raise taxes.”
Traywick added, “The tax rate going up or down generally is not what the taxpayers are concerned with. It’s the total dollar value of the levy. If you need $185 million to run the county, it doesn’t matter what the rate is. You have to raise those dollars to run the county.
“You can tell the taxpayers all day long that you kept the rates low, but if you don’t have sufficient funds to run to run the programs that they care about, they are not going to be your friends. If you have to raise the rate, they don’t care too much about the percentage. It will be the $435 for this year’s tax bill, which was $431 last year.”
English spoke of the problems the county had during the down years when the tax rate was not raised and it was difficult to continue services. Such practices, if continued for too long, could get the county millions of dollars behind.
English said to Crosby, “We asked the county attorney and the treasurer and she said this cannot be done. It’s your right and responsibility to look at avenues of which you have concerns. You presented those to us and this will be a part of our decision making process.”