City Hall is pinching pennies, yet overall spending increased $80.5 million over original projections for the fiscal year that begins July 1. The city is broke, yet the City Council committed last week to finding $8.5 million--in the future--for a dramatically expanded park for elephants at the Reid Park Zoo. Spending for police and fire protection is up, but only because of increased benefits. More cars pound Tucson streets, yet there is zero for regular street maintenance. Taxes for daily operations will drop slightly, yet property owners will pay substantially more in taxes. Cuts have not abated, yet the city will ask voters in November for permission to spend more.
And finally, the city has a consensus-building chief executive, Mike Hein, who took over for deliberately divisive James Keene. Yet the budget, Hein's first and one that he essentially inherited, slipped past the City Council on a 4-3 vote.
"That's definitely a new thing for me," said Hein, who achieved unanimous approval for most of his budgets and initiatives in Marana and Pima County. "I had very little to do with this budget, which is the second of a two-year budget, to tell the truth. (Deputy City Manager) Mike Letcher and the staff did a reasonably good job to put it together."
Despite that detachment, Hein worked the council hard. He pressed Democrats Jose Ibarra, Steve Leal and Shirley Scott to join Republican Mayor Bob Walkup and his majority of Kathleen Dunbar and Fred Ronstadt, both Republicans, and Carol West, a recent convert from Democrat to independent. Democrats refused, saying the budget left out kids, working families and essential city services. They remain opposed to the city's $14-a-month residential garbage collection fee.
Even West said she wasn't thrilled with the budget, which she said "probably has more things that I don't like than what I do like."
Hein put his mark on the budget in a few ways and outlined future budgets. First, he dropped Keene's enormously presumptuous plan--one that also passed the council last year--to have Pima County pay 100 percent of the nearly $24 million budget for the Tucson-Pima Library System. The county has a separate property tax for the jointly funded libraries. It's a tax, totaling $55 a year on a $200,000 home, that all county property owners pay, including those in the city. While Keene wanted to save up to $10 million in library expenses so that the money could be use for other city functions, Hein is the man who negotiated the funding and eventual management transfer. He injected reality, and the city will contribute $8 million this year, the first in the five-year transition.
Under the 2005-2006 spending plan approved last year, the city will boost its police force by 27 officers. Four cops were added in changes approved earlier this month. But the extra $2.4 million in police spending, boosting the total for the 2005-06 fiscal year to $138 million, is for a $2.1 million increase in pension payments for commissioned officers. Similarly, nearly $1 million in increased spending in the fire department, for a total of $63 million, is for increased pensions.
Government watchdog Mary Schuh, who met with Hein at the manager's request, said the city's commitment to employee benefits will create a future financial crisis. The city pays 100 percent of retirement benefits and a larger share of health insurance than other governments.
"The way they pay people with perks and benefits is obscene," Schuh said.
Schuh is not a city resident. She was on Hein's call list because of her position as president of the Pima Association of Taxpayers. Hein and his crew are out selling the underpinning of future city budgets: a lifting of the spending caps that, adjusted for inflation and population growth, have been in place on Tucson and all Arizona municipalities since 1980.
Schuh's main message: "You get a windfall, don't spend it. Don't be financing long-term projects. But more important is to teach the elected officials not to spend it."
The city is primed for a windfall, both in local sales taxes and other revenues that Hein and other city officials say it won't be able to spend in the future, without voter approval, because of the 25-year-old spending limits. The city projects between $7 million and $8 million in revenue for the 2006-2007 budget that it won't be able to spend if voters don't approve relief from the cap.
In Letcher's lectures and in city promotional material, voters are being told only part of the story. For example, the city's talking points ask the question if the higher spending limit gives the city authority to impose new taxes. "No," the city answers in bold print. "All state and local laws for existing and new taxes continue to apply. Approval would just allow the city to spend the revenues it expects to collect."
The answer is misleading. Passage of the measure also does not prevent the city from raising taxes, including some without voter approval.
And the city already is bringing in more in taxes, even at the current tax rates, because of increased property values. Sales tax revenues will increase by 5 percent to $184 million this year. And property tax revenues will increase by $3 million in the coming year. Part of that property tax increase comes from a nearly six-cent increase in the secondary tax rate, used to pay off voter-approved debt. That increase will mean an extra $12 for the owner of a $200,000 home and a total city tax bill of $247, less than a quarter of the $1,090 county property tax bill for the same home. The county, however, has no direct sales tax. The city's is two cents per dollar.
The state law limiting growth in municipal governments was an outgrowth of California's landmark Proposition 13, passed by voters in 1978. Bill Heuisler, the tax crusader who lost a Republican bid for county assessor in November, led a drive similar to Proposition 13. The effort was hijacked by the state Legislature, which adopted less-stringent standards.
"They did an end-run around us and gave the cities a lot of loopholes," Heuisler said. "Really there isn't a spending limit. There are ways to get around it, using a variety of debt."
Hein concurred and said he wants the city to move away from its decades-old practice of budget and debt "gimmicks," while instituting regular street-maintenance and public safety improvement plans.
Heuisler, also a member of the Pima Association of Taxpayers, remains skeptical.
"If the city has or will have so much extra revenue that it needs to lift the spending limit, then why does the city charge a $14-a-month garbage fee? The city cries 'no money' and now wants an override," Heuisler said. "They really don't care about the little guy, the retiree on a fixed income, the working poor. If they have or will have such a windfall, then they should drop the garbage fee. To get the override passed, they'll have to do something that dramatic."