TAX NEWS - June 2010

Arizona Tax: Mohave County Property tax hike may be around corner

Without tax rate increase, Mohave County would face $4.6 million shortfall under new budget

KINGMAN — There was some good news but mostly bad news in Monday's 2010-11 budget workshop held by the Mohave County supervisors.

Mohave County Finance Director John Timko said the good news is his office presented a balanced budget to the board. The bad news is that the property tax rate may have to be raised. The county's revenue is projected at $74.4 million and its expenses also are projected at $74.4 million. The contingency fund is estimated to be $11.5 million.

The property tax rate for the current 2009-10 fiscal year is $1.26 per $100 assessed value on a home. The rate is calculated after a limit of a 2 percent increase from the previous year. A state tax commission calculated Mohave County's property tax rate for the 2010-11 fiscal year at $1.46 per $100 assessed value on a home. The county saw an 11 percent decrease in property values, Timko said.

Without the increase in the property tax rate, the county would face a $4.6 million shortfall, most likely resulting in eliminating 72 county employees. The county initiated a hiring freeze in 2007.

Timko also asked the supervisors what each thought about raising the property tax rate but neither Supervisors Tom Sockwell of Bullhead City, Gary Watson of Kingman nor Buster Johnson of Lake Havasu City gave a hint in which direction they were leaning.

The property tax rate was set at $1.33 per $100 assessed value for the 2008-09 fiscal year and for the 2007-08 fiscal year the rate was $1.53 per $100 assessed value. The year before that the rate was set at $1.67 per $100 assessed value. The rate was $1.75 per $100 assessed value for the 2005-06 fiscal year.

Timko said another revenue source for the county is the state sales tax, which is projected to increase by $350,000 from the year before. About

$17.65 million in state sales tax is expected for the 2010-11 fiscal year. Other sources of revenue include a vehicle license tax, which is not expected to increase. All other revenues are expected to rise by about $350,000.

The only place to cut spending would be eliminating county positions. For the second year in a row, county employees will not see a pay or merit raise. The county did absorb an increase in health care costs for employees, Timko said.

One unknown issue is the cost of the new jail that is being built next to the administration building and is expected to be completed by the end of the year. By mid-fiscal year, additional funding may be needed for the jail, possibly for staffing.

Mohave County Manager Ron Walker again criticized Arizona legislators for not balancing the state's budget, spending its contingency fund and passing costs on to the counties.

Sheriff Tom Sheahan was one of only two department heads to give a presentation to the board. Jail bookings increased to 11,000 this year and calls for service for deputies increased by 52 percent in the last 10 years.

The biggest issues were school resource officers and boating officers on the waterways, including the Colorado River and Lake Mohave. The state parks department swept away about $500,000, which would have devastated boating enforcement. A recently passed state bill will send $500,000 back to Mohave and La Paz counties. About half of all boating traffic in Arizona is in Mohave County.

Sheahan said the state parks department illegally took that money and is asking the Arizona Attorney General's Office to look into the issue. The county attorney's office also may seek legal action.

Public Health Director Patty Mead was the only other department head to speak giving the bad news of budget cuts to the senior meals program. Bullhead City senior center is projected to lose about $70,000 and the Golden Shores senior center is projected to lose about $27,000. That would mean fewer clients for meals at the senior centers and seniors receiving home-bound meals.

One solution is outsourcing senior meal programs. Sockwell and Johnson said there was a bigger need for home-bound meals than meals at the senior centers.

The board is expected to adopt a tentative budget at the July 6 board meeting and adopt the final budget and the truth in taxation statement at the Aug. 2 board meeting. The supervisors also will vote on adopting the fiscal year primary and secondary property tax levies and rates at the Aug. 16 board meeting. The tax levies and rates are for county taxing authorities, including the county and school and fire districts.