Thu, July 18

City voters to decide Home Rule question

COTTONWOOD -- The Home Rule election is back before Cottonwood voters May 19. In fact, registered Cottonwood voters should already have their ballots in hand with a single item:


The question now is how to vote.

Some believe it would be a good time to tie the city council's hands in terms of spending. Voting against the ballot measure would do that. The surprise however is that the city does not stop collecting sales taxes. Those dollars collected on purchases within the city continue to add to the city coffers. The difference is that Cottonwood no longer is able to spend all of the revenues. The typical consequence is that the dollars build up and earn interest for the city in accounts until voters again approves the alternative expenditure limitation so they may be spent. It essentially means that the city must reduce its services to the tax payers even though the taxpayers continue to pay out the same as if services were provided.

Why does that happen?

Voters changed the Arizona constitution in 1979, one year after California approved Proposition 13, an initiative model to limit California spending that has braved a Supreme Court challenge.

The California constitutional amendment, approved as the "People's Initiative to Limit Property Taxation," has been subsequently adopted in 24-states that allow the initiative process, including Arizona.

Has anyone attempted to correct the flaws of the Arizona's amendment.

"I am not aware of anyone trying to get that done. Typically citizens presented with the facts of the budgets approve the alternative expenditure limitation," said Ken Strobeck, Director of the Arizona League of Cities and Towns. He says to approve the state's limitation is, "to go back 30 years. It does not take into account any growth."

The State's spending limitation is anchored to a base expenditure established in 1979-1980 budgets. There is a complicated formula, but, under the law, cities are allowed to increase their spending a couple percentage points each year, based on population.

The state constitutional amendment allows the alternative to the states more onerous formula allowing a more typical revenue-expenditure stream.

Cottonwood voters have approved the Alternative Expenditure Limitation every four years since the measure was first approved in 1979, seven approvals.

That is the same with every other city and town in the state. Strobeck says every one of the other 81-incorporated communities has also approved Home Rule, the Alternative Expenditure Limitation.

Only one community, Sedona, in northern Arizona ever rejected Home Rule. Two years later, the alternative was restored.

There are a number of exclusions allowed to the State imposed limitation for bonds and debt service, federal grants and donations. The exclusions also include state highway and state share revenues as well as monies accumulated for capital projects.

But, City Finance Director Rudy Rodriguez says the state formula does not take into account some significant changes in a city's structure.

The Cottonwood changes over the years, since the formula's established base in 1979, include the transition from a volunteer to a paid fire department, the construction of a new library facility, the construction of a wastewater system throughout the city, the acquisition of four formerly private water companies. It also does not account for the staffing needed to operate the new recreation center. The state formula does not take into account any changes of that kind.

The difference is dramatic. For the 2009-2010 budget year, the difference between what the State Limitation allows in spending and what an Alternative Limitation would allow is over $11 million.

Rodriguez says has not personally received any questions about Home Rule, but understands the City Clerk Marianne Jiménez has fielded a couple concerns in response to the city's increase in its sales tax rate.

Rodriguez says, the city increased its tax rate, "in order to survive and not have to lay off a lot of staff."

He is concerned that people may vote against Home Rule because they may believe that it will have an effect on the tax rate. "They are two different things."

Rodriguez has spoken with several groups to explain the Home Rule vote. "Many people don't fully understand the implications," he says. "It is more an educational issue."

The Finance Director asks that anyone with questions call or email him. He promises to respond right away. Rodriguez may be reached at 634-5526 or