June 22, 2009

There is some good news to report on the Scottsdale City Budget. We cut the 2009-2010 budget by $9M beyond what the City Manager proposed in order to be prepared for the continuing revenue shortfalls we see in the immediate future. We held the line on water rate increases. And we cut the city's property-tax rate enough to reduce the overall amount city residents will pay! One note of caution, all of these measures were just barely approved, so not everyone on the Council is committed to making Scottsdale city government leaner.

Not all of the news on the budget front was good. The Retirement Incentive Plan cost four times what the staff predicted it would when we approved it, not to mention the ethical questions about how many of the decisions regarding the plan’s implementation were made. I for one do not believe that there is nothing to be done about this and I will continue to press for action to scale back the payments.

One silver lining of the Retirement Incentive Plan cloud is that the outrage over this helped us to finally get the votes to hire a City Treasurer who is independent of the City Manager, who can therefore give the Council unbiased advice about financial issues. My seven years at City Hall have convinced me that getting financial advice from the same person who spends the money is a conflict of interest that costs Scottsdale taxpayers big $. The Council made the Audit Committee (of which I am the Chairman) the task of conducting the search for a City Treasurer and we will be getting on that ASAP.

While we at the city level have made progress toward a more fiscally responsible budget, we risk having our city coffers pilfered by the State Legislature. The state budget for 2009-2010 is three billion dollars in the red. The responsible way to deal with this is to either raise revenues, cut spending, or both. Of course, these are unpopular moves. So, some legislators are trying to dodge responsibility for these unpopular moves by passing the buck to the cities, forcing us to raise taxes or cut services further and thus take the heat off the legislators.

But the biggest threat to the city budget that the legislature is considering is Senate Bill 1035, which would place a total moratorium on impact fee collection for three years. In the case of Scottsdale this would cost the city $30 million! That is a direct transfer of $30M from the pockets of Scottsdale citizens to the pockets of homebuilders and developers. Since Scottsdale does not even (surprisingly) charge as many impact fees as other cities around the state, the statewide impact of this build would easily be in the hundreds of millions of dollars.

The supporters of this proposal are trying to sell it as “business friendly” but the bottom line is that it is nothing but a special-interest subsidy using taxpayer money. The suggestion that this will encourage more building is totally phony. The problem is not a lack of people to buy homes at reasonable prices; the problem is a lack of financing for these people to buy homes, and a glut of foreclosures and existing homes on the market which depresses demand for new homes. Senate Bill 1035 would not fix either of these problems.

I always oppose these at the city level and they are wrong at any level of government. If you agree I would appreciate it if you would let your legislators know that you oppose this special-interest subsidy and urge them to vote against it. You can find the contact info for your legislators here.

As always, feel free to email or call me if you have any questions or need more information.