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ACMA Legislative Report ~Summer 2014~ Craig Sullivan Executive Director

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CSA Legislative Priorities 2 Eliminate payments to the Arizona State Hospital (ASH) for the Sexually Violent Persons (SVP) population Re-establish the county share of lottery revenues Increase investment in transportation infrastructure, by: Stopping the diversion of local government HURF revenues Identify and enact enhanced revenue options and efficiencies In addition to the restoration of HURF, CSA urged the legislature to work with stakeholders to identify and enact revenue enhancements for the existing HURF distribution system, and to pursue policies that improve efficient utilization of transportation resources.

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CSA Legislative Priorities: Result The budget includes the following county-related provisions: Sexually Violent Persons (SVP) Payments: Maintains FY15 payments at FY14 levels, approximately 34% of costs. Includes "flexibility language" allowing counties to pay via any county resource. Direct Appropriation to Counties (Lottery Revenue): $7.15 million line item appropriation, distributed to 13 counties under 900,000 persons. HURF Restoration: $30 million appropriated for HURF restoration Counties receive: $10 million County Flexibility Language: Allows counties, with fewer than 200,000 persons, to use any source of county revenue to meet a county fiscal obligation for FY 2015.

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Fiscal Year 2015 State Budget JLBC Baseline FY15 Changes to JLBC Baseline Total Revenues 1 $8,708$8,762$54 Total Expenditures 2 $9,035$9,224$189 4 Note: Figures may not add due to rounding 1 Excludes $601 million beginning balance 2 Excludes $120 million in HURF restoration

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State Budget as Enacted FY15FY16FY17 Ongoing Revenues $8,708$9,061$9,465 Ongoing Expenditures $9,200$9,415$9,719 Structural Balance/ (Deficit) 1 $(492)$(354)$(254) Carry Forward $601$139$0$(215) Fund Transfers $54$0 One-time Capital Outlay $24$0 Ending Balance / (Deficit) $139$(215)$(254)$(469) Note: Figures may not add due to rounding 1 Excludes one-time revenues and expenditures and does not account for $460M in rainy day fund In Millions 5

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State Budget with K-12 Judgment FY15FY16FY17 Ongoing Revenues $8,720$9,069$9,486 Ongoing Expenditures $9,564$9,774$10,074 Structural Balance/ (Deficit) 1 $(844)$(706)$(589) Carry Forward $596$0$(220)$0$(932) One Time Revenue $52$(6)$0 One-time Capital Outlay $24$0 Ending Balance / (Deficit) $(220)$(706)$(932)$(589)$(1,520) Notes:a) Figures are taken from JLBC K-12 Inflation Funding Lawsuit Update Table 4, based on the April FAC forecast; b) Figures only reflect projected balances due to the K-12 inflation reset, if back payments are required the FY16 ending balance could reach $(1.4) billion. c) some figures may not add due to rounding 1 Excludes one-time revenues and expenditures and does not account for $460M in rainy day fund In Millions 6

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CSA Legislative Agenda & County-related Bills

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CSA-sponsored Legislation Enacted into law: HB 2218: fire districts reorganization elections (Fann) Ch. 260 HB 2240: developmental disabilities; client income; retention (Brophy McGee) Ch. 167 HB 2320: county seals; approval of use (J. Pierce) Ch. 57 SCM 1006: urging Congress; PILT program; funding (Griffin) Transmitted Did not advance through the process: HB 2149: state parks; SLIF fund distribution (Borrelli) Held House Rules HB 2224: sale of fireworks; counties (Fann) Failed in House Public Safety, Military and Regulatory Affairs HB 2531: court-ordered evaluation services; payment (Brophy-McGee) Held Senate Third Read, to pursue an administrative remedy SB 1271: county liens; abatements (Ward) Assigned to Senate Government & Environment 8

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Public Finance & Secondary Districts 9 HB 2379 special districts; secondary levy limits (Olson) Held House Rules HB 2386 special districts; elections; financing; limits (Olson) Held House Gov. SB 1316 financial reporting; political subdivisions (S. Pierce) Held, Senate Third Read SB 1413 taxes; manufacturers electricity sales; exemption (Yarbrough) Ch. 7

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Public Health & Healthcare 10 HB 2436 food handler training; courses; certification (Shope) Ch. 210 HB 2530 county dog licensing; temporary license (Brophy McGee) Held House COW SB 1035 special health care districts; reimbursement (Melvin) Ch. 65 Administrative implementation of Medicaid Expansion

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Courts & Criminal Justice 11 HB 2093 incapacitated persons; jurisdiction of court (Petersen) S/E Vehicle/ SB 1176 change of venue; guardianship (Crandell) Held Senate COW HB 2457 mental health; veterans courts; establishment (Farnsworth) Ch. 37 HB 2460 probation; community supervision; search; seizure (Farnsworth) Assigned House Judiciary HB 2461 probation officers; authority (Farnsworth) Ch. 152 SB 1249 dangerous & incompetent defendants; commitment (Driggs) Assigned House Judiciary, Appropriations

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General Government 12 HB 2126 S/E municipal annexation; size; exception (Pratt) Ch. 256 HB 2196 election law amendments; repeal (Farnsworth) Ch. 5 HB 2225 county medical examiner; autopsies; images (Fann) Ch. 88 HB 2339 firearms; permit holders; public places (Barton) Vetoed HB 2420 county supervisors; pop. threshold; membership (Stevens) Ch. 265 HB 2483 firearms; private land; lawful discharge (Kavanagh) Ch. 62

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2014 Summary Incremental progress on financial objectives resulted in $10 million in HURF relief for counties in FY15. Secured direct county appropriation, projected through 2017 Session law flexibility language Elevated awareness of growing transportation funding crisis Lawmakers exercised caution when funding new items or addressing cost shifts due to projected structural deficits. Situation made worse by lawsuits (Medicaid Expansion, K-12 inflation) and child welfare crisis Improved operating environment with many new legislators taking an interest in county issues. Education efforts and relationships paying dividends Major changes on the horizon. New Executive = New Agenda New Leaders in 3 of 4 legislative caucuses Legislative mix? 13

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Payment in Lieu of Taxes (PILT) FY2013 Annual PILT Payments County by County Breakdown 14

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Payment in Lieu of Taxes (PILT) 15 The purpose of PILT is to offset losses in tax revenue and to reimburse counties for services provided on, or associated with federal public lands. *PILT using actual FY14 payment as reported by The Department of Interior, Bureau of Land Management **Net Assessed Value as reported in Arizona Department of Revenue (ADOR) Average Statewide Property Tax Rates 2013 State Fiscal Year 2014 PILT Payment Compared to Property Tax Rate FY2014 NAV* FY2014 PILT Payment** PILT Equivalent Property Tax Rate FY2014 Actual Primary Tax Rate PILT Payment as a percent of Property Tax Rate Apache$525,723,278$1,657,1820.31520.459369% Cochise$1,006,475,403$2,142,9850.21292.67608% Coconino$1,519,086,333$1,705,0080.11220.546621% Gila$438,624,843$3,426,4200.78124.190019% Graham$192,240,653$2,784,5601.44852.371161% Greenlee$335,715,128$844,8900.25170.743234% La Paz$216,835,366$1,928,2690.88931.960845% Maricopa$31,996,204,979$3,011,2640.00941.28071% Mohave$1,771,371,872$3,469,6430.19591.819611% Navajo$903,351,854$1,519,2560.16820.699624% Pima$7,559,129,097$3,152,5840.04173.65831% Pinal$1,988,882,373$1,223,7470.06153.79992% Santa Cruz$338,356,662$978,1730.28913.72158% Yavapai$2,232,629,599$3,177,5990.14231.93087% Yuma$1,112,115,440$3,476,3760.31262.060615% Total / Average$52,136,742,880$34,497,9560.34882.127916%

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Emerging & Ongoing Issues The state & federal fiscal situation: Federal appropriations processes (PILT, SRS, SCAAP, etc.) What does the education lawsuit mean for the state fiscal situation? Research & stakeholder issues, including: Transportation PSPRS Cost Containment Strategies Animal licensing and control practices Auditor General county audit training Title 36 and indigent defense costs County data collection 16