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Hear what local governments have as legislative priorities for the 2016 legislative year. Ken Strobeck, executive director of the Arizona League of Cities and Towns will tell us more.



Ted Simons: Coming up next on Arizona Horizon, we'll speak with representatives of the state's local Governments on what they expect from the upcoming legislative session, and we'll hear about what some consider the increasing militarization of local police forces. That's next on Arizona Horizon. Arizona Horizon is made possible by contributions from friends of Arizona PBS. Members of your PBS station. Thank you.

Ted Simons: Good evening and welcome to Arizona Horizon. I'm Ted Simons. Governor Doug Ducey today's pointed Phoenix attorney and goldwater institute litigator Clint Bolick to the state's Supreme Court. The Governor said that Bolick is nationally renowned and respected as a constitutional law scholar and a champion of liberty. This was the Governor's first a appointment to the state Supreme Court bench. Bolick was chosen over applicants that included court of appeals judges and current and former prosecutors. This week we've been hearing from leaders and advocates of various issues on what they are hoping to see from the new state legislative session, which begins next week. Tonight, we look at the legislative priorities of Arizona cities and towns and counties. Joining us is Ken Strobeck, executive director of the Arizona league of cities and towns, and mark Barnes, a representative of the county Supervisor's association of Arizona. Good to have you here. Thanks for joining us.

Mark Barnes: Thanks, Ted.

Ted Simons: What do you expect to see from this session?

Ken Strobeck: Well, I think it's going to be very budget focused like it always is. We really don't run a lot of bills. We don't have a proactive agenda. We're mostly defensive, trying to protect shared revenues and trying to protect local authority. We have one issue, though, that we are pushing in a coalition, and that is reform of the public safety pension system, which is really important.

Ted Simons: And I want to get to that in a second. That is a big one. As far as what you are expecting, what you are hoping to see from lawmakers this go around.

Mark Barnes: What the counties are hoping to see is a look at some of the financial responsibilities that the counties assumed during the fiscal crisis. Many of these responsibilities were things that the state was doing, responsibilities that now the county is shoulder financially things like funding portions of state agencies. We would like the legislature and the governor's office to work with us on looking at those responsibilities, and align them with the management of those responsibilities. I'm talking about things where the counties are required to fund a portion of the state agency, when the county, the Government doesn't have any management oversight over that level of Government.

Ted Simons: Has that changed in recent years, that responsibility?

Mark Barnes: Since the great recession, in 2008, out of necessity, the legislature has asked the counties to take on more responsibilities for things that the state was doing.

Ted Simons: Similar scenario for cities and towns?

Ken Strobeck: It has, and last year it was a new fee of $10 million a year from cities and towns to pay for the department of revenue operations, again, that's one of those things that mark is talking about, a state agency, and of course, for years and years, we have had sweeps of our funds that are supposed to be going into the streets and roads.

Ted Simons: Let's talk about the highway user fund. What is it, and how is that money supposed to be used?

Ken Strobeck: It's the source is the gas tax and other car related registration and fees and things like that, and it's supposed to be used for streets and roads, and operations of the streets and roads, but the state has, for years, taken a portion of that to funnel to dps operations for statewide highway patrol.

Ted Simons: Has that shifting of funds, has it increased over the years? Do you say they are holding back a bit in the future? Obviously, we had the great recession and there were a lot of things done that weren't necessarily done before. Is this a trend that's going to stick around?

Mark Barnes: It's a trend that occurred in the late 1990s. And then the funding was restored up to 2008, and then it started to occur again. The funding is shifted to the Department of Public Safety. And you know, the shift is one thing. And you know, the shift of the funds, to dps is one thing, but just the adequacy of the formula to fund the transportation needs of the cities and counties and the state, too, is another issue that's just apart from the shift. There is not just sufficient funds into the fund, to allow the proper maintenance of the roadway system, let alone, shift moneys to fund the dps.

Ted Simons: I was going to say, is there an example that you could give us where these fund shifts have directly impacted the counties?

Mark Barnes: Oh, certainly. Certainly, Ted. Last year, the amount is about $12 million, but since 2008, you add the dollar amount per year, it's about $130 million or something for counties. And that funding would have been used to maintain roads, and to, in some place, in some places, build and construct new infrastructure.

Ted Simons: When you talked to lawmakers about this, and say, I wish that you would stop doing this, what do they say?

Ken Strobeck: We agree. We should stop doing this, and then unfortunately, when they get into the budget negotiations, and every dollar matters, then the funds start looking attractive again. But, as mark says, we have lost so much money out of the cities and towns, counties, and the state highway fund, that it's the maintenance, it's the upkeep on the roads, and when you drive around, especially rural parts of the state, roads are crumbling, falling apart, and they are just not getting the maintenance that they should get, and that's really a direct result of the sweeps.

Mark Barnes: Ted, the fund was created, and was revised in 1991, and so, the funding source, was matched with about, with cars that would run 20 miles per gallon. Now, cars go 40, 50 miles, and they still pay, per gallon, and pay 18 cents, and we have cars that don't use gas, with hybrids, and electric cars, and so we need to look at this funding system, and modernize it so it fits with how the motoring public powers their vehicles.

Ted Simons: Let's get the pension reform. Every time we have Mayors on here, they say, I cannot wait for the state to do something. First, what is the problem? What is -- what should the state be addressing?

Ken Strobeck: There are a number of reasons why the public safety pension fund is in the trouble that it's in, and we have a task force that we created about a year and a half ago that involves cities and counties, and we came up with some recommendations, and I've been part of the negotiating group working with the labor groups, the firefighters, police, and as well as the employers to try to figure out what can we do. So, I think that some of the things are the permanent benefit increase, the generous benefits paid out to the retirees, the number of years they have to serve and when they can retire and governance and the fact that we have a fragmented system of 256 different plans, rather than one single plan, so we are very much encouraged by the negotiations that have gone on so far, and cities and towns have a huge stake in this. Right now, there is over $6 billion of unfunded liability in the public safety pension system, and cities and towns are responsible for $4 billion of that money. And so, it's really something that must be addressed this session.

Ted Simons: For those confused about this entire issue, they are hearing pension, well, the city takes care of some pension, the takes should take care of others, and why are these meeting?

Mark Barnes: This is a particular pension system for public safety personnel, that anyone, any individual who is in the public safety sector is part of this pension system. It just operates a bit differently than those.

Ted Simons: It's a different one?

Ken Strobeck: Cities, towns, dps officers, fire districts, and everybody that's in the public safety sector, is part of this plan, but we don't have a role in governing it or making decisions about how these benefits are done, and so, over time, it really has needed a lot of attention. We're getting that attention this time around, but it's one of those things that, we're now shouldering the billions of dollars of liability.

Ted Simons: So cities and counties can do all that they can to a certain degree, but the state has got to --

Mark Barnes: It needs to be reformed with the help of the state.

Ted Simons: Ok.

Mark Barnes: And I think that we're getting that help, and we made a lot of progress, and reforming it will allow barriers that are permitting us from adding officers from the county's perspective, sheriffs, deputies and so forth.

Ken Strobeck: The contribution rate in some jurisdictions is so high, it's up to 50, 60, 70%, so you have a salary, but you have to additionally 34567 that percentage of the salary just into the retirement system, so you are, basically, hiring 1.5 people for a position that, that should be just one.

Ted Simons: Why is it taking so long to get this done?

Ken Strobeck: It's very hard to change on of these huge systems. It has so many people involved in it, it has a lot of constituents interested in the success, and how it operates. It's a big challenge.

Ted Simons: The residential tax, does that impact the counties?

Mark Barnes: It doesn't.

Ted Simons: Ok. So this is more of a cities kind of a thing?

Ken Strobeck: Yes.

Ted Simons: Tell me about this. I know that there is an effort, and we had a debate, a lively debate on this program. What is that tax and what is --

Ken Strobeck: Cities and towns are funded by sales tax, transaction privilege tax, which is the tax on the business of doing business. And one of the things that we tax, at the city level, is the residential rental. And that's apartments and houses and things like that. It's a huge amount of tax. It's over 70 million a year for cities and towns, and there is a proposal to eliminate it because some people say well, we don't like paying that tax. Well, nobody likes paying that tax, but you cannot take 70 million out of city and town revenues when we're on a very tight financial system, and not have an impact on the services that are delivered.

Ted Simons: I am a lawmaker, and you buttonholed me somewhere, and you get your opportunity to tell me, what counties need the most from the legislature? What is it?

Mark Barnes: I think what the counties need the most is the ability to work with them, constructively, to partner with them constructively, to change some of the financial relationships between the state and the counties, so that the counties are put on a firm financial ground, to operate long-term. We have counties there in very difficult financial situations because of the constraints they operate under, things like expenditure limits, and levy limits, things put in place 40 years ago, so long-term, those are sort of the most important things on specific issues for this session. We have our association has a number of bills we'll be proposing that will make the county Government run more effectively, and efficiently, and the county Government can only do the things that the legislature authority do, so we need to work every year to, to change laws to make that happen.

Ted Simons: Ok. You have got me at an elevator. Give me the elevator speech.

Ken Strobeck: It protects shared revenue. That's an important issue for us, and this year, we have a change to the distribution through the population census activities that are the cities and towns do every ten years. We're proposing that they update the numbers every year, with the U.S. census bureau numbers. But, we're also based on income tax, unlike counties. We have local sales tax and a portion of the income tax, so if there are income tax cuts that are being proposed, as they are, we expect to have some way to make up that revenue because we're operating on a very, very narrow margin.

Ted Simons: All right. Gentlemen, good to have you both here and thanks for joining us.

Mark Barnes and Ken Strobeck: Thank you.

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Ken Strobeck:Executive director of the Arizona League of Cities and Towns
Mark Barnes: a representative of the county Supervisor's association of Arizona

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