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What the Devil won't tell you

Tucson sales tax referendum confirms erosion is no hoax

Everyone needs capital spending, even the Deep State

I love hearing the alt-right talk about “The Deep State.”

Don't get me wrong. Bureaucratic inertia is real. It's a living thing that will defend itself.

But just as often the Deep State is there to protect elected leaders from their own shallow whimsy.

Ballots are about to go out to Tucson city voters asking for a five-year, half-cent sales tax to pay for the obvious: road and public safety investments our community has put off for too long. It's a matter of simple paternalism and state rules that make municipal government too dependent on sales taxes.

Credit City Manager Mike Ortega for bringing order to the City Council's chaos, and this ballot measure is another exhibit proving his bona fides. The manager runs a professional organization lead by a finger-waving dad, who has a family to keep happy. Dad, the City Council, and the family (voters) like the city when it's broke. So buying new laptops is what you do when you've exhausted all other possibilities.

We all know cops need computers in their cars but the sales tax proposal calls for $3,000 laptops. That seems high until you realize the only way police will get their next round of laptops is when a police chief can tell the Council they haven't had new ones in 10 years. Might as well buy the police good ones if the shoplifting kids cuffed in the back seat will be laughing at the arresting officer's dinosaur tech in 2023.

Dad likes to say he's “held the line” on spending and forced the city “to tighten its belt.” It's not a bad instinct but dad and the family have taken it too far.

Successful businesses don't work this way and responsible families don't operate accordingly. If you the roof leaks, you fix it. If the driveway cracks, you seal it. If the law says, you need liability insurance to drive, you get comprehensive and collision – just in case. If you don't do these things, you know it will just cost you more later.

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You don't take pride in the fact that you never change the oil in your car to prove you are fiscally conservative. Voters save that sort of wisdom for the government and it costs them, and all of us.

There's no denying

Stuff breaks. Things cost money. These are the realities prompting Prop. 101 being put to city voters.

The five-year, $250-million in revenue will be split 60-40 between roads and public safety.

Take a look at traffic fix costs to see the price of belt-tightening flashing in red. A city map lays out the transportation element of the sales tax plan. Green lines show where Tucson streets need “preservation” (resurfacing), so taxpayers don't have to foot the bill for total reconstruction. Red lines show where Tucson taxpayers missed that chance and must rebuild the road entirely.

Eyeballing the map shows the lane miles are about the same. The cost of resurfacing will run $5 million. The cost of rebuilding those streets will cost $55 million. Tucson tightened its belt by $5 million and it cost us 11 times what we saved. Yay.

Tucson isn't saving any money – at all – letting the green half of the map turn red out of some puritanical sense of austerity. Nor did it do lower-income folks any favors shoveling that $5 million into Sun Tran at the price of $55 million.

Maybe we can debate anthropomorphic climate change, but can we all agree the erosion of our roads is not a Chinese hoax?

Really basic budget primer

There are two types of municipal budgets: Enterprise funds and general funds. Enterprise funds operate off money they make. Tucson Water is the best example. The water department operates solely on the fees they collect from customers. The whole community pays for the general fund to sustain public programs that don't pay for themselves, or shouldn't. Police, fire and city courts get more than 50 percent of the general fund.

All budgets are divided between “maintenance and operations” and “capital improvement.” It's real simple in human terms. Food and bills are operations. Buying a car is capital spending. Capital needs are those expenses not encountered every day, week or year – like a salary – but big enough to cause a headache if they aren't budgeted.

Bonds are a common way to pay for truly big ticket capital projects but a smart city manager doesn't want to have to bond every time she needs an iBook. So, SOP is to set aside some of every budget for capital as the cost of doing business.

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That's not the case today. Going on a decade's worth of budget crunches has left Tucson's capital improvement cupboard dry.

But Intrepid Columnist, why does Ortega need more money? They are awash in tax dollars, right? Wrong. Sales tax revenues still haven't recovered from the Great Recession. In fact, they are about $5 million less in absolute dollars than 10 years ago. So that's a real cut in sales tax dollars of about 25 percent.

The city has a capital projects fund but there are no general fund dollars contributing to it. In fact, without the sales tax hike, only enterprise funds, bond money and regional transit fund money is going to be tapped for any capital improvement. None of the general fund programs will get new capital.

Check that belt

There's an upside to this. To restore capital means going to the voters and getting their buy in — and that's telling dad's family if they want new fire trucks, they are going to have to pony up. Voters get a say in it and the city has laid out in detail how the will money will be spent.

To whit, I checked it out and years of reviewing budgets tells me there's nothing shocking.

Voters may get sticker shock at the idea of spending $34 million on fire trucks but that's what they cost. Get used to it. Those big red machines are seriously pricey. The city's prospective price tag of up to $1.7 million is in line with the new firetrucks coming on line today and the city needs 47 of them.

City spokeswoman Lane Mandel pointed out that “90 percent of ambulances, 68 percent of pumper trucks, and 42 percent of ladder trucks are beyond the reliability threshold.”

I imagine, when your house is burning down, you don't want to get a call from dispatch “uhh, Ladder 8 just threw a rod … the wanna know if you can come pick them up.”

If $57,000 for a new Police Interceptor seems steep for a Ford, remember that it's not just a normal Crown Victoria. The engine needs about 68 valves to get where they are going fast and so they aren't outrun by a 1998 Geo Prizm (you laugh, but they move out).

My only question about buying 1,306 police department employees laptops is this: Could you get some bulk-buying deals and split the buys up over time because the line $3,000 for a laptop jars the senses when buying a thousand at once?

At this point, we're just bitching to bitch because it's not a lot for tech over seven to 10 years after software and durability needs are satisfied. Three grand per department worker between now and 2025 ain't that much.

In 2009, Tucson firefighters and police officers leveraged their badges on a political charge to swipe for themselves the whole of the city general fund's budget by asking voters to change the city charter to staff them at a favorable “national standard.” That ballot question blew up in their faces because hubris works that way.

It's eight years later and the patrol fleet, their laptops, fire trucks and all the other capital assets have been aging. They now need really stuff and stuff costs money.

Arizona, the Regressive Tax State

Sales taxes, as are most taxes where everyone pays the same amount, are regressive. They hit the poor harder. Prop 101 would drive the overall sales tax rate to nearly 9 percent. A person charged almost a buck in tax on a $10 bag of life necessities has a lot fewer options with what remains of their paycheck than does somebody who's got the scratch to pay $2,000 on a luxury item and pays $200 in taxes.

Moreover, leaving municipal government dependent on sales taxes is a bad way to run city hall. Sales tax revenues dry up faster than income or property taxes during recessions and aren't accumulating like they used to during boom times.

Income taxes are not local options in Arizona. State law limits what the city can charge or property taxes and the City Charter further restricts that source (general-purpose property taxes account for 1 percent of the city budget). So half the city general fund – $246 million – comes from sales taxes generated both locally and shared by the state. State shared income taxes account for $64 million.

Property taxes respond slower to the boom-bust cycle than sales taxes. Sales taxes haven't recovered in 10 years but property tax revenues in that time has increased by 41 percent, from $10.3 to $14.5 million.

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If Tucson were funded 50-50 by property and sales taxes, the city's revenues would be 10 percent higher than they are now, without changing overall tax rates.

Here's the better part – Pima County government is far too reliant on property taxes and is unable to cash in on the boom times. So, County Administrator Chuck Huckelberry has since forever proposed reducing property taxes to get a sales tax that would be revenue neutral. So we could probably diversify both local governments, you wouldn't pay any more and the city and county could both be in better shape.

But we live in Arizona, which means it's about to get hot and we are run by the Legislature's shallow whimsy to dangerous degrees.

We are too reliant on sales taxes just as a general rule because the state government prefers it that way. They would say that a sales tax is “neutral” meaning it has a limited affect on your decision-making. A higher property tax would discourage the kind of investment that leads to growth. I can see that. Where the argument falls off the rails is when they argue that taxing income discourages people from trying to make more money.

I say this as a guy who once took a second job teaching at the University of Arizona and hit the tax bracket sweet spot so perfectly that every dime I made on campus I owed right back to the Internal Revenue Service. That's rare. I don't know many people who making $92,000 a year who would be happy to have their pay cut to $37,000 but fall back into a lower tax bracket.  ("Honey, I got great news. Our taxes just went down!")

The Legislature doesn't want the wealthy to pay for stuff because it “punishes them.” So we're stuck with a system that leaves a sales tax as our only recourse, hitting lower income folks harder.

Stuff costs money and the city's sales tax ballot measure reflects only those reality of wear, tear, the march of tech and the liberal conspiracy of erosion.

We need to get to work on traffic and public safety needs because parks don't exist in a weather-resistant bubble, either. This way, at least voters get to check off on these expenses so they can be satisfied they have the Deep State on a leash.

Blake Morlock covered Arizona government and politics for 15 years, including 11 in the Tucson Citizen. He also worked on Democratic Party campaigns in the field of political communications. Now he’s telling you things that the Devil won’t.


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