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Tucson-area schools can't cash in on booming economy

The Tucson agenda

Tucson-area schools can't cash in on booming economy

Reliance on property taxes, keep lid on revenue growth, plus more in local gov't meetings this week

  • Sales taxes collected at the point of purchase let governments ride economic booms upward. Unfortunately for school districts, their budgets are largely funded by property taxes, which increase slowly even if housing prices spike.
    Calamity Meg/2.0 licenseSales taxes collected at the point of purchase let governments ride economic booms upward. Unfortunately for school districts, their budgets are largely funded by property taxes, which increase slowly even if housing prices spike.

Three Tucson-area school districts will vote on their final budgets this week, and the numbers show the big difference between revenues from sales and property taxes.

Governments that are dependent on sales taxes can ride a fiscal rocket during good times (and some inflation actually helps). Property tax revenues creep along steadily without providing anything close to the same kind of windfall.

The Catalina Foothills Unified School District Governing Board will vote on final approval of a $37 million budget with a $1.1 million surplus brought forward from the current fiscal year.

The Amphitheater Unified School District Governing board will consider (and must approve by the end of the month) their 2022-23 budget. Its slated to have a $1.6 million carry-forward.

The "moneybags" at the Flowing Wells Unified School District will put before that board a $110 million budget with a comparatively boffo $8 million ending balance in 2022. 

I've long been told ratings agencies like to see fatter surpluses (about 10 percent) for cities and counties, and none of these districts meet that threshold. School districts are, in so many ways, their own critters and each of these districts claim a AAA rating from Moody's Investors Service.

The town of Oro Valley has a $96 million budget planned and is inheriting $50 million in budget carryover and projected surplus.

The town of Sahuarita — which may have two new Town Council members after a meeting Monday night — has just over $107 million in the bank but will only spend $53 million.

The Sunnyside School District board is also scheduled to meet but no agenda was posted as of Friday. The district staff has until 6 p.m. Monday to publish an agenda to comply with the state's open meeting law.

Sales taxes are imposed as a percentage of sale prices. So if the price of a product rises, so too does the amount of tax that single purchase creates. in a booming economy, if two of those products are sold, then the tax revenues increase even more.

Property taxes are different. State law limits their increase to 10 percent a year. Without a building and sales boom, the base of taxable properties just kind of inches along.

So yeah, home prices are soaring but the schools (and Pima County) are limited in how they can cash in on that.

School districts don't get funding from sales taxes and are unable to capitalize on rollicking good times. 

The flip side, of course, is during recessions the sales tax proceeds that flooded cities and towns can vanish. The city of Tucson didn't recover its sales tax revenues until 2017 — about a decade after the Great Recession started.

Smart budgeting would let governments diversify their revenue streams. State law and local charters conspire to take that off the table. 

This why former Pima County Administrator Chuck Huckelberry was so keen on a sales tax. He was even willing to cut the primary property tax rate to make it revenue neutral. He never got one and always complained about it.

Meanwhile, nothing is particularly new in those budgets other than losing federal COVID money, which was always meant to be a short-term fix. School budgets all carry a big asterisk. 

The Arizona Legislature took so long to cobble together a state budget, school districts had big holes in their projections. That budget was finally approved late last week. Schools depend heavily on statewide distribution of cash to fund K-12 education but must complete their budgets by June 30.

The Catalina Foothills district is already warning its board that the whole budget will have to be reviewed in September (assuming lawmakers get their acts together by then).

A new council member

Meanwhile down in Sahuarita, the Town Council will vote during its Monday meeting on who will fill seat left vacant by Gil Lusk, who resigned in March, as well as a set left vacant by Melissa Hicks, who left office in February.

The finalists for the first seat are Stephen Gillespie, a surgeon, former Indiana airport executive William Foraker and sommelier and wine journalist Teodoro Teso. I don't mean to put my thumb on the scales but a "wine journalist and sommelier?" As opposed to a whining journalist told by their editor that "som" is not an acceptable synonym for "sommelier."

The replacement for Lusk will serve the unexpired balance of his term, through 2024.

To replace Hicks, there is just one candidate: Diane Priolo, who is also the sole candidate on the ballot for the seat in the upcoming August election. The appointment would be good until then.

If all goes well, the new council members will be sworn in during the meeting.

The council will also vote on a final approval of the town's $107 million budget, complete with a $53 million surplus. 

Blake Morlock is an award-winning columnist, who worked in daily journalism for nearly 20 years and is the former communications director for the Pima County Democratic Party.

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