Town impacted by state actions

By Gary Edwards, Town Manager

The State of Arizona continues to have a very significant impact on local government finances. Some recent developments indicate that certainly may be the case here in Wickenburg.

I attended the Governor’s Rural and Regional Development Conference Sept. 24 through 26 over in Cave Creek. The event was nearby, so I could drive back each evening instead of paying for a hotel room. Because of an announcement at the meeting, it probably was a good thing to save those dollars. The session is sponsored by the Arizona Association for Economic Development and the Department of Commerce. The three-day annual event is filled with training sessions related to community and statewide economic development.

On the first day, a luncheon was held during which the Arizona Department of Commerce gave a presentation titled “Arizona’s Economic Forecast”. At the very end of the talk, a department spokesman said local governments in Arizona could lose $100 million in state revenue sharing during fiscal year 2009-2010. The luncheon was held in a large ballroom and was attended by representatives from many Arizona communities. You could hear a pin drop in that huge room after the state dropped that bomb. It is too early to know what Wickenburg’s share of that $100 million will be. I don’t mind saying that this development makes me very nervous.

While attending the same conference, word of some more bad news, although on a somewhat smaller scale, began circulating. Dozens of Arizona towns, cities, counties, and school districts could lose $40 million as a result of the collapse of Wall Street investment bank Lehman Brothers. Tempe could lose $3.5 million. Goodyear and the City of Maricopa could lose $1.4 million each. Pima County could lose $5.2 million. Lake Havasu City could lose nearly a million dollars, the same with Glendale. Flagstaff could lose nearly $290 thousand and El Mirage may see a loss of $230,000. These local governments are among the 138 investors that had money in the state treasurer’s Local Government Investment Pool 5. A little more than 1 percent of this pool was invested in unsecured Lehman bonds that may not be fully recoverable. How is Wickenburg impacted? We could lose as much as $156,000.

In many states, it is illegal to invest public dollars in unsecured funds. Apparently, that is not the case in Arizona because the state is doing just that. It is taking public finances belonging to local communities and investing them in unprotected funds. Of course, taking that risky investment path will provide a higher interest rate for the public dollars, but it is a gamble. In a damaged economy, it is a bet that did not pay off. Larger towns and cities have the staff to do their own investments. Smaller communities were relying on the state to provide that service. I anticipate some communities may reconsider their options in light of the current economy.

As if all of the above weren’t enough, in order to help balance its budget, the state is still trying to get local governments to pay for crime lab fees, something we had not paid in the past. This could hit the Town of Wickenburg’s pocketbook in excess of $30,000. Because the issue developed after our budget was approved, it is not something we included with this year’s document.

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