Nearly $1.5 million in federal funding has been secured for Navajo County, thanks to an omnibus bill passed by Congress and signed by the President on Dec. 18.
The Payment in Lieu of Taxes (PILT) funding had been in question and county officials decided not to rely on it in the current fiscal year budget. Instead, primary property tax rates were increased to make up for the potential loss of PILT revenue.
PILT funds are intended to make up for uncollected taxes due to federal lands within the county. For example, Navajo County must provide law enforcement, fire and emergency services to areas located within national forests, but cannot collect property taxes from those lands.
County Manager Jimmy Jayne explained that the federal funding was not included in the budget because of the uncertainty that Congress would approve it.
“We’re still treating PILT as a one-time revenue. There’s no guarantee,” he said. “We will likely be in the same place as we’re building this (2015-16) budget.”
Jayne noted that the county will not actually receive the recently approved PILT funding until June, which is the last month of the county’s fiscal year. The exact amount the county will receive is not yet known, but it is expected to be around $1.5 million, similar to previous years.
Although the PILT funding is secure for this fiscal year, county officials are still pushing for a guarantee that they will continue to receive the funds.
“We’re looking for at least a three to five-year commitment,” Government Relations Administrator Hunter Moore said.
He noted that it is difficult for the county to build a reliable budget when such a large amount of funding is uncertain.
Assistant County Manager Homero Vela noted that PILT funding makes up about five percent of the county’s general fund.
Even with the PILT funding, the county still faces many uncertainties in the upcoming fiscal year thanks to a state budget shortfall.
“The state budget is projected to be more than $1 billion in the red and next year looks worse,” Moore said. “We know that the (state) budget is going to have very severe consequences on counties.”
Cost shifts from the state to the county in the current fiscal year total more than $1 million, including $420,000 in Highway User Revenue Funds (HURF) that were diverted to the Arizona Department of Public Safety. According to Jayne, the raid on county HURF funds makes it difficult for the county to properly maintain roads.
“To maintain all of our paved roads on a 25 year replacement cycle, we need to repave 14.28 miles every year, but we only have funds to repave six miles per year, which pushes the road system life cycle to a 60-year, assuming that all things remain constant,” a written report notes.
Other cost shifts by the state, such as requiring the county to foot a portion of the bill for sexually violent offenders and pay salaries for justices of the peace, have also cut into the county’s budget.
“The state needs to take responsibility for their own financial management,” Jayne said.
Finance Director James Menlove echoed Jayne’s sentiments, noting that the county has been lobbying to prevent state shifts and cuts, but historically has had to absorb part of the state’s financial difficulties.
“The last time the state was in this position, they kicked the can to the county,” he remarked.
