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  • Supervisors approve new infrastructure funding policy; will fix all county roads in 10 years while also providing tax relief

    Nov 06, 2019 | Read More News
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    sunrise roadThe Pima County Board of Supervisors at its meeting Nov. 5 unanimously entered into a new era for funding county infrastructure and capital needs. It is perhaps the most significant policy endeavor enacted by the Board since the adoption of the Sonoran Desert Conservation Plan in the 1990s. 

    Supervisors approved a new Board Policy that will use the General Fund to pay for county capital infrastructure projects, including road repair in the unincorporated county. The Pay-As-You-Go plan, or PAYGO, once fully funded, will provide up to $50 million a year for the construction and maintenance of county infrastructure and facilities. As part of the new policy, the Board will solve the vexing issue of road repair by improving all unincorporated county roads to good condition in 10 years and keeping them that way. At the same time, it will provide the Board the funds necessary to meet the facility and infrastructure needs of a growing County without having to resort to voter-approved debt. 

    What’s more, depending on economic conditions over the 10-year period, it’s possible the Board could raise these needed funds while cutting the combined County property tax rate by more than 15 percent. 

    Initially, the majority of PAYGO funds will be used for road repair, with the smaller portion used for facilities, such as Sheriff's Department substations, and other infrastructure, such as technology upgrades. County Administration will use a new Integrated Infrastructure Plan to determine PAYGO funding priorities that will be submitted to the Board during discussion of the annual budget. Once the County is caught up on road repairs and able to fund repairs solely out of the Transportation Department budget, all of PAYGO will be used to fund projects identified in the Infrastructure Plan.

    The Library and Flood Control districts and the Wastewater Department, which all have their own dedicated funding sources, already use PAYGO plans for their infrastructure needs. The Board’s action Tuesday makes PAYGO a countywide policy. 

    The funding for PAYGO will come from a percentage of the growth in the overall County tax base and recapturing a portion of the taxes no longer needed to pay off bonds, while still reducing the combined County property tax rate over time.

    “This PAYGO plan will provide us the funding to make sure our critical infrastructure is maintained and that we’re meeting the needs of a growing population, while at the same time providing tax relief to county taxpayers. It is a win-win plan that still gives the board the flexibility to determine funding priorities every year,” said County Administrator Chuck Huckelberry.

    Tax base funding explanation
    There are two parts to the County’s primary property tax bill (which funds the General Fund) – a property’s net assessed value and the tax rate. The two are multiplied together to determine the amount of property tax due. Except during the rare times of severe recession, the County’s tax base increases a few percent every year. If a property’s tax rate stays the same, the amount due will increase if the net assessed value increased. In adopting the new board policy, the board is directing county administration, when crafting the County’s annual budget, to apply 60 percent of the tax base increase to PAYGO and reduce the primary tax rate to provide tax relief for the remaining 40 percent growth in the tax base.

    Debt tax recapture funding explanation
    The County over the past several decades has taken on voter-approved debt through bond elections, which is repaid through a secondary property tax. Because the County has been aggressive in its repayment of this debt, and because no new bonds have been passed by voters, the amount of money needed in coming years to pay off this debt will drastically decline. Therefore, the tax rate needed to raise the funds to pay off the debt can be sharply reduced year-over-year and will decline to zero in 10 years. The Board Nov. 5, decided to take 60 percent of the secondary tax rate reduction and apply it to the primary tax rate for PAYGO.

    Estimated PAYGO funding by year using the funding formula approved by the Board Tuesday:
    Fiscal Year PAYGO Total PAYGO Road Repair Share*
    FY 2021 $21.1 million $10 million
    FY 2022 $21.6 million $15 million
    FY 2023 $31.4 million $20 million
    FY 2024 $38 million $25 million 
    FY 2025 $39.1 million $25 million
    FY 2026 $40.6 million $25 million
    FY 2027 $43.3 million $25 million 
    FY 2028 $47.5 million $25 million 
    FY 2029 $51.1 million $25 million
    FY 2030 $52.8 million $25 million
    Total $386.7 million $220 million
    *The PAYGO road repair funding will be augmented by another $280 million from Transportation Department funds, bringing the estimated total raised for road repair over the 10 years to $500 million.