Column: Taxed to the max: County's special district accounts awash in cash

Last year, during the budget/property tax levy battle, County Supervisor Buster Johnson argued for the necessity of an increased primary property tax levy, commenting that since the "special taxing districts" were already at their maximum rate, the county would have to transfer funds from the general budget to these other districts to cover their operating expenditures. This was because the secondary levy rates, also based on the reduced valuations, would result in lower tax collections for these special districts, including Library, Flood Control and the Television.

This was not just Buster's observation - the 2012 Budget Book made the following statement: "While this $1.8196 rate will generate an additional $1.2 million in General Fund revenue in 2012, it should be noted that the other county taxing districts ... are keeping the rates at the 2011 level, due to the valuation decrease. This will generate $5.5 million less revenue than 2011, for a net tax reduction of $4.3 million."

So I didn't give Supervisor Johnson's statement much thought, because his claim seemed perfectly sound.

However, as I have studied the county's past budgets, some troubling facts came to light. Instead of moneys being transferred from the General Fund to these special districts to cover their operating shortfalls, just the opposite is true. There are ample funds in these special districts. In fact, these taxing districts - Flood Control, Library and TV Improvement - have a whopping $40 million balance! Not one dollar was transferred to these districts, rather, moneys have been transferred OUT of these funds for use elsewhere.

I wondered why there was so much money in these districts, and why Supervisor Johnson made such an incredibly inaccurate statement. Since John Timko's Finance Department is responsible for budgeting and the financial reporting, certainly he knew that Buster's statement was inaccurate. Yet he remained silent. And with good reason, for it would contradict the narrative that the county is running short on money.

Buster's statement wasn't the only questionable claim. Also in the Budget Book, a product of Timko's office with the assistance of Walker's OMB Manager Gene Hepler, you'll find this claim: "This year, due to the decrease in assessed valuation, the PTOC's rate calculation requires a rate increase in order to maintain the statutory 2% revenue growth."

In reality, the ONLY part that is "mandatory" about the rate increase is Walker's commitment to keep increasing the property taxes coming in to the county coffers. The statutes define the MAXIMUM increase of 2% of primary property taxes on existing parcels, not a required or "statutory 2% revenue growth" as claimed in the Budget Book. Clearly, Walker is committed to more revenue, not less.

Now here is where it really gets interesting. These special taxing districts do have millions of dollars, and in at least two of the districts, there is two to three times their average annual expenditures for the last few years. As I reviewed the levy rates for these three districts, which the Board of Supervisors set each year, I noticed that none of them had changed in the past decade. They all were at the same rates, which defied logic. All three districts are required by statute to prepare annual financial reports and then adjust their tax levy rate to meet their budget needs. These reports are required to be audited annually, and the new levy rates are to take into account any surplus funds from the prior year. Not one of these three funds - Flood Control, Library and Television - have set their rates according to the law. Instead, the county has taxed to the max all three! So why does the Board of Supervisors, which sits as the board of directors for all three districts, fail to do their duty and follow the law, establishing new levy rates each year? After all, other counties adjust their rates each year, so why doesn't Mohave County?

I can't read their minds, but I do see the result of creating huge piles of cash. Timko and Walker have transferred millions of dollars out of these funds over the last several years, taking advantage of the huge valuation increases, and moving the funds elsewhere. Perhaps this new jail isn't operating as profitably as first hoped, or they need to cover future claims from pending lawsuits. The fact is, they are moving the funds, and furthermore they may be violating the law in doing so. Don't believe me? Go to the Arizona Revised Statutes and read 42-17106, 48-1104, 48-3620, and 48-3904. Then talk to your supervisor or state legislator. Ask them why Mohave County doesn't see the law the way it is written. The citizens of Mohave County deserve an answer, and an honest one.