PROPOSITION 474: HOME RULE FISCAL RESPONSIBILITY OR FISCAL FOLLY

Fiscal responsibility sounds good. It doesn’t sound so good when someone using that argument would make you live under your inflation adjusted allowance when you 12 and you now are 50 and have a family, house and cars. If Proposition 474 (Home Rule) in the upcoming July 30 election does not pass, imagine eliminating the police department and still having to find tens of millions of dollars in additional cuts.

Passing Proposition 474 (vote YES) makes absolutely no difference in taxes and fees. It simply gives town government the voter’s permission to budget within reasonably expected income as they have now done every four years for over forty years.

It will be wordy: TOWN OF PRESCOTT VALLEY. PROPOSITION 474. PROPOSAL SUBMITTED BY THE TOWN COUNCIL OF PRESCOTT VALLEY. OFFICIAL TITLE: RESOLUTION NO. 2024-2365. A RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE TOWN OF PRESCOTT VALLEY, A MUNICIPAL CORPORATION OF ARIZONA, PROPOSING AN EXTENSION OF THE ALTERNATIVE LOCAL EXPENDITURE LIMITATION. You vote either yes or no.

So how did this come about?  We can blame it on California. The Home Rule vote is an echo from the 1970s and worries that government spending might grow endlessly. Proposition 13 passed in California which limited government by freezing property valuations for tax purposes unless a building was sold or changed. People gamed the system by doing things like tearing down all but one wall of the old shack and building the new mansion around that one residual wall so that for tax purposes it was the ‘same’ as the old building it replaced, and its taxes did not change.

Arizona thought that could be improved by fixing the budgets at their starting amount in 1980 and then adjusting that amount annually based on population growth and inflation. Arizona chose to limit budgets, not limit property valuations like California did.

Ultimately some flexibility was allowed. Governing bodies or the people could elect to change the base from the 1980 assignment (Permanent Base Adjustment) or simply allow budgeting based on expected real income (Home Rule). As small towns grow, people tend to want additional things like paved roads, water and sewer, a library, parks and sporting fields, stop lights and a local police department which cannot be met by a simple straight-line budget formula. Of Arizona’s 91 towns and cities, 83 use some adjustment and eight stick to the state formula. The later tend to be smaller towns like Quartzite or Winslow which have not grown much. Still, the idea is that towns exceeding the state formula need to go before residents periodically to get their permission to continue. Hence Proposition 474.

Prescott Valley in 1980 had a population of about 1500 and a budget of $420,000. It had one bank, one church and an elementary and a high school. It often had a cloud of dust from the dirt roads. Today it has a population of 49,000 and a budget for fiscal year 2025 of about $210 million. Below is a pie diagram of how it is divided.

Some of the budget slices are self-explanatory and some are less so. Community Services includes library and recreation. Governments services covers the town government departments. Non-departmental are town-wide items not tied to any department. They range from large numbers such as the YMCA ($29 million), event center ($3  million) retirement ($2 million) and Crossroads developer refund ($2 M) to small numbers like CASA senior center ($40,00) and the AZ Crisis Team ($13,000), The Enterprise Fund is the budget item for the water, storm water and sewage systems.

Home Rule has been approved by Prescott Valley residents every four years since 1981. If not approved by residents, then about $90 million would have to be cut back by July 1, 2025 and that would be very, very tough. Refer to the pie diagram above on where those cuts might come.