PSPRS Ad Hoc Committee Testimony

The following is the written testimony submitting by Supervisor Buster Johnson to the State’s Ad Hoc   Dear Chairman Campbell: I have been a County Supervisor for Mohave County for the past twenty years.  For the last two decades I have seen the State Legislature try and perfect our state retirement system.  I do believe our state lawmakers understand the importance, and necessity, of wise stewardship of taxpayers’ dollars. They know that a balanced budget is common sense in that only fools spend more than they take in.  With that said though I must ask why has this allegedly Conservative elected body left Mohave County taxpayers on the hook for up to $80 million caused by poor management at the state level? Mohave County’s unfunded liability amounts for the Public Safety Retirement Pension System are over $20 million.  The cities within our County are far worse off, owing over $100 million.  Fire districts within our county are already maxed on their property tax rate.  I am not sure how they will even afford to pay their portion of the debt without going bankrupt.  It’s important to note that these are just preliminary numbers, and we could end up owing even more.  Statewide the total liability is $7.7B, but once interest is added that total will double and total liability will be probably around $15B.  Counties, cities and fire districts don’t just have millions lying around to pay off this debt.  We are going to have to pay this amount off over time and by doing so accrue interest on the payments which could double the amount taxpayers owe. Counties were also notified that the State needs the Counties to pay up front for their portion of the refunds due to employees because PSPRS has outdated computer systems.  Municipalities were told in April to stop the overpayments yet the State continued to incur interest because they had no way to stop the overpayment on their computer system.  This is just another example of the State’s lack of financial responsibility coming back onto the counties. Over the past eight years, counties and cities have also been hit with state cost shifts.  In fact, some have gotten so use to being mugged by our state officials that they are praising lawmakers this year for not taking more funds from us.  This year, the state swept close to $750,000 from Mohave County’s General Fund and more than $100,000 in our county’s Highway User Revenue Funds (HURF).  The State’s annual sweeps of local governments’ funds have been an ongoing problem that many local elected officials have learned to live with. They say, “We can cover it; just don’t rock the boat or they might take even more.” State sweeps added onto the $7.7 billion elephant in the room are forcing local municipalities to cut services and raise taxes while state lawmakers get viewed as the taxpayer’s hero for not raising a dime.  This problem however is in no way the counties, cities or fire district’s … Continue Reading →

Obama Administration Proposes to Cap Municipal Bonds That Are Crucial to Mohave County’s Financial Future

Lake Havasu City, AZ – Mohave County Supervisor Buster Johnson is urging the Arizona Congressional delegation to support municipal bonds and to oppose proposals that would eliminate or cap the deduction on tax-exempt municipal bonds in the President’s Fiscal Year 2016 Budget Proposal.  “Municipal bonds are a primary funding source for infrastructure projects in cities and counties throughout the United States,” Supervisor Johnson said.  “These projects create numerous jobs and economic growth, and it is imperative that their tax-exempt status remain unchanged,” Johnson continued. Tax-exempt bonds were written in the first tax code in 1913 and are a well-established financing tool for state and local government.  They are mainly issued for governmental infrastructure and capital needs purposes. “Mohave County does not use municipal bonds for its improvement projects, however; the incorporated cities within the county use them to help taxpayers save on the debt issued for capital projects such as the construction or improvement of city roads, water and sewer systems and other public works projects,” Johnson explained. According to a report by the National Association of Counties (NACo), over the last decade municipal bonds have saved local governments in Arizona roughly $36.1 billion.  If signed into law, President Obama’s Fiscal Year 2016 Budget would place a 28% limit on the value of specified deductions or exclusions from adjusted gross income and all itemized deductions; the limit would apply on interest earned for new and outstanding state and local tax exempt bonds.  NACo’s report estimates a 28% cap would cost Arizona taxpayers roughly $3.8 billion.  “This cap would increase borrowing costs to public entities and could potentially shift these costs to local residents through tax or rate increases,” Johnson said. Through the use of tax-exempt municipal bonds, state and local governments invested 2.5 times more in infrastructure than the federal government over the last decade.  NACo reported that local governments saved roughly $1.9 million in infrastructure construction in the last decade alone by funding millions of infrastructure projects with the help of municipal bonds.  “Placing a cap on municipal bonds would have a dire effect on Mohave County’s economic and financial future,” Johnson stated.  “These tax-exempt bonds have and can continue to save the taxpayers money by offering lower interest rates on infrastructure projects throughout the county,” Johnson ended.