Scottsdale override of budget has its foes

Posted on May 14, 2006 | Type: In the News
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A budget override, routinely passed by 76 Arizona cities and towns in recent years, is facing surprisingly strong opposition in Scottsdale's election Tuesday from businesses affiliated with the city's strip clubs.

Fat with cash and ready to spend, Scottsdale leaders expected voters to overwhelmingly support the idea of exceeding the city's state-mandated spending cap, especially because it means no new taxes.

Instead, Scottsdale is again fighting a 1980 taxpayer revolt that led Arizona voters 26 years ago to flash-freeze municipal spending. advertisement  

Opposition is coming from a small group of Scottsdale business owners enraged about new restrictions passed unanimously by the City Council in December that opponents say could put the city's two strip clubs out of business.

Both sides are trying to educate voters about a groundbreaking law that continues to influence every city and town in Arizona today.

For watchdog taxpayer groups, the law functions as a crucial check to out-of-control spending: Cities and towns must consult voters before hiking their budgets above fiscal 1979-80 levels. They have little sympathy for difficult campaigns.

"If you hear politicians grousing, it's because it makes the spending of other people's money a little more difficult," said Noah Clarke, an economist with the conservative Goldwater Institute.

For municipal leaders, pressured by increasing demands of residents, passing budget overrides is a recurring headache that has become an almost meaningless gesture.

"It's an outdated law," said Scottsdale Mayor Mary Manross, who is concerned about the outcome Tuesday of Proposition 402, which would raise the city's annual limit by $79 million.

"It did not foresee that cities and towns across the state would have new priorities, different sources of revenue and would want to expand and add programs that they did not have in 1979," Manross said.

Scottsdale is flush with voter-approved tax increases. The budget for the new fiscal year calls for more police, a new senior center, an aquatic complex and enough amenities to make cash-strapped cities such as Mesa drool.

That is, if voters decide to spend the money.

Ordinarily, that would not be a concern.

Phoenix voters: 6 OKs

Phoenix alone has routinely bumped its spending ceiling six times since 1981. Phoenix's unique operations - Phoenix Sky Harbor International Airport, the Phoenix Convention Center, regional landfills and sewage treatment plants - serve the entire region, and city leaders have argued successfully that spending is needed to keep pace with the Valley's skyrocketing growth.

On March 14, Chandler voters overwhelmingly approved, 77 percent to 23 percent, that city's most recent request to spend above the 1980 caps.

With little or no campaigning and with threats to public services cuts at the ready, Arizona voters have rejected attempts to raise spending caps only a handful of times.

1980 Arizona tax revolt

Americans were moved to act when Ronald Reagan won the White House in 1980 and promised to cut government and reduce taxes.

Two years earlier, Californians passed Proposition 13, which limited property taxes and inspired even liberal Massachusetts to clamp down on governmental excess.

Arizona legislators knew the anti-tax movement would reach their borders, but they decided to restrict spending instead of taxes to avoid California's inflexibility.

"We knew that cities were going to grow, but if you want to exceed that expenditure limit, you have to go to voters and make a case for it," said Diane McCarthy, a senior vice president of the ASU Foundation and who was a state representative in 1980 when the Legislature proposed the caps to voters. "It was a question of, rather than cap taxes, which was a disaster in California, why not cap expenditures?"

Arizona voters agreed. An overwhelming 85 percent of them approved a complex package of 10 constitutional amendments in 1980 that capped expenditures.

One of the new amendments, Proposition 108, stopped local spending dead in its tracks.

But the law provided ways that municipalities could raise their caps by asking voters for adjustments to the "base expenditure limit," the 1979-80 spending levels.

Dozens of cities have used another option, called home rule, that exempts them from the spending limit but requires them to run their budgets by the voters every four years.

Scottsdale's third time

As they entered their third election in 27 years for an alternative to the spending ceiling, Scottsdale leaders prepared for another do-nothing campaign prior to Tuesday's expected passage of Proposition 402.

Then they heard from a well-financed opposition group with a long name, the Scottsdale Small Business Alliance Political Committee Opposed to Proposition 402.

The group is funded by Scottsdale strip clubs, angry about the city's strict new sexually oriented businesses ordinance.

As the clubs waited for their own Sept. 12 referendum to try and overturn regulations that banned lap-dancing, among other things, they decided to hit the city where it hurt the most: the spending limit.

Mayor cries 'blackmail'

Manross called the anti-spending campaign "blackmail."

The opposition nonetheless stirred up concern about the city's three-year run of double-digit budget increases.

Scottsdale should reorganize the budget to stay under the ceiling and return excess funds to taxpayers, said opposition leader Lamar Whitmer, who also consults for the strip clubs.

A political-action committee led by the Scottsdale Area Chamber of Commerce, which initially planned no campaigning, has posted signs around the city urging voters to "protect vital public services."

Unforeseen needs

Manross said that voters in 1980 simply could not foresee the expectations of Scottsdale residents in 2006. Waves of wealthy new voters moved to town since then, expecting high-class amenities.

"That takes dollars," Manross said. "Otherwise, you can't sustain those quality-of-life amenities that have made us successful."

Some of the pent-up cash comes from tax increases voters have approved in the past six years: a bonds election in 2000, several increases in the sales tax to fund the McDowell Sonoran Preserve and extra funds for the Police Department.

Clarke and Whitmer argued that the city should "reprioritize" its budget, focusing on basic services and leaving luxuries to the private sector.

Rick Kidder, president of the Scottsdale Area Chamber of Commerce, said that returning sales-tax dollars, which make up the bulk of the city's operating budget, would be impossible. About half the funds come from out-of-towners.

"We would have to find people in Manitoba (Canada) to give it back to," Kidder said.

Reporters Monica Alonzo-Dunsmoor and Edythe Jensen contributed to this article.

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