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Tax Increase Largely Offset by Valuations Drop

The Coconino County Board of Supervisors has been meeting with county departments and has a preliminary budget for the upcoming fiscal year.  The supervisors are  scheduled to preliminary adopt the budget on June 14, 2011, in a public meeting.  Final adoption will occur on July 12, 2011, with the final tax rates set on August 9, 2011.

Even with a proposed increase in the Flood Control District tax, Coconino County will remain in the lowest one third of counties statewide based on primary and secondary property taxes. Coconino County expects to continue to have one of the lowest primary property tax rates in the state.

“The budget represents a conservative, yet realistic picture as we move forward in fiscal year 2012,” said Mandy Metzger, Chair of the Board of Supervisors.  “Coconino County has been devastated by the federally declared disasters that occurred in our county in fiscal year 2011.  Unfortunately, like other counties in the state are not witnessing, we quickly discovered that you cannot always plan for natural disasters.”

Revenues and tax rates are being influenced this year by several factors, including an increase in continuing costs associated with responding to the Schultz Fire/Flood, as well as a decrease in county-wide limited cash assessed values.

Coconino County and its residents have seen a 15 percent decrease in assessed valuation of county-wide properties over the past two years.  Full cash assessed values are used to determine revenues for several County districts, including Public Health Services District, Library District and Flood Control District.  The impact of reduced values is a reduced amount of revenue, unless tax rates are increased to compensate for the drop in property values.

The county has also been impacted by cuts from the state, including a shift of costs for counties to pay for Sexually Violent Persons and Restoration to Competency individuals in the Arizona State Hospital, a shift of county Highway User Revenue to pay for the operation of the Arizona Department of Public Service, as well as a shift of costs to pay for Superior Court Judge salaries.

Between State impacts and revenue reductions, the County is dealing with a total of $11.2 million in the current fiscal year and is projecting total impacts of $12.4 million in FY12.  In addition, the County must accommodate increases in health care costs, fuel, utilities, and other inflationary expenditure increases.

“These shifts by the Arizona State Legislature, along with natural disasters, declining assessed values and lower revenue collections, are impacting the county significantly,” said Mandy Metzger, Chair of the Coconino County Board of Supervisors.  “The county has continued to manage our finances conservatively during the best and worst of times.  Unfortunately, the lack of flexibility in county funds leaves us few options.”

With an increase in costs in flood response in the last year and a need to continue much-needed flood control projects across the county, county management is recommending up to a 20 cent increase in the Flood Control District tax.  During fiscal year 2011, Coconino County spent $4.5 million, alone, responding to the Schultz Fire and subsequent flooding.  In addition, with the increase in natural disasters nationwide, and in the State of Arizona, the need of assistance is far larger than the resources available on the state and federal levels.  While the county has been successful in obtaining federal and state resources, the county is not confident moving forward that these resources will be available going forward.

Therefore, the county is proposing a tax rate of 40 cents per $100 assessed valuation.  The tax rate increase is largely offset by a 14 percent decrease in full cash assessed values in the Flood Control District.  The average increase in Flood Control District taxes is expected to be $29/year for a residential property in the district.   The Flood Control District Tax will not be collected in Flagstaff, Page or Fredonia. The revenues generated in Sedona and Williams are returned to those cities for flood control projects.

While maintaining flat rates in other secondary districts, Coconino County expects to remain in the lowest 1/3 of counties statewide based on primary and secondary property taxes.  Coconino County will continue to have one of the lowest primary property tax rates in the state.


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