Vous êtes sur la page 1sur 12

Elizabeth Venable

Maricopa County Budget Analysis


Dec. 5, 2008

Introduction: Maricopa County’s Budget

Maricopa County is located in roughly the center of the State of Arizona and is
home to the state capital, Phoenix. Maricopa County is one of the fastest-growing and
largest counties in the entire United States. As of 2008, it is the 4th largest county in the
country, and in terms of land area it is the 14th largest. The population of the county has
grown tremendously in the past two decades. For example, the county grew from
2,122,101 residents in 1990 to 3,880,181 in 2007, an 83 percent increase in less than
twenty years.

Some basic figures illustrate the size of Maricopa County’s budget for 2008-09:

Beginning Undesignated Fund Balance


(After 2007-08) $1,029,852,312
Total size of 2008-09 Budget $2,258,887,593
(Revenues and Expenditures are Same)
Ending Undesignated Fund Balance $649,590,515
Non-Recurring Capital Expenses $316,939,764

Major Funds in Maricopa County include the General Fund, the Detention
Operations Fund, the County Improvement Debt Fund, the General Fund County
Improvements Fund, and the Solid Waste Management Fund.

Major functions of Maricopa County include:

• Justice and Law Enforcement (Clerk of the Superior Court, County Attorney,
Superior Court, Juvenile Court, Justice Court, Sheriff’s Department, Indigent
Representation and Public Fiduciary);
• Medical Services (Public Health, Human Services and Forensic Science Center);
Community Resources (Superintendent of Schools, Library District and Stadium
District);
• Public Works (Flood Control District, Transportation Department and Solid
Waste Management);
and
• County Administration (Board of Supervisors, County Administrator, Assessor’s
Office, Clerk of the Board, Elections, Finance, Human Resources, Information
Technology, Treasurer and Facilities Management).

The approved budget for 2008-09 is based on a funding and expenditure amount
totaling $2,258,887,593. However, the costs of these functions are not evenly spread. The
following chart lists expenditures by percentage of the 2008-09 operating budget, which

Venable Budget Final 1


leaves out capital investments. Public safety accounts for well over half of the money
spent, and health, welfare, and sanitation accounts for about a quarter. Aside from the
cost of highways and streets, which runs to about a tenth, funding to other functions of
government is nominal. Although the proportion of funds going to public safety costs is
usually fairly high in Maricopa County, the ratio of public safety costs to the total is
higher in 2008-09 than in recent years.

2008-09 Approved Budget Forms of


Expenditures
0.74%
0.33% 2.00%
Education
9.30%
Culture and
Recreation
General Government
23.70%
Highways and
Streets
Health, Welfare and
63.93% Sanitation
Public Safety

Major sources of funding for Maricopa County for 2008-09 include property
taxes, state shared sales taxes, charges for services, permits and fees, fund balances, and
grants. Taxes for this budget total slightly under 50% of revenues, which is less than in
previous years. Fund balances also cover a much higher proportion of expenses.
Maricopa County, like Southern California, has been hit particularly hard by the
foreclosure crisis, resulting in (anticipated) much lower than usual property tax revenues,
and much higher than usual general fund expenses.

2008-09 Approved Budget Sources of Revenue Patient Revenue

Permits, Fees, Fines


7% and Charges
Misc. and Interest

5% 0% 14% Fund Balances

7% 3% Property Taxes,
Penalties and Interest
Sales Taxes
16% State Shared Sales
21% Taxes
State Shared Vehicle
License Taxes
Highway User
6%
Venable Budget Final 21% Revenues 2
Other Intergovernmental
and Grants
As a note, Maricopa County officials have made deliberate decisions to avoid the
use of bond measures, and to maintain a relatively low level of debt. It has tried to lower
its mandated contributions to the State, which now are 18.2% of the General Fund Budget
—down from 25.1 in 2003%. Maricopa County also boasts in its budget that it has the
lowest property tax rate of the state’s urban counties, in a state (Arizona) that has some of
the lowest property taxes in the nation. Maricopa County’s 2008 overall property tax rate
is 1.2970 per assessed value.

A breakdown of tax revenue sources (1997-2007) shows that about one-third of


tax revenue comes from general property taxes, another third comes from the state sales
tax, and the remaining third comes from a variety of sources: street lighting assessments
and vehicle license taxes are consistent among these.

Tax Revenue by Source, 1997-2007


Street Lighting
100%
Assessments
90%
Jail Tax
80%
70%
Rental car surcharge
60%
Percent

50%
Baseball Stadium Tax
40%
30%
20% Highway User Fuel Tax
10%
0% Vehicle License Tax
04
98

00

02

06

State Sales Tax


-

-
97

99

01

03

05
19

19

20

20

20

Year General Property Taxes

An interesting source of revenues is the “jail tax,” which appears to have


supplanted the stadium tax after 1998. The Detention Operations Fund was voted into
existence in November 1998, and is currently funded by a 1/5 of one-cent sales tax. The
Detention Operations Fund covers jail operations expenditures, and transfers to the
Detention Capital Projects Fund for construction of the adult and juvenile detention
facilities.

Venable Budget Final 3


The total number of employees in Maricopa County in FY 2006-07 was 13,274.
This total made it the fifth largest employer in the county, although it accounted for only .
7% of all employment.

Maricopa County’s Cash Solvency: Liquidity Ratios

A number of ratios and measures can give readers a sense of the state of the budget in
Maricopa County:

2006-07 Ratios
Working Capital Current Assets - Current Liabilities $2,447,776,595
Current Ratio Current Assets / Current Liabilities 13.22429627
Total Debt Ratio (Times) Total Liabilities / Total Assets 0.136573705
(Cash + marketable securities + receivables) / Current
Quick Ratio Liabilities 6
Note: See appendix 1 for original values.

While not every ratio is diagnostic, each gives us an idea of the picture that is the budget.
The working capital ratio for Maricopa County is 2,447,776,595, which seems quite
large. In addition, the current ratio (13.22) indicates that Maricopa County seems well
able to pay for its present liabilities. The quick ratio (6) helps to confirm the idea that
Maricopa County is has enough money to maintain itself in the present. The total debt
ratio of .1365, or 13.65% seems fairly low.

Maricopa County Budgetary Trends and Long-Term Obligations

Maricopa count appears to consistently be spending just slightly below its


revenues, allowing it to save and have a buffer. This is demonstrated in the visual.
However, the percentages and ratios below suggest that in terms of rate of growth,
expenditures have been growing just slightly faster than revenues and may eventually
catch up with revenues.

Total Revenues vs. Expenditures

$2,500,000,000.00
$2,000,000,000.00
$1,500,000,000.00 Total expenditures
$1,000,000,000.00 Total revenues
$500,000,000.00
$0.00
20

20

20

20

20

20
01

02

03

04

05

06
-0

-0

-0

-0

-0
-0
2

Venable Budget Final 4


Percentage Changes for Revenues and Expenses, 2001-2007

Revenues
Percentage Change, 2001-2007 41.12%
Average Annual Percentage Change 2001-2007 6.83%

Expenditures
Percentage Change, 2001-2007 48.68%
Average Annual Percentage Change 2001-2007 6.83%
Note: See Appendix 2 for original values.

The unreserved fund balance has grown steadily from 1997-2007, although the
end of the curve (2004-2007) seems to have flattened a bit and may be decreasing,
indicating that the balance may not increase in the future.

Unreserved Fund Balance


y = 5E+07x + 3E+07
R2 = 0.9068
$600,000,000.00
$500,000,000.00
$400,000,000.00
$300,000,000.00
$200,000,000.00
$100,000,000.00
$0.00
1997- 1998- 1999- 2000- 2001- 2002- 2003- 2004- 2005- 2006-
98 99 00 01 02 03 04 05 06 07

Unreserved Fund Balance Linear ( Unreserved Fund Balance)

In addition, Maricopa County’s debt spending has been declining considerably


from 2001-2007.
Debt Service Funds

$140,000,000.00
$120,000,000.00
$100,000,000.00
$80,000,000.00 Debt service funds
$60,000,000.00
$40,000,000.00
$20,000,000.00
$0.00
4
8

6
-0

-0

-0
-9

-0

03
97

99

01

05
19

20
19

20

20

Venable Budget Final 5


Maricopa County’s net assets grew considerably throughout the 2001-2007
period. Interestingly, however, total business-type activities net assets either stagnated or
decreased over the period.

Net Assets:
Government Activities vs. Business-type Activities

y = 4E+08x + 1E+09
$4,000,000,000.00
R2 = 0.982 Total governmental
$3,500,000,000.00
activities net assets
$3,000,000,000.00
$2,500,000,000.00 Total business-type
$2,000,000,000.00 activities net assets

$1,500,000,000.00
y = -3E+07x + 2E+08 Linear (Total
$1,000,000,000.00 governmental activities
R2 = 0.7425
$500,000,000.00 net assets )
$0.00 Linear (Total business-
type activities net
-$500,000,000.00
2

7 assets )
-0

-0

-0

-0

-0

-0
01

02

03

04

05

06
20

20

20

20
20

20

Finally, Maricopa County’s total tax revenues grew consistently over the period
1997-2007.

Total Tax Revenues y = 7E+07x + 6E+08


2
R = 0.9792
$1,600,000,000.00
$1,400,000,000.00
$1,200,000,000.00 Total Revenues
$1,000,000,000.00
$800,000,000.00
$600,000,000.00 Linear (Total
$400,000,000.00 Revenues)
$200,000,000.00
$0.00
98

00

02

04

06
-

-
97

99

01

03

05
19

20
19

20

20

Focus: Maricopa County’s Public Safety Expenses

As previously stated, Maricopa County’s public safety expenses take up 63.93%


of the total 08-09 budget. That percentage seems fairly high in comparison to other areas.
In addition, expenses for public safety have grown far faster between 2001-2007 than

Venable Budget Final 6


they have for the two next large components of spending: highways and streets; and
health, welfare and sanitation.

Funding for Maricopa County Services

$1,000,000,000.00
Public safety
$800,000,000.00
$600,000,000.00 Highways and streets
$400,000,000.00
$200,000,000.00 Health, welfare and
sanitation
$0.00
2

7
-0

-0

-0

-0

-0

-0
01

03

04

05

06
02
20

20

20

20
20

20

One department that has seen increases in its staffing and capacity is the Maricopa
County Sheriff’s Department (MCSO).

Number of Employees,
Department of Public Safety Versus Total for
Maricopa County

30,000

25,000
No. of Employees

20,000

15,000

10,000

5,000

0
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Year

Total DPS Total Maricopa Co.

A great deal of scrutiny has been placed on the Maricopa County Sheriffs
Department because of its controversial positions on criminal detention and immigration
enforcement. Probably the most notorious creation of Maricopa County Sheriff Joe
Arpaio is the “Tent City” jail where inmates live in outdoor tents, wear demeaning

Venable Budget Final 7


clothing, work on chain gangs, etc. This jail has been criticized by international
organizations such as Amnesty International. “Sheriff Joe,” or “America’s Toughest
Sheriff,” as national news media know him, has been able to parlay such stunts into long-
term political success. He won re-election for the 5th time in 2008, although his approval
ratings have declined somewhat recently. The County also has the largest 287g
agreement in the nation, which allows its officers to be cross-deputized by Immigration
and Customs Enforcement to enforce immigration law. MCSO currently has 160 cross-
deputized 287g officers. The City of Phoenix and other cities in the area have denounced
the Sheriffs’ immigration sweeps and suggest they may involve racial profiling.
However, despite (or perhaps because of) the controversy surrounding Sheriff Joe, his
department’s funding is quite high. Indeed, its growth in terms of personnel has outpaced
growth of other prominent criminal justice agencies in Maricopa County.

Number of Employees for Three Largest


Components of the Department of Public
Safety, 2001-07

5,000
4,000
Adult Probation
3,000
Court System
2,000
Sheriff
1,000
0
20

20 02

20 03

20 04

20 05

20 06
01

02

03

05

06
04
-

-0
-

In addition, the MCSO jail capacity has been increased dramatically.

Venable Budget Final 8


Inmate Beds Available (Including Portable),
2001-07

12,000
10,000

No. of Beds
8,000 Inmate beds
available
6,000
(including
4,000 portable)
2,000
0

20

20 02

20 03

20 04

20 05

20 06
05
01

02

03

04

06
-

-0
7
Year

Venable Budget Final 9


Analysis of Long-Term Solvency

It seems safe to bet that Maricopa County is going to be stable for a while.
Whether or not one wants to attribute that stability to its kind of bare bones low-
government, low-spending attitude, low-tax model, or to other strategic management
models, it appears to be a fairly well functioning county, in financial terms.

Maricopa County doesn’t seem to be having debt problems or cost problems, and
its general fund has been increasing. The most troublesome aspect from the position of
Maricopa County is likely the expected downturn in taxes in 2008-09, and the resulting
increased use of money from the general fund in this year’s budget. However, it does
seem fairly vulnerable because of its low property tax rate, and the problems with the
housing slump.

Maricopa County has dramatically increased its “public safety” capacity,


personnel, and funding. One department that has received large increases in funding is
the Maricopa County Sheriff’s Office. Although all departments in Maricopa County
were reduced, the Sheriff’s Office had to reduce their budget much less than other
departments did. There may come to a point (especially if the economic downturn
continues) when Maricopa County does not have the resources to keep such a high level
of law enforcement, especially as most other agencies appear to be operating on very lean
budgets.

Conclusion

Maricopa County is one of the largest in the United States, and has one of the
lowest property tax rates for a major urban area in the nation. It appears to be relatively
stable although this may be partly due to a low level of some services. The most well
funded area of the government is public safety, and the most well funded office within
the category is the Maricopa County Sheriff’s Office, which has seen steady increases in
its capacity and staffing.

Sources:

Department of Finance. “Comprehensive Annual Financial Reports.” Maricopa County.


2008. Accessed 5 Dec. 2008. <http://www.maricopa.gov/finance/CAFR.aspx>.

Office of Management and Budget. “Budgeting Documents.” Maricopa County. 2008.


Accessed 5 Dec. 2008. <http://www.maricopa.gov/budget/BudgetDocument.aspx>.

Venable Budget Final 10


Appendix 1

2006-07 Actual
Current Assets 2,648,015,246
Current Liabilities 200,238,651
Total Assets 4,181,619,402
Total Liabilities 571,099,256
Capital Assets 1,422,257,683
Noncurrent Liabilities 370,860,605

Components of Current Assets


Cash in bank or on hand 4,320,032
Cash and investments held by County Treasurer 1,159,099,008
Receivables 26,472,051
Due from other governmental units 201,999,484
Inventories 11,359,197
Prepaids 1,855,519
Deferred Costs 5,537,308
Miscellaneous 4,165,144
Intergovernmental loans 21,018,395
Advances to other funds 48,666

Cash and Investments Held by Trustee-Restricted 111,346,473

Components of Current Liabilities


Accounts payable 77,602,169
Accrued Liabilities 11,952,477
Employee Compensation Payable 80,440,093
Interest payable 1,308,067
Deferred Revenue 27,814,030
Due to other governmental units 171,993
Deposits held for other parties 949,822

Noncurrent liabilities
Due within one year 59,330,829
Due in more than one year 311,529,776

Venable Budget Final 11


Appendix 2
Revenues and
Expenditures 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Total expenditures $1,327,151,756.00 $1,380,395,860.00 $1,385,643,943.00 $1,523,963,815.00 $1,646,380,870.00 $1,872,848,632.00
Total revenues $1,355,237,417.00 $1,395,118,276.00 $1,476,753,864.00 $1,652,639,763.00 $1,852,887,554.00 $2,015,002,416.00

Venable Budget Final 12