JOINT LEGISLATIVE STUDY COMMITTEE ON SELECT
RURAL COUNTY FINANCIAL BURDENS
DATE: December 5, 1995
TO: Senator John Greene, President of the Senate
Representative Mark Killian, Speaker of the House of Representatives
Pursuant to Laws 1995, Chapter 300, the Joint Legislative Study Committee on Select
Rural County Financial Burdens conducted interim hearings pertaining to select rural county
financial burdens and has compiled an overview of the findings. The following members of the
Committee endorse recommendations included in this report:.
,%& tor John Kaites, I Co- Chair
gnator Lany ahesle
w
Senator A. V. ill" Hardt
rkamp, Co- Chair
; I 8
\ a - AI1~ I/ NI
~ e~ re'sentatiLveo ri S. Daniels
/ L[/ Q~ ( y4/. l ; f ? y
Representative Rebecca Rios
FINAL REPORT
JOINT LEGISLATIVE STUDY COMMITTEE ON SELECT
RURAL COUNTY FINANCIAL BURDENS
Background
Laws 1995, Chapter 300 appropriated the sum of $ 2.5 million to provide temporary
financial assistance to three Arizona counties. Gila County received $ 1,876,000; Cochise
received $ 393,000 and Santa Cruz received $ 23 1,000. The appropriation was intended to
alleviate for one fiscal year the financial burden of these counties due to a combination of unique
economic factors including a disproportionate ratio of public to private land ownership, limited
access to both property tax and other revenues and the provision of necessary services to a
smaller population. A six- member joint legislative study committee was created to recommend a
long- range solution to these problems and submit a report and recommendations to the President
of the Senate and the Speaker of the House of Representatives.
The committee focused on two problem areas identified during testimony: 1) county
contributions to the Arizona Health Care Cost Containment System ( AHCCCS) and the Arizona
Long Term Care System ( ALTCS) and 2) expenditure limitations in border counties. Several
counties provided the Committee with testimony indicating that the AHCCCS/ ALTCS problem
for some rural counties is based upon indigent health care costs and the State's fixed formula for
allocation of those costs among the counties. The counties' testimony suggested that the formula
is unfair, disproportionate and imposes a significant burden on local property taxes.
Information provided to the committee explained that county contributions to the
AHCCCS acute care program as established by the Legislature are based on county budgets and
expenditures for fiscal year 1980- 81. The county contributions for the ALTCS long term care
program as established by the Legislature are based on fiscal year 1987- 88. The formulas
establishing the contributions mandate that each county continue to support the state's indigent
health care programs in the same ratio that each county was expending in the base year to the
total expended by all counties. Fixed percentages for each county are codified in statute.
The argument presented to the committee for changing the formula explained that the
fixed formulas for county contributions to AHCCCSIALTCS were based on one fiscal year,
which does not consider unusual circumstances that may have adversely impacted the base fiscal
year nor provide for future changes. The committee was asked to revise the historical formulas
for indigent health care contributions.
The expenditure limitation for each county is determined by the Economic Estimate
Commission and is based on an equation of inflation and population changes. Santa Cruz
County explained that the present expenditure limitation formula does not address the average
daily crossing number of 42,000 at Nogales which places an additional financial burden on the
county's infrastructure, health, law enforcement and criminal justice systems. The Committee
was asked to redefine " population" for expenditure limitation determinations only.
Recommendations
Joint Legislative Study Committee on
Select Rural County Financial Burdens
The above committee, having met three times during the interim to address rural county
financial burdens pursuant to laws 1995, Chapter 300, unanimously makes the following four
recommendations:
1. The legislature should address and satisfy the concerns of Gila, Cochise, Santa Cruz and Pinal
counties regarding their respective AHCCCS and ALTCS contributions for one additional year
only. The long term aspects of these problems should not be addressed until the implications of
anticipated changes in Indian Health Services funding and pending federal block grant legislation
for AHCCCS and ALTCS are clear. Only then can the legislature prudently address any
structural inequities in the current mechanism for allocation of the costs of AHCCCS and
ALTCS to the counties.
2. The widest possible number of funding sources, including the " tobacco tax", should be
considered to provide monies for the recommended short term solution for the indicated counties.
3. The existing funding mechanism for allocation of the costs of ALTCS should be reviewed
and carefully evaluated in view of the rapidly increasing projected costs of these services to the
counties. The committee realizes that this will be a long term project.
4. The charge of this committee should be renewed and the committee perpetuated to address the
long term issues raised above. To the extent practicable, individual committee members should
be retained so that the committee may have the advantage of the expertise developed through
interim service to the committee.
By a second motion, your committee, with the exception of Senator Chesley and Representative
Daniels, makes the following recommendations:
1. Legislation should be considered to include a percentage of the average daily number of
border crossings from the Republic of Mexico in the population base for calculating expenduture
limitations for Arizona counties which are continguous to the border and which have a
population of less than two hundred thousand persons ( Yuma, Santa Cruz and Cochise counties).
2. In providing fiscal relief to the counties, the legislature should be cognizant of the
implications that alternative forms of relief may have upon the expenditure limitations of the
counties.
The committee expects that these items will require at least two separate bills.
ARIZONA STATE LEGISLATURE
JOINT COMMITTEE ON SELECT RURAL COUNTIES' FINANCIAL BURDEN
Minutes of Meeting
Tuesday, September 12, 1 995
Senate Hearing Room # 2 - 10: OO a. m.
Co- Chairman John Kaites called the meeting to order at 10: 05 a. m. and the attendance
was noted.
Members Present sh! x
Senator Larry Chesley Victoria Clark, Senate
Senator A. V. " Bill" Hardt Kitty Decker, House
Representative Lori Daniels Kathi Knox, House
Representative Rebecca Rios
Senator John Kaites, Cochair
Representative John Verkamp, Cochair
Members Absent
None
Others Present
See attached list
Senator Kaites explained the scope of the Committee does not include Maricopa and Pima
Counties, and is to be used to explore the inequities in financial disbursements in the rural
counties. Senator Kaites added the focus of the Committee is to tackle problems that are
identifiable by the counties and the issue was brought to the attention of the Legislature
by Gila County.
John Nelson, Financial Director, Gila County, explained H. B. 2226 ( Chapter 300) from
1995 appropriated $ 1,876,000 to Gila County, $ 393,000 to Cochise County and $ 231,000
to Santa CNZ County to alleviate for one fiscal year the financial burden to these counties
due to a combination of unique economic factors including a disproportionate ratio of public
to private land ownership, limited access to both property tax and other revenues and the
provision of necessary services to a smaller population. H. B. 2226 further establishes a
study committee to submit a report and recommendations on current and county revenue
aspects of the problem to the President of the Senate and Speaker of the House by
December 1, 1995. Senator Kaites asked Mr. Nelson how he envisioned the committee
working. Mr. Nelson answered he believed the Committee would review revenue problems
and other problems associated with rural counties. Mr. Nelson further informed the
Committee the cost of running the Arizona Health Care Cost Containment System
( AHCCCS) and the Arizona Long Term Care System ( ALTCS) is still being charged at the
same percentage rate as it was when it was established in the early 1980s. Mr. Nelson
MINUTES OF THE JOINT COMMITTEE ON SELECT
RURAL COUNTIES' FINANCIAL BURDEN
September 12, 1995
Page 2
explained that the formula results in Gila County paying $ 107 per person rather than the
average of $ 47 paid within the State. Mr. Nelson further referred the Committee to page
3 of the handout entitled " Pinal County - County Property Financial Burden" which listed
the counties and the ALTCS payments made from 1990 through 1996.
Mr. Nelson referred the Committee to the handout entitled " Financial Burden: Small
Business & Home Owners" prepared by Gila County. Mr. Nelson explained the changes
to the revenue support resulted in an actual decrease from the State to the counties and
hurt some small counties. Mr. Nelson directed the Committee to look at page 2 of the
handout, noting the loss felt by Gila County through the changes in sales tax distribution.
Mr. Nelson referred the Committee to page 3 of the handout which was related to the
Cypress Mine and legislation signed 4/ 25/ 94; however, the legislation did not create new
assessed value and jobs, it only gave a tax break to the existing facility. This caused a
revenue loss to Gila County of $ 407,100. Pages 4 and 5 of the handout gave further detail
on the loss in relation to mines and utilities. Mr. Nelson continued through the handout for
the Committee's information. Senator Kaites asked if the graph on page 9 indeed showed
a possible tax increase in taxes by Gila County of 54 cents on the dollar if no action was
taken by the Legislature. Mr. Nelson answered affirmatively and continued to direct the
Committee members through the pages of the handout.
Senator Chesley asked for clarification on the AHCCCSIALTCS contributions. Mr. Nelson
explained mandated county contributions are based on a percentage each county spent
on indigent care when the program was created. There is no correction in the formula to
reflect population shifts, changes in operations ( i. e., closing area hospitals), or the change
in economic climate. Page 12 of the handout reflects AHCCCSIALTCS contributions per
capita by counties for N 1995- 96 while page 13 shows the change from FY 1994- 95 to
FY 1995- 96. Mr. Nelson continued through the handout, which addressed areas such as
the tax rate required by Gila County required to offset lost revenue and AHCCCSI ALTCS
overcharge in addition to the ownership of private lands among counties and how it affects
each county's tax base.
Representative Verkamp stated Mr. Nelson's testimony points out exactly what is
happening around the State - each time certain things are done by the Legislature, others
the Legislature doesn't even think about are impacted. Representative Verkamp told the
members he felt the Legislature should focus on all appropriate issues in the State and not
just address problems with a " patchwork* solution. Representative Verkamp spoke in favor
of addressing problems and possible solutions through this Committee. Senator Kaites
agreed it was clear problems needed to be addressed as evidenced by Gila County's
presentation. Senator Hardt suggested looking further at the property tax issue and its
effects on all the rural counties.
MINUTES OF THE JOINT COMMITTEE ON SELECT
RURAL COUNTIES' FINANCIAL BURDEN
September 12, 1995
Page 3
Representative Daniels stressed it was her goal not to shift taxes by class or to the
individual counties.
Larry Richmond, representing Pinal and Santa Cruz Counties, commented on the
scope of the Committee and explained three or four of the counties involved had decided
to present to the Committee the problems realized by their individual areas. Mr. Richmond
noted the problems presented to the Committee are reflective of many of the rural counties.
Mr. Richmond recommended to the Committee that a standing committee to address
county issues be formed.
Sandie Smith, Board of Supervisors, Pinal County, spoke of the new jail presently
being constructed in Pinal County with a private company and the innovative way it will be
run. Ms. Smith spoke of the necessity of the counties delivering services to its constituents
by ordering a 90- day county hiring freeze and trying to keep taxes low. Senator Chesley
asked who would be running the new jail. Ms. Smith answered the sheriff would run it.
Terry Doolittle, Deputy County Manager, Pinal County, referred the Committee to page
4 of the document entitled " Pinal County - County Property Financial Burden" which lists
ALTCS payments for N 1990- 96. Senator Hardt asked how figures for Coconino County
were determined. Mr. Doolittle explained each of the amounts was estimated based on
the formula set in statute based on 1987- 88 mandates. Mr. Doolittle proceeded to list the
headings on each page of the Committee member's handouts and proposed solutions to
the inequity problem such as a property tax reduction, a general excise tax, the creation
of an enterprise zone, publiclprivate partnerships such as that presently held with
" Corrections Corporation of America", the privatization of the Pinal General Hospital, the
nursing home and landfill operations. Senator Chesley asked if " Evergreen" had started
work yet in Pinal County. Mr. Doolittle responded " Evergreen" was in the process of hiring
personnel.
Ron Morriss, Chairman, Santa Cruz County Board of Supervisors, thanked the
Committee for allowing him to present his County's view of the financial problems facing
rural Arizona. Mr. Morriss explained Santa Cruz is a border county and has different
problems than some of the other rural counties in the area of criminal justice. Mr. Morriss
explained Santa Cruz County was sanctioned for exceeding the limit in 1994 and in 1995,
the limit would have been exceeded if there was no carry forward expenditure limit from
prior years. The balance of the carry foward limitation is projected to be depleted during
the 1995- 96 fiscal year. Mr. Morriss added he supported Mr. Richmond's suggestion of a
legislative standing committee dedicated solely to county issues.
Dennis Miller, County Manager, Santa Cruz County, explained although Santa Cruz
county is small, it is dealing with a huge problem related to the criminal justice system. Mr.
Miller noted Santa Cruz County is the third largest in bank deposits because of its proximity
MINUTES OF THE JOINT COMMITTEE ON SELECT
RURAL COUNTIES' FINANCIAL BURDEN
September 12, 1995
Page 4
to the Mexican border. Mr. Miller noted that with increased mandates come increased
costs for carrying out those requests. Mr. Miller added that 70% - 80% of the jail inmate
population in Santa Cruz county is from south of the border. The majority of those people
will be prosecuted by the County Attorney's Office and will be appointed a defense attorney
at Santa Cruz County taxpayer expense. The County will also feed, clothe and provide
medical care for these individuals. Mr. Verkamp asked what sort of relationship the County
has with the Federal Justice Department. Mr. Miller said the relationship is a good one,
with both parties working closely together. Mr. Miller added the County does not take on
any legal cases it is not forced to take on.
Senator Kaites asked how indigent defense is handled. Mr. Miller answered outside
attorneys are hired as the County's financial situation does not allow more employees to
be added although some cuts have been made to County agencies. Mr. Miller added
there is a 20% unemployment rate in Santa Cruz County.
Jody Klein, Cochise County Administrator, Cochise County, noted his County has a
lot of the same border problems as Santa Cruz County and noted that the three border
counties are among the top six counties as far as tax rate. Mr. Klein added assessed
valuation is impacted simply by being a border county which has resulted in lower tax
revenues. Mr. Klein added the elimination of the tax on livestock has further impacted
Cochise County. Representative Daniels requested a breakdown comparing the loss of
income due to the elimination of the livestock tax and the impact of changes in the
personal property tax. Mr. Klein noted Cochise County is also paying a disproportionate
share on acute care and is interested in looking statewide at a long- term, equitable
solution. Mr. Klein added 60% of the prison population in his County is from Mexico.
Senator Hardt pointed out AHCCCS had reverted $ 53 million to the General Fund that
maybe should be returned to the counties.
Ron Christensen, Supervisor, Gila County, told the Committee his County was looking
at possible expansion of its jail facility and landfills in addition to its tax base overall. Mr.
Christensen noted the timber industry had been wiped out and the cattle industry had been
hit hard which were both areas which contributed to County revenues. Mr. Christensen
stated 85.5% of primary property taxes in Gila County are spent on indigent care and
criminal justice. Mr. Christensen stated the copper industry is a big chunk of the current
Gila County economy, and that it was time for the Legislature to reevaluate the situation.
Senator Kaites noted the presentations by the counties were excellent and that the
Legislature was committed to working towards a solution. Senator Kaites asked Mr.
Richardson to get together with all of the rural counties to work on solutions to discuss at
the next meeting with a draft report. Senator Kaites suggested the counties contact Staff
in order to narrow the focus of possible proposals and solutions to be offered as legislation
MINUTES OF THE JOINT COMMITTEE ON SELECT
RURAL COUNTIES' FINANCIAL BURDEN
September 12, 1 995
Page 5
in the next session. Representative Verkamp stressed the need for all the rural counties
to be involved in the process.
Senator Hardt cautioned the Committee about addressing too many issues, and asked the
counties to provide information on the amount spent for indigent defense. Senator Kaites
added there is currently a study committee on indigent defense to specifically study those
problems.
Without objection, the meeting was adjourned at 11 : 40 a. m.
Respectfully submitted,
Arlene Seagraves, Committeewtary
( Tapes on file in the Office of the Secretary of the Senate)
REVISED
Arizona State Legislature
Meeting Notice
Open to the Public
Joint Committee on Select Rural Counties'
Financial Burden
DATE:
TIME:
PLACE:
SUBJECT:
Senator John Kaiteg J
Co- Chairperson
September 12,1995
Senate Hearing Room # 2
1. Calltoorder / O : O ~ I I M
2. Discussion of scope of cornmitt& as it relates to
rural counties
3. Discussion of issues
4. Presentation by invited guests
5. Public Testimony
6. Adjourn
Representative John Verkam~ i/
Co- Chairperson
Members
Senator Chesley J / Senator Hardt 4
Representative Daniels
Representative Rios r/
Ti& II of the Americmu With Disabilities Act prohibits the Arizona Senatejkm discriminating on the basis of disabiliry
in the pnwision of its services adpublic meetings. In&&& with disabilities may mquest masonable accommodations,
such ar interpmtrs or altematiw/ o? mah, by contacting the Senate Secretary's Ofice at ( 602) 542- 4231 ( voice) as soon
ar possible. Please be specific about the agenda item in which you am interested and for which you am mquesting an
accommodation The Senate may not be able to provide certain accommodations prior to the meeting unless they are
mquested a masonable time in advance of the meeting. This agenda will be made avaihble in an alternative fonnat on
requesr
Arizona State Legislature
Meeting Notice
Open to the Public
Joint Committee on Select Rural Counties'
Financial Burden
DATE:
TIME:
PLACE:
SUBJECT:
Senator John Kaitq
Co- Chairperson
September 12, 1995
Senate Hearing Room # 2
1. Call to Order
2. Discussion of scope of committee as it relates to
rural counties
3. Discussion of issues
4. Presentation by invited guests
5. Adjourn
Representative John Verkamp
Co- Chairperson
Members
Senator Chesley
Senator Hardt
Representative Daniels
Representative Rios
Tide II of the Americmu With Disabilities Act prohibits the Arizona Senatejivm discriminating on the basis of disability
in the pmvision of its JOM'OWa ndpublic meeting. I&& with disabilities may request rcaronable accommodations,
such ar intevntcrs or a f t ef~ m by co ntacting the Scnate Sccrerary f Oflce at ( 602) 342- 4231 ( voice) as soon
as possible. Please be specific about the a g e d item in which you are interested and for which you arc requesting an
accommodation The Scnate may not be abk to provide certain accommodations prior to the meeting unless they are
requested a rearo~ bleri me in advance of the meeting. This agenda will be made avaibbk in an alternative format on
reques f
N- AME
Please Print
- 2- .
Hearing Room No.-
MEETING OF COMMITTEE ON DATE C/ - / A : i 5
Tos,~\ lrC OMW. o , d
SC'LECT CowtrlTE< F ~ & X R L ~ L ( P ! J ~ T I M E ~ ~ ' O O I Z I L \
REPRESENTING BILL NO.
ARIZONA STATE LEGISLATURE
JOINT LEGISLATIVE STUDY COMMITTEE ON SELECT
RURAL COUNTY FINANCIAL BURDENS
Minutes of Meeting
November 1, 1995 - 1: 30 p. m.
House Hearing Room 3
Members Present
Senator Chesley
Senator Hardt
Representative Rios
Senator John Kaites, Co- Chair
Representative John Verkamp, Co- Chair
sba
Victoria Clark, Senate
Kathi Knox, House
Members Excused
Representative Daniels
Co- Chairman Verkamp called the meeting to order at 1: 35 p. m. and attendance was noted.
See attached sheet for other attendees.
Larry Richmond, representing Pima and Santa Cruz Counties, thanked the Legislative
Staff members for their cooperation and assistance and told the Committee he had
prepared a position paper ( filed with original minutes) which outlined agreements made by
the Counties in a meeting held recently which Legislative Staff also attended. Mr.
Richmond noted as far as he knew, there was no opposition by the Counties to the
proposal and that included Maricopa and Pima Counties who also attended the meeting.
Mr. Richmond gave a brief synopsis of the last Committee meeting held on September 12,
1995 and the history of H. B. 2226, 1995. Mr. Richmond said his position paper discusses
the issues and makes specific recommendations. He added while this Committee cannot
address the full extent of the financial problems of the four counties affected ( Gila,
Cochise, Santa Cruz and Pinal), it should address the two problem areas that have been
identified and the proposed solutions. The two problem areas identified are the Arizona
Health Care Cost Containment System ( AHCCCS) and the Arizona Long Term Care
System ( ALTCS) and the expenditure limitation experienced by the border counties.
Mr. Richmond's suggestion for the AHCCCSIALTCS dilemma is to partially adjust the State
mandated contributions to insure that small counties with limited assessed values and high
property tax rates are not required by the State to maintain a high local tax effort. The
adjusted AHCCCSIALTCS formula will allow these counties to reduce their high property
tax rates, thereby reducing the financial penalties on their taxpayers and removing present
barriers to economic development opportunities. Mr. Richmond noted the average cost to
provide AHCCCS coverage is $ 47 and should be adjusted so those counties paying more
MINUTES OF THE JOINT LEGISLATIVE STUDY COMMITTEE Page 2
ON SELECT RURAL COUNTY FINANCIAL BURDENS November 1,1995
are paying the average. He suggested using part of the revenues collected as a result of
the recently implemented tobacco tax to offset the increased cost to the smaller counties.
Mr. Richmond outlined the second problem experienced by some of the rural counties and
explained to the Committee the present expenditure limitation does not address the issue
of the more than two- fold population increase of Santa Cruz County created by daily border
crossings and the increase expenditure of county funds to accommodate this transient
population. He added the North American Free Trade Agreement ( NAFTA) was expected
to make things even worse. He suggested as a solution that the Committee adopt
language to redefine " populationn for expenditure limitation determinations only and add
a percentage of the average daily international border crossings as annually determined
by the U. S. Border Patrol to the County's permanent population base. Mr. Richmond
added when the issue of raising expenditure limits is put to the citizens of the County, they
perceive it as raising taxes.
Senator Kaites asked if there is Federal grant money available as it relates to the
immigrant jail population. Mr. Richmond affirmed this, but further noted approximately
$ 179 million is collected in crossing revenues but he was unable to confirm where that
money is. Senator Kaites thanked Mr. Richmond for his proposal and suggested another
meeting be scheduled after Staff and the Committee members have a chance to go over
the information.
Representative Verkamp thanked Mr. Richmond for his work on behalf of the Committee
and asked if it was possible to address concerns regarding border crossings in statute
rather than constitutionally. Mr. Richmond said it was.
Senator Hardt asked for verification that if the State changed the formula to $ 47 per person
for all counties for AHCCCSIALTCS coverage, it would cost the State $ 6 million. Mr.
Richmond verified that information. Senator Hardt said that solution seemed simple and
reasonable if it could be worked out legislatively.
Ron Morriss, County Supervisor, Santa Cruz County, explained corrections were made
to the Santa Cruz County expenditure limit base in 1985; however, the corrections did not
take into consideration the " floating population" experienced through border crossing
problems. He noted the entire criminal justice system is impacted because of that " floating
population" and that Santa Cruz is currently 50 cents below the tax levy limit but is at or
exceeding the spending limit and possibly subject to sanctions. Mr. Morriss informed the
Committee of how difficult it is to convince constituents in his County to increase the
expenditure limit. In response to Senator Kaites concerns regarding prisoners, he added
the Federal government is billed for Federal prisoners. Representative Verkamp asked if
any of the other border counties were near their expenditure limit. Mr. Morriss said he was
unaware of the other border counties' expenditure limits, but noted the legislation
suggested for relief for Santa Cruz County would be specific to those counties which
MINUTES OF THE JOINT LEGISLATIVE STUDY COMMITTEE Page 3
ON SELECT RURAL COUNTY FINANCIAL BURDENS November 1,1995
experience a large foreign population impact.
Representative Verkamp cautioned the Committee against establishing only a " patchwork"
solution in this situation. Senator Chesley agreed.
Sandie Smith, Pinal County Supervisor, thanked the Committee for its work and
explained Pinal County had increased its assessed valuation by $ 25 million but because
of recent tax shifts, it only received an increased revenue of $ 4 million. She added half of
the total property tax rate goes to schools and questioned the probability of cutting services
while still retaining a good qualtty of life for Pinal County citizens. Ms. Smith stressed the
uniqueness of Pinal County, noting it is a rural county between two urban counties - Pima
and Maricopa.
Ron Christensen, Gila County Supervisor, told the Committee Gila County had received
$ 2.4 million in relief and used $ 674,475 for a 25 cent reduction in the property tax rate,
$ 201,500 for AHCCCSIALTCS relief, and $ 1 million had been placed in the Property Tax
Stabilization Fund for anticipated decreased revenues. Mr. Christensen spoke in favor of
a permanent solution and revealed Gila County receives the least amount of private
property tax revenues in the State. Senator Hardt asked if the $ 47 average was assessed
for all counties if it would provide the relief Mr. Christensen needed for his county. Mr.
Christensen said it would, but cautioned it would affect other counties adversely. Senator
Hardt stated Staff would need to study the issue further and work on a proposal for
consideration by the Committee.
Representative Verkamp pointed out there had been no opposition to the proposal by
representatives at the recent County Supervisors Association meeting. Mr. Christensen
agreed, noting the proposal prepared by Mr. Richmond would not hurt any of the counties
significantly but stressed the need for reevaluating AHCCCSIALTCS. Representative
Verkamp stated the position paper could not be adopted as the report of the Committee
as further work needed to be done by Staff to address all concerns.
Senator Kaites requested that Staff work with the Joint Legislative Budget Committee
( JLBC) for an analytical approach of the proposal and the costs involved with the position
paper.
Senator Chesley commented on Mr. Richmond's statement in the position paper that read
" It is axiomatic that previously enacted federal and state unfunded mandates, passed on
to counties has and will continue to cause local fiscal chaos." He stated that these were
not unfunded mandates.
MINUTES OF THE JOINT LEGISLATIVE STUDY COMMITTEE Page 4
ON SELECT RURAL COUNTY FINANCIAL BURDENS November 1,1995
Senator Hardt agreed with Senator Kaites' plan to have another meeting and asked that
all the counties, not just the rural ones, be contacted for their opinions on whatever
proposal Staff and JLBC come up with. Representative Verkamp agreed.
Mr. Richmond stated the CSA was proposing adjustments to AHCCCSIALTCS as part of
their legislative agenda for next session.
Representative Verkamp stated another meeting would be scheduled upon completion of
the work requested by the Committee.
Without objection, the meeting was adjourned at 2: 30 p. m.
Respectfully submitted,
Arlene Seagraves, ~ o m r n i wSe cretary
( Tapes on file in the Office of the Secretary of the Senate)
ARIZONA HOUSE OF REPRESENTATIVES
GUESTS ATI[ II; INDING
Hearing Room i7
Time I 3~
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Attachment
ARIZONA STATE LEGISLATURE
JOINT LEGISLATIVE STUDY COMMITTEE ON SELECT
RURAL COUNTY FINANCIAL BURDENS
Minutes of Meeting
November 29, 1995 - 10: 30 a. m.
Senate Hearing Room 3
Members Present
Senator Chesley
Senator Hardt
Representative Daniels
Representative Rios
Senator John Kaites, Co- Chair
Representative John Verkamp, Co- Chair
Staff
Victoria Clark, Senate
Kathi Knox, House
Bill McCullough, Senate
Co- Chairman Kaites called the meeting to order at 10: 45 a. m. and attendance was noted.
See attached sheet for other attendees.
Michael Bradley, Senior Analyst, Joint Legislative Budget Committee ( JLBC),
informed the Committee JLBC had been asked to run numbers detailing an alternative
method of calculating county Arizona Health Care Cost Containment System ( AHCCCS)
contributions ( filed with original minutes). It had been determined by JLBC what each
county pays into AHCCCS and Arizona Long Term Care ( ALTCS) had not changed in
years and that the spreadsheet submitted to the Committee ( filed with original minutes)
illustrates the distribution of Fiscal Year ( FY) 1996 county contributions to AHCCCS based
on FY 1995 actual expenditures by county. Mr. Bradley explained the first columns of each
block " Acute Care Current % and ALTCS Care Current $" represent the fixed county
contribution percentages currently in statute and that the " Acute Care Current $ and
ALTCS Current $" represent estimated FY 1996 county expenditures based upon the
current fixed county contribution percentages. He added the third column of each block
" Acute Care Alternative %" and " ALTCS Alternative %", represent the county contribution
percentages if they were based upon actual FY 1995 county expenditures. " Acute Care
Alternative $" and " ALTCS Alternative $" represent estimated FY 1996 county expenditures
based upon the alternative county contribution percentages. The " Acute Care $ Change"
and " ALTCS $ Change" represent the difference between the estimated FY 1996 county
expenditures based upon the current and alternative percentages. Gila, Greenlee,
Maricopa, Pima, Pinal and Santa Cruz counties would all save money if this plan was
adopted; however, Apache, Cochise, Coconino, Graham, La Paz, Mohave, Yavapai, and
Yuma would have to pay additional dollars based on the population served in their
counties.
JOINT COMMITTEE ON SELECT RURAL COUNTY
FINANCIAL BURDENS
Page 2
November 29,1995
Mr. Bradley noted some of those counties have a unique situation in that they have had
to provide more services to the Indian reservations who do not pay taxes. Senator Kaites
noted even if a plan of this sort could be put into place, it would need more than a one year
cycle to phase it in. Senator Hardt said the plan would not work as the counties have no
way to raise the additional money.
Senator Kaites commented on the possible changes in Congress regarding the way block
grants are distributed as this could result in the states having to make sizeable overhauls
of their own formulas for funding health care. Senator Kaites recommended that the goal
of the Committee be a temporary financial relief bill for those counties now in a distressed
situation while continuing to work on the formula after it is known what the Federal
government is planning to do.
Mr. Bradley said it was his understanding block grants were likely to be vetoed by this
administration and the State would have until March to come up with changes. He further
suggested adjustments to the formula for those counties which have revenue problems.
Jerry Orrick, Executive Director, County Supervisor's Association, referred to the
charts put out by JLBC. Senator Kaites assured Mr. Orrick that the Committee was not
planning to follow up on the JLBC recommendations. Mr. Orrick expressed concern with
the approach Senator Kaites was suggesting; i. e., a one year " fix". He added the counties
will have to appropriate more money to accommodate growth.
Larry Richmond, representing Pinal and Santa Cruz Counties, expressed
understanding with the approach Senator Kaites was suggesting and urged the Committee
to allocate $ 6 million to cover the shortfall realized by the counties and for the Committee
to continue to work towards a long term solution.
Steve Besich, Gila County Administrator, noted it was his intention to continue to
support the efforts of the Committee, and added the inequities in the property tax system
were irrefutable. He requested that the Committee continue to work until a formal report
is issued. Senator Kaites stated it was an excellent suggestion to keep the Committee
intact and that it was important to make it part of the Committee recommendation in order
to work out a permanent solution. Mr. Besich said he would recommend the support of his
Board.
Sandie Smith, Pinal County Board of Supervisors, stated support for Mr. Richmond's
proposal and Senator Kaites' comments. She added she was willing to help in any way
possible.
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FINANCIAL BURDENS
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November 29,1995
John Nelson, Gila County Financial Director, noted the providing of services to Native
Americans skews the true picture in Gila County and that Gila County, as illustrated by the
JLBC chart could have been overpaying the State by even more.
Michael Racy, representing Pima County, informed the Committee according to the
JLBC charts, Pima County is subsidizing $ 6.9 million for the other smaller counties and
noted the rural counties have serious problems to address.
Rory Hays, representing Maricopa County, expressed concern with appropriations that
will be needed to fund health programs for older Arizonans.
Ron Morriss, County Supervisor, Santa Cruz County, thanked the Committee for its
efforts and said it was his belief the Committee should continue. He noted the seriousness
of the expenditure limit problem in his county.
Senator Kaites thanked all the county representatives for their work on the financial issues
addressed by the Committee. He directed Staff to prepare a recommendation that will
appropriate $ 6 million out of the General Fund or the Tobacco Tax Fund. He asked Mr.
Bradley if it was possible to utilize $ 6 million of the Tobacco Tax Fund for this purpose. Mr.
Bradley responded the argument in its favor would be that the $ 6 million would be
offsetting increased costs of ALTCS, although it could be argued either way.
Senator Kaites added to the recommendations that the Committee continue in existence
to come up with a permanent plan to address the rural counties issues including ALTCS.
Representative Verkamp said he was concerned with using Tobacco Tax dollars and
advocated using General Fund monies instead. He spoke in favor of developing a long
term solution after the Federal government resolves the questions regarding block grants.
Senator Kaites spoke in favor of using the Tobacco Tax dollars, adding it would be easier
to claim a portion at this point before it is divided up in a permanent manner by other
interests.
Senator Chesley said he supported making the system of paying into ALTCS and
AHCCCS more fair, and advocated using the Tobacco Tax Fund to cover the $ 6 million
shortfall. He expressed concern regarding the continued increase of spending for Native
American issues.
Senator Hardt moved recommendations be made that would request the $ 6
million dollars from both funds referred to and that the other
recommendations made by Senator Kaites be adopted with the caveat that all
members will have a chance to review and sign the final report prepared by
Staff for the Committee.
JOINT COMMITTEE ON SELECT RURAL COUNTY
FINANCIAL BURDENS
Page 4
November 29,1995
Senator Kaites stated he had been delighted to work on this Committee, and that he was
happy to be making progress to the ultimate solution by addressing the needs and
inequities experienced by the rural counties.
Representative Verkamp apologized for being late to the Committee meeting and thanked
the Committee and those participants who had been attending the meetings during the
interim.
Mr. Richmond inquired as to whether or not the Committee would be including in its
recommendations the expenditure limit problem experienced by Santa Cruz and some of
the smaller counties. Senator Kaites said it would be a separate motion.
Motion CARRIED by voice vote.
Mr. Richmond suggested a recommendation be drafted that a percentage of the average
daily border crossings be counted into the permanent population base for the expenditure
limit only. Senator Chesley expressed his concerns about adopting a proposal that had
been rejected by the counties' constituents; adding he felt the State would be imposing a
mandate.
Senator Hardt asked if the request was that language be adopted to redefine population
in the border counties. Mr. Richmond answered affirmatively. Senator Hardt said he would
support that concept and that he did not believe the Committee was doing what Senator
Chesley feared.
Mr. Morriss said he understood Senator Chesley's concerns and explained the situation
regarding the vote for home rule and for raising the expenditure limit that took place in
Santa Cruz County. Representative Verkamp added he did not believe what was being
suggested was a mandate; rather, it is a request of the Legislature to change the
population formula in limited cases.
Senator Kaites asked Staff to investigate the possibility of this legislation affecting only
border counties. Senator Chesley stated he believed the Legislature was opening a
" Pandora's box" with such a recommendation.
Senator Hardt moved that legislation be drafted to provide a percentage of the
daily border crossings at the Mexican border be counted into the permanent
population base for the expenditure limit only. The motion CARRIED by voice
vote.
1 JOINT COMMITTEE ON SELECT RURAL COUNTY
FINANCIAL BURDENS
Page 5
November 29,1995
Senator Kaites informed the Committee a report would be provided to the Committee
members by Staff when it was completed. He thanked the Committee, Staff, and all those
who had participated from the counties.
Without objection, the meeting was adjourned at 11: 55 a. m.
Respectfully submitted,
Arlene Seagrave's, Commiv Secretary
( Tapes on file in the Ofice of the Secretary of the Senate)
