Saturday, September 10, 2011

New Funding Source for the Arizona Department of Water Resources

Back in April I posted about a piece of legislation passed up in Phoenix that would allow the Arizona Department of Water Resources (ADWR) to replace the funding they used to get as a general fund appropriation by taxing all Arizona cities, based on their population.  ADWR finalized the rulemaking (specially exempted from the governor's moratorium on new regulations, that seems to be a moratorium in name only) last month and set the fees for each of the cities in the state.  The authorizing legislation allows ADWR to use the fee to collect up to $7 million each year, but they gave the cities a break by only going for just over $6.25 million this year.  Obviously Tucson and Phoenix, as the two biggest cities, will be covering a big chunk of the fees - $650k and $1.8 million, respectively.  This municipality fee is meant to cover roughly half of ADWR's budget - the rest coming from fees on permits, permit reviews, and other services the agency provides.  But in the current economic climate I suspect that is probably most of what the agency will be operating on for the coming year.

The big question that has been bugging me is - how are most cities planning to pay for this new fee?  There are many cities that have public water utilities that will permit them to pass the fee along in their water rates.  Tucson has a utility, but about 30% of that utility's customers live outside the city limits, so it doesn't seem fair to do that here.  There are also many cities that don't have their own water utilities - usually they have private water utilities.  That requires some cities to just cover this fee out of their general fund.  But budgets are pretty squeezed for everyone these days.  Then there are all the people who live in unincorporated areas.  They will pay nothing, presumably, but still derive some value from the services that ADWR provides.

Bisbee, a city of 5,500 people in far southeast Arizona has a private water utility and their city manager sounds none too happy about having to pay an additional 7 grand to the state to keep the doors open at ADWR.  I wonder how much value Bisbee receives from the work that ADWR does?  Or how much value the city of Tucson receives for their share of the money.  Admittedly, you might say that funding the agency the old way probably resulted in many parts of the state receiving more from ADWR than they were paying for, so maybe this method makes more sense.  But I have a feeling the only place that will be getting what they pay for under this system is gonna be the Phoenix metro area.  Although, that has arguably been the case since ADWR closed down all their offices outside of Phoenix last year.

It's just that the services different parts of the state require from a state water management agency vary based on the hydrologic issues that area is dealing with and those services are usually not directly related to population, although population is a factor - but in my opinion it's more about population growth than absolute population.  Maybe that gets covered by the fees for services part of ADWRs budget, hard to say.  But I remain astonished that things looked so grim for ADWR that the cities agreed to fund their activities in this way.

Oh and one other thing.  If you look at the bottom of page 2 of the notice of proposed rulemaking there is a sentence that says: "Monies in the fund are subject to legislative appropriation".  That means the legislature can sweep the fund in future years if they need to top off their budgets, just like they have been doing for the last 3 years.  They have had their wrists slapped by courts on a couple of occasions recently - including their sweep of money from Las Vegas that was intended to buy excess Colorado River water for banking in Arizona.  In that case the court said the fund sweep was unconstitutional, but they refused to order the legislature to give the money back.  Real nice.

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