Benefits of incorporation 'exaggerated'

It does not provide a fiscal windfall, says Pima's Huckelberry
2013-02-23T00:00:00Z Benefits of incorporation 'exaggerated'Darren DaRonco Arizona Daily Star Arizona Daily Star
February 23, 2013 12:00 am  • 

The longstanding conventional wisdom that widespread annexation or incorporation would be a financial bonanza for the region may not be all that wise - at least as Pima County Administrator Chuck Huckelberry calculates it.

For decades, proponents of annexation have bemoaned the area's loss of $70 million or more each year in state shared revenue because Pima County has approximately 355,000 unincorporated residents.

"Choices made decades ago, including choices not to pursue, or to resist, annexation, have helped bring us to where we are today," said Mayor Jonathan Rothschild during his State of the City address last week. "To recapture the $70 million … we must become an incorporated valley."

But Huckelberry thinks the numbers being thrown around are "significantly exaggerated," to the point that the region might actually lose money if everyone lived in an incorporated area - anywhere from $2 million to $5 million, depending on the level of service provided to residents in newly incorporated or annexed areas.

Huckelberry said the county doesn't take a position on annexation or incorporation but believes residents should have a full picture of the issue before making a decision.

"Historically, people form towns and cities because they want more and better services as opposed to what the county provides," Huckelberry said. "That's fine if people want to do that. But don't do it on the basis that it's a fiscal windfall because it's not."

He said annexation advocates are omitting some key factors in their calculations. The first is that the state's funds for revenue sharing with cities are fixed, not fluid.

"This pie is finite," Huckelberry said. Every dollar that goes to a newly annexed or incorporated area reduces the shares of the existing cities.

For example, he said, if all of Pima County's unincorporated residents formed their own new city, they would qualify for $80 million in state shared revenue. However, the revenue share to the existing municipalities and the county would decrease to the tune of $47.6 million, leaving the region with a net gain of $32.4 million.

While $32.4 million is is a nice chunk of change, Huckelberry said, the presumption that existing or new municipalities can provide services at the same or lower cost is not necessarily accurate.

"An assumption that the cost of service delivery will remain the same is unreasonable on its face," he said.

Just look at what Tucson currently charges for police and parks and recreation, and what the county currently charges for those same services, and apply it to the approximately 355,000 unincorporated residents, he said. It would cost $34.2 million more than what the county charges today, meaning overall, the region would experience a net loss of $1.8 million if every resident was incorporated.

And that doesn't factor in all the other services, which Huckelberry said most certainly would change based on population numbers and drive the losses even higher.

At least for now, Huckelberry is going against the grain alone.

Michael Varney, president and CEO of the Tucson Metro Chamber of Commerce, said the area needs to urbanize as much as it can so those tax dollars can stop taking a "one-way trip to Phoenix" each year.

"That money builds a lot of roads, a lot of parks, a lot of everything," Varney said.

Rothschild echoes that the money now sent to Phoenix could be used to pay for services here we're already spending money on, and pointed to Vail as a perfect example of the incorporation's benefits.

Vail's attempt at incorporation will bring in "$3.2 million we didn't have before" and will be used to pay for police, road maintenance and other services that the county or some other entity supplied, he said.

Rothschild didn't take Huckelberry's counterposition well, saying it's time for the region to catch up with the rest of the country, and not let Pima County officials "interfere in our progress."

"We have been a county that serves an urban area with rural services, he said. "Eighty-two percent of Americans live in incorporated areas," Rothschild said. "Pima County is at 64 percent.

"I don't think … the rest of the country is wrong and that one particularly small governmental body is correct," he said of Huckelberry's figures.

Varney said while he's not familiar with Huckelberry's calculus, he is keeping an open mind on the issue.

"Chuck could show me his numbers that contradict or show that we would lose money and I could change my position," Varney said. "But what we know for sure now is we're not keeping this money" and we need to find a way to hold on to it.

On StarNet: To read more about local and state government and political news, go to azstarnet.com/politics

Contact reporter Darren DaRonco at 573-4243 or ddaronco@azstarnet.com. On Twitter @DarrenDaRonco.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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