ARIZONA STATE SENATE
Phoenix, Arizona
FINAL
REVISED
intergovernmental agreements; procedure
(NOW:
expenditure limitations; disproportionate share funding)
Purpose
Maintains for FY 2001-2002
and FY 2002-2003 the $100 penalty for a municipality, county or community
college district violating its constitutional expenditure limits if the
expenditures of a city, town, county or community college district do not
exceed the expenditure limitation for FY 1999-2000 multiplied by the percentage
change in population and multiplied by specific inflation factors for each
fiscal year.
Requires county expenditure limits to be adjusted beginning with
FY 2001-2002 as a result of the elimination of the transfer of funding for the
federal disproportionate share health (DSH) services from the counties to the
state and federal governments beginning with FY 2001-2002.
Background
Article 9, Sections 20 and
21 of the Arizona Constitution require the Economic Estimates Commission to
determine each year the expenditure limitation for the following fiscal year
for each county, community college district, city and town. The limitation is calculated based upon the
amount of FY 1979-1980 actual payments of local revenues, referred to as the
“base limit.” Each year, the base
limits for local jurisdictions are adjusted for population and inflation to
reach the expenditure limitations. The
inflation index used by the Commission is the GDP price deflator. Every four years, the GDP price deflator is
adjusted by the U.S. Department of Commerce.
According to the League of Arizona Cities and Towns, the 2000 GDP
adjustment had the effect of reducing the allowable expenditures for
municipalities and counties to an amount less than the previous year. As a
result, last year, H.B. 2563 suspended the penalty for exceeding the
expenditure limit for one year in order to allow for continued study and
review. S.B. 1246 extends the
suspension of the penalty for two more years with the intent to allow more time
to study options.
Article 9, Section 20 also
requires the Commission to adjust the base limit to reflect “subsequent
transfers of all or any part of the cost of providing a governmental function,
in a manner prescribed by law.” In FY
1991-1992, Arizona began participation in the DSH payments program, distributing
federal funds to county hospitals that serve a disproportionate share of
Medicaid or low income patients.
Through this participation, a portion of the cost of providing health
care services to the public is transferred from the counties to the federal
government. That same year, the
Legislature directed the Economic Estimates Commission to adjust, for
allocations of DSH payments, the base limit used in calculating the county
expenditure limitation. This direction
has continued annually through the current fiscal year. Traditionally, the annual legislation
directs the Commission to decrease the base limit for DSH payments allocated in
a single fiscal year, and to increase the base limit by the same amount in the
next fiscal year, bringing the base limit back to the original level.
Currently, only Maricopa and Pima counties’ expenditure limitations are
adjusted for DSH allocations.
During
the 1999 legislative session, legislation was once again enacted (Laws 1999,
Chapter 176) directing the Economic Estimates Commission to adjust the base
limit for allocations of DSH payments. For the first time, direction was given
to the Commission to adjust the base limit for a two-year period. This was done to conform to biennial
budgeting. This legislation continues
the adjustment for FY 2000-2001, and ends the adjustment beginning with FY
2001-2002 as a result of the elimination of DSH payments to Pima and Maricopa
counties' hospitals.
There
is no fiscal impact to the state general fund associated with this legislation.
1. Provides that the Legislature finds that the reduction in the GDP price deflator index currently used to compute city, town, county or community college district expenditure limitations has resulted in limitations that do not accurately reflect the effect of inflation on the state’s political subdivisions budgets.
2. Establishes a $100 penalty in FY 2001-2002 and FY 2002-2003 for violating expenditure limits if the expenditures of a city, town, county or community college district do not exceed the expenditure limitation for FY 1999-2000 multiplied by the percentage change in population and multiplied by a three percent inflation factor for each fiscal year.
3. Provides method for computing percentage change in populations.
4. Requires county expenditure limits to be adjusted beginning with FY 2001-2002 as a result of the elimination of the transfer of funding for DSH services from the counties to the state and federal governments beginning with FY 2001-2002.
5. Requires the Economic Estimates Commission to increase the base limit of each county by the amount the base limit was decreased for FY 2000-2001 relating to county expenditure limitations in FY 2000-2001.
6. Requires for FY 2000-2001 the Economic Estimates Commission to use:
a. the base limit of $156,635,737 in adjusting Maricopa County's expenditure limitation for DSH payments.
b. the base limit of $93,755,872 in adjusting Pima County's expenditure limitation for DSH payments.
7. Provides for a general effective date.
Amendments Adopted by the House of Representatives
Adopted a strike everything amendment.
Senate Action House
Action
Final Action 5/2/01 28-0-2-0 PIRA 4/03/01 DPA/SE 8-0-0-2-0
3rd
Read 4/11/01 50-5-5-0
Signed by Governor 5/7/01
Chapter 362
Prepared by Senate Staff
May 25, 2001