The 2018 Sedona city election has been described by many as the most contentious one in the city’s 32 years since incorporation.
A lot of that was the result of one item — Home Rule vs. Permanent Base Adjustment. Home Rule was approved on the August ballot and a PBA rejected on the November ballot.
The debate, still fresh on the minds of many, came up once again during the Sedona City’s Council’s meeting Tuesday, Jan. 14. The item was not put to a vote but the consensus by council was to have things remain status quo for the 2020 election and that a PBA could be considered in the future.
During the city council’s 2019 annual retreat, council listed exploration of a PBA as a high priority. From there staff helped create a public work group that met several times to explore this option with the findings shared this week with council.
The work group stated that Home Rule remains the best option that makes the most sense for Sedona.
Their report stated they understand the various concerns about continuing with Home Rule. If council chooses to place a PBA question on the ballot, the group recommends an increase over current spending needs with the goal of eliminating the need for Home Rule elections for 10 to 15 years.
“The alternative recommendation is not considered a close second choice for most of the participants, but they would be comfortable with this option if chosen by the city council,” they wrote.
Those residents taking part in the work group included Jean Jenks, Shaeri Richards, Richard Breunich, Peter Furman, Michael Salamon, Charlotte Hosseini, Roger Shlonsky and Lynn Zonakis. They were overseen by Finance Director Cherie Wright. Each member of council praised the work put in by Wright and the members of the work group.
“I’m so grateful that you were willing to do what you did and go through everything because it is kind of a thankless job,” Mayor Sandy Moriarty said. “You spent a lot of time and agonized the way we do.”
She went on to say that after the 2018 election, she was leaning heavily toward a PBA but that feeling recently changed.
“After I read what you all went through and your report and the conclusions, I’ve changed my mind,” she said. “I think we should stick with Home Rule. I am willing to go with your recommendation because of all the work you’ve done.”
In a previous report from Wright, she explained the difference between Home Rule and a PBA.
Home Rule
Municipal spending in Arizona has been capped since a constitutional amendment passed in 1980. However, the Arizona State Constitution allows a city or town to adopt an alternative expenditure limitation, aka Home Rule, with voter approval, letting them spend more than the stat cap.
The Home Rule option is free from any ties to the state-imposed expenditure limitation. The annual adopted budget becomes the alternative expenditure limitation for the city or town.
Constitutionally allowable exclusions apply only to entities bound by the expenditure limitation. However, a city or town under Home Rule may use any exclusions specifically identified in its voter-approved Home Rule proposal. The city of Sedona has not previously included any exclusions in the ballot language.
When Home Rule is adopted, it remains in effect for four years. Following the fourth year, the state limit is re-imposed unless the Home Rule alternative, or another expenditure limitation option, is approved.
Permanent Base Adjustment
The Arizona State Constitution allows a city or town to permanently adjust its base limit from which its municipal budget cap is calculated, with voter approval. The PBA applies to all future years; however, voters may adopt additional adjustments.
Once a PBA has been implemented and the city or town is operating under the new base, the constitutionally allowable exclusions apply.
In 1980, the Arizona Constitution was amended to include state-imposed expenditure limits on cities and towns. Adding the state-imposed limit and the excluded expenditures would have given the city a $24.3 million budget in Fiscal Year 2020. If that had happened, it would have required a 51% reduction to the projected city budget. The city would still collect the same revenue via taxes and other sources but would be unable to spend it beyond the limit.
If Home Rule had failed in 2018, the city had the option to use a one-time override during a May 2019 special election to adjust the spending limit. The city could not have asked for Home Rule authority for two years after the one-time override, but it could have put a PBA on the ballot during even-numbered years.
Since the city’s first Home Rule election in 1990, voters have approved each Home Rule option in every election except once, in 1994. In the last three elections, more than two-thirds of the voters have approved the Home Rule option. The Home Rule option approved in 2018 is in effect through Fiscal Year 2022-23.
Of the 91 cities and towns in Arizona, 54% use Home Rule, 34% PBA and 12% state-imposed limits.
In November 2018 — for the first time in Arizona history — a citizen-initiated PBA was placed on the ballot to increase the base at $36 million. It failed with 63% of the voters opposed.
Councilman John Currivan said he didn’t wish to argue against Home Rule but he thinks a PBA should be explored and was hoping to see it on the 2020 ballot. If nothing else, he said, it would act as a safety net in the event Home Rule were to not pass at the ballot box in the future, which would create a “sky is falling” scenario.
“The way it is now, if Home Rule fails, we drop to around $24 million, which would be a huge drop — cutting our budget approximately in half,” he said. “I didn’t understand what the argument would be against that [passing a PBA] while staying with Home Rule. Now that we are not in a Home Rule election year, I’m still hearing arguments that we’ll be confusing the voters. I’m not really sure I agree with that. Maybe I just have more faith in the voters of Sedona than some other people do.”
Councilwoman Janice Hudson said that in the future a PBA may be the best route for the city. But right now is not the time because of the uncertainty associated with capital improvement projects and what that PBA dollar figure should look like.
“My opinion is, we’re not stable enough,” she said. “Two years ago we would not have known that we were going to start putting the amount of money into housing that we’re starting to talk about now. And, that we might have a transportation system. Not just a transportation plan but busses running that have a huge cost associated with them that two or three years ago we really didn’t see. And sustainability, as we have heard from residents, is a big deal. None of those things come without significant costs. And I don’t think we know what those costs are yet.”
