Board of Supervisors - Special Meeting

I'll entertain a motion to move into public hearing portion. Move. Second. It's been moved and seconded. Any further discussion? Hearing none, all those in favor, please signify by saying aye. Aye. Motion carries unanimously. At this point in time, we'll start with the public hearing, and I'll ask Deputy County Manager Mauricio Chavez to come on up. And as far as... interaction with the public, with the constituents. It'll be during the hearing portion of this, so we'll kind of play it by ear, and when is appropriate, if you have any type of a question, we'll just kind of play it by ear as to when you will speak, but you will have an opportunity to speak to say what's on your mind, thank you. And with that, Mr. Chavez.

Mr. Chairman, members of the board, and members of the community and county staff, thank you for giving me the opportunity to provide the public with the public hearing and the truth in taxation. This is in compliance with Arizona Revised Statutes 42-17107 and 48-254. Next slide, please. I would like to go over this first off, start off the slide or the presentation with a commitment that the board in the direction that you have provided our finance staff to assess and provide a recommendation on a reduction in tax rate, in property tax rate. You started this process last year, and last year it's a reflection when we started at 4.0065, in which our fiscal year 26, it was reduced by 3 cents on our primary tax rate. And then the recommendation for this fiscal year is going to be a reduction of another 3 cents for a 3.9465. So that's the commitment that you want to move forward with on a four year plan, which altogether would be about a $0.12 drop in the current primary tax rate. Next slide, please. So we want to identify. Why is my tax bill going up even though the tax rates decrease? The simple answer to that would be it's an increase in assessed values. It's a simple multiplication between the rate and the value and that gives you the assessed value. So if you look at the icon on the left, the tax rate, even though it's reduced at 3.9465, which is the three cents lower. However, since assessed values overall in the county went up this fiscal year, the tax bill may increase in some taxpayers. Now, not all taxpayers are going to result in the same. It's going to vary depending on many different factors. It's going to vary on where they live. There's a lot of different ways that the assessed values are calculated through that.

Any questions so far, Mr.

Chair, members of the board? So basically, depending on what area of the county you live, depending on variables, meaning home sales, all that will depend on what your tax valuation is going to be?

It depends on the tax value, and I've asked our county assessor to be present here as well. He's the one, his office is responsible for the assessed values, and he can provide more detail if the board would like that to happen, and he's prepared for that. Pablo, if you don't mind coming up.

I think it's important that the community hears. I was able to sit down with Assessor Ramos for about a half an hour with County Manager Valdez. And because my question was at the time, is it a mandatory 5% on a yearly basis? because I was hearing conflicting reports that that 5% on a yearly basis may or may not be mandated by law. And after sitting down with Mr. Ramos, there are very few exceptions to that rule, but that is statute if I'm not mistaken. And I'll let you take it from there.

Correct, good morning. Values are set based on market sales and cost components. So we have different market areas in the county. So depending what market area you're living in, it's based on sales. So that's how we make our market adjustments on a yearly basis to increase or decrease values. The limited property value is based on statutes, a 5% increase minimum. It can differ if you have a new construction, it can go up to a different percentage, or you have an addition to the property that constitutes 15% greater value than the previous year, we can do a Rule B. It's called Rule A and Rule B. In Rule A, it's like 5% across the board. Then the Rule B, it could be more than 5% based on new construction or additions to the property. The limited property value can never exceed the full cash value. So there might be cases where the LPV only goes up one or two percent or it doesn't go up at all. If your full cash value is $100,000, let's say, and your LPV is $99,000, for the following year, if the full cash value doesn't change over $100,000, the LPV cannot go up 5%. It only goes up to that $100,000. So it's different variables that we have, and there's a lot of different possibilities the way your LPV can go up, but it's 5% at least for statute.

Can you tell us what LPV is again?

It's the limited property value. That's where all the primary taxes are assessed against.

And that increases every year?

It's every year, it's based on statute. It was voter approved in 2017. It was Proposition 117, actually.

So even though we decreased the tax rate, the overall bill could go up, right, because of that increase?

Yeah, and the different, there's a few parts to the tax bill. There's different taxing authorities. We have the county, the school, the fire district, flood control, special districts, community college, school districts. So those districts make changes to their tax rates. Even if we keep your value the same, you can still see an increase in your tax bill.

Because the counties, they can only have an impact on the primary and secondary tax rate, right?

Yes.

And then the other ones, like you said, the schools, the provisional college, the other.

Yeah, and there's bonds also. There's the primary tax rates and there's secondary tax rates, which are bonds and special districts. And the value does change every year based on values. So whatever the market's indicating, there's a lot of sales in the area. The market goes up. So by statute, we have to follow the market and do market studies every year. That's how we come up with a full cash value and limited property value. Because we have two values in the state. We have the full cash value and the limited property value.

So would it be safe to say that the majority of homeowners are at that 5% raise?

Yes. Most taxpayers will see that 5%.

Thank you. Thank you.

Mr. Chairman, members of the board, Pablo, who would audit that information when you do the assessed values and in your evaluation? What agency audits your office?

The Department of Revenue. Before we send out our notices of value on January 1st of every year, we get a notice from the Department of Revenue. It's a good-to-go letter, we call it, that they give us that they reviewed our sales. We work with them reviewing our sales and doing the market adjustments every year. We also contract with Marshall & Swift, which is a company, a nationwide company that does our cost system, which we call the black box. It's embedded into our CAMA system, which is a computer system mass appraisal that we use to come up with the values. And in there, there's a market adjustment, location adjustment, and we have different factors, obsolescence, depreciation, so everything's built into the system.

So if I understand correctly, once you prepare that analysis or the assessed values, you send all that documentation to the State of Arizona Department of Revenue? Yes. And then they analyze it and they approve it?

Yeah, we work with them and come up with the market adjustment. Actually, we send them the information. They also get copies from the recorder's office with all the affidavits of value, all the sales. They get a copy of that, we send it again based on, we do a coding, which we make it as a good sale or we can reject the sale. With their out of state buyers, they're rejected because there's the different prices that they pay for property when they come into the state compared to wherever they're coming from. So those sales are not, they're not quoted as good sales. So we usually use the local market, in state market.

If I'm a property owner and I'm not happy with where my home is valued, what protocol can I take in order to receive an adjustment? Do we have certain steps?

Yes, notices of value go out by March 1st every year. Then the property owner has until April 15th to appeal their valuation. That's the administrative level. They appeal to us their value. They don't appeal taxes. You cannot appeal your tax rate or your taxes. You appeal your valuation. Right now, based on the statute, the value that you can appeal is the full cash value. and all the taxes are based off the limited property value. So you can appeal your value, we can lower your value if you have enough information that we have the wrong square footage, that we're not comparable with similar properties within your market area. It doesn't mean that your tax bill's gonna go down. So that's one of the things, but you can appeal your value. Once you appeal at the administrative level in our office, then we send our decisions out by August 15th of every year. If you're not satisfied at that point, you can take it to the Board of Equalization, which is... is the Board of Supervisors, now you guys have hired the Board of Equalization to do the hearings. So after that instance is done, they can take it to tax court by December 15th. So you have your administrative, then you have your Board of Equalization, then you have your tax court remedies to fight your valuation. But in most cases that we've seen, most people agree with their value. They feel their value is pretty much to what they can sell their property for. They're okay with their value, the problem is the tax bill. So that's where we have the problems with the taxpayers that they're not happy with their tax bill, but they think their value is okay.

So my last question, and I think I know the answer to this, but I want to make sure that it's said. Would it be safe, once again, would it be safe to say that no decisions are arbitrary, they're based on formula and based on state statute?

Yes. all of our values are set based on statue and based on a formula that we have to use, based on square footage, design, construction type, architectural style, components of the property, what kind of roof you have, what kind of flooring, interior components, driveways, everything's taken into consideration, not buildings, so yeah.

Thank you.

Okay. And like you were going back to the appeal, like Mr. Morletta said, we have 47,000, 48,000 parcels in the county. This year we had like, if I'm not mistaken, about 80 appeals. Yeah, we had about 80 appeals out of 47,000 parcels. And from those 80, the ones we reject or we do change their value on them, The ones that go to the board, I think last year we had like six of them, and we didn't have any of them go in the tax court.

Thank you.

Thank you, sir. All right.

Thank you.

Next slide, please. Mr. Chairman members of the board members of the community speaking of formulas the state of Arizona provides what we call a worksheet that's formula based and provides the information that you see here Now, this is for the primary property tax levy. So that formula, we plug in the current primary property tax levy amount. We have the net assessed value, the new construction, and an existing property, and it calculates basically the tax levy amount that you see on the left there, which is the $18,329,524. That's with a tax rate of 3.9465, which that's what the board directed me to move forward with. All in all, what this is going to do to a home, a value home at $100,000, it's going to add about 3.84, so $3.84 a year additional on a $100,000 value home. So it's about $0.32 per month additional based on that. Even though, again, as the county assessor explained, even though the tax rates went down, but assessed values did go up. Next slide, please.

So that's taking into consideration both? Both the drop, the 3 cent drop as well as the 5%?

That is correct. That's a calculation of taking into consideration of both, yes. Thank you. Next slide, please. Now we have to do under this, in compliance with the statute, we have to do the same exercise for the secondary. property tax so Santa Cruz County has a primary that provides the services for the general fund that funds 26 departments and then we have the secondary property tax which is that controls the flood control district And that we go through the same exercise that the net valuations are a little different on that and it's calculated in the figures are a little different. But the end result would be on a $100,000 home, the additional per year would be $1.57 or about 13 cents per month. Okay, next slide please. So both of those worksheets put together, we look at the primary tax and the secondary tax. So even though our primary and secondary tax decreased, however, because there was an increase in assessed values, homeowners, an average homeowner on a $100,000 home is gonna see an increase of about $5.41 annually, okay, or about 45 cents per month. Now, I do wanna emphasize, and I know that Mr. Ramos indicated this, This is only controlling what you as a board can control. You control the tax rates and you set the tax rates for the county only, the primary and secondary. You have no control over school districts, over fire districts, and over the provisional college or any other jurisdiction that might be prevalent in those particular homeowners tax bills. So they have their own boards and they set their own rates. Next slide, please. I'll reiterate that all taxes play a really important role in our community here. For school districts, they provide the education. Fire districts, they provide emergency and fire support. The provisional college provides post-secondary education opportunities. The JTED, which is the Joint Technical Education District, provides also valuable services of technical programs. and then there's the county the county provides services for 26 departments that go anywhere from the recorders to the assessors to the treasurers public fiduciary emergency management you saw the presentation earlier today on emergency management and the job that they do environmental health, all those clinics that they have throughout the community as well. So I'll reiterate that when taxpayers come and pay their tax bill, At the treasurer's office, the treasurer collects that full amount, but the Santa Cruz County itself, our organization, doesn't keep that entire amount. The treasurer's responsibility is to disseminate all the other payments to those other jurisdictions as well. And I'll provide an example in the next slide how that works. These are just two examples of the property tax dollar and where it goes. Now these are for illustrative purposes only of some examples in the Nogales area and then another example in the Tubac area. So if you see out of every dollar there, I'll take the Nogales area example, out of every dollar there, A little bit over 50% is for the Nogales Unified School District. That includes their bonds and overrides, and those bonds and overrides have been approved by voters in that area, okay? The county itself, our entity, we have about 37% of that. And then the flood control district, which is our secondary tax, that's about 7.4%. Then you see the others, the community college at 3.7, and then the fire district assistance fund at almost 1%, and then JTED at 0.5% there. On the other side, the other bill is on the two-back area. Every area's a little different because there's so many different taxing jurisdictions. So when you go to the previous one, in the Nogales area, there's no fire district tax there because the city of Nogales takes over those responsibilities for the residents and provides those services. As opposed to unincorporated areas, like in the Tubac area, you'll see Tubac Fire District there with 26.5% on that cycle. And then it's not NUSD, but it's Santa Cruz Valley with 35%. And then you see the other breakdown there that provides a visual, I think this is a very helpful visual of where the money's going. That not all that dollar that is paid stays, we keep as a county. Depending on the area where you live, we keep that percentage so we can provide those services and fund those 26 departments. Any questions, members of the board?

So basically the board has control for the tax rate, right? And we've been decreasing that for three cents per year. But the CESS value and then the different districts, we have no control how it goes up, right? The school districts, the fire districts, the bonds, the rates, the bonds and the overrides, that's what people vote for.

Mr. Chairman, members of the board, that's correct. You have no control over the assessed values. That's the department that Mr. Ramos takes care of. You have control over and you set tax rates, but only for Santa Cruz County, for the primary and for the secondary, that's all. The other jurisdictions, the other taxing districts that are part of our community, which is the school districts, the fire districts, the provisional community college and JTED, those are districts that have their own governing board. They go through their own process and they set their own budgets and they set their own tax rates. And they only present those tax rates to you as a board so you can certify them. That's all, but you have no control over those rates. But they do play a pivotal role because that's overall, we're going to get them in our tax bill, including myself. So I receive a tax bill, I live in the Nogales area, and I fund part of it for NUSD, for example.

That's good that you brought that up because last year there was, I feel like a confusion between approving the tax rates or certifying them between the different schools. So basically, can you clarify that? What distinction between those two?

Glad to do it, Mr. Chairman, members of the board. When you're going to be asked to do an item on the agenda, and the third item on the agenda here is to act on the taxing rates or the tax rates for the other jurisdictions. But this is just a ministerial act that you're required to do under Arizona law. What that'll do, it'll move forward those tax rates. that have been previously approved by other boards and move them forward to the treasurer so he in turn can add them to the tax roll and bill.

Thank you. Thanks for your clarification.

Mr. Chairman, members of the board, that concludes my presentation for the truth in taxation and the impact that may affect some of the residents on the tax rule moving forward. But I'll be here to answer any questions the board might have.

Would that also include constituents, I would assume? Correct.

Okay.

At this point in time, I don't have any questions. I may have some after the constituents, but at this time, Ms. Register, if you'd like to come on up, and I know that Mr. Levine and anyone else who would like to come up and comment.

So I have a, I don't know how to do this. Did I ruin it? There you go. Okay, I didn't ruin it. Perfect, thank you. Okay. So I have a prepared two minute little statement and then I have some additional questions after the presentation. So can I do my statement and then ask my questions?

Sure.

Great, thank you. So my name's Vanessa Register and I live at 105 Lotto De Loma. Dear supervisors and county staff, In 2012, voters approved Proposition 117. And in 2015, the limited property value taxes, so that the limited property taxes can be increased, can be increased to no more than 5%. At that time, this board is asking for an increased spending to be approved by the voters. A key talking point, I don't remember your name, sorry. You spoke no new taxes, the beginning, the end, summary constantly. So no new taxes, I get it, but you can increase current taxes. Is that the only thing that you're promising to?

Mr. Chairman, members of the board, this is based on assessed value. So independently of what the expenditure limit we are requesting of the voters in November and the truth in taxation today in our final budget, those are actually two independent items.

I see them as connected because you're getting more money for me from not a new tax that you can spend more of. So just so you know, from a person that's providing money, I see that these as connected. One of the other things is this board has the option not to raise our limited property value by 5%. And I have proof of that because I have from the Arizona Department of Revenue the statements that say, and I will read it to you directly, and I've highlighted it and made a copy for everybody because I think it's important you know the law. Proposition 117 imposes a limitation of the limited property value to an annual growth of 5% in the year 2015. It's not a requirement. The Arizona Department of Revenue says it's a limitation too. The proposition too doesn't mean at, to the top. So I think you have to understand and ask yourself what, was the purpose of 117 and why did the voters approve it? It was so that we could not be hit with new taxes and it wouldn't increase too much and people on limited incomes would not be hit and not able to pay their taxes and lose their homes. I think that you can disagree with Mr. Ramos' interpretation. In fact, the last Board of Supervisors that Mr. Molina was on, they voted to decrease the tax by the three cents. That's great. But all the property values were then decided to be brought up. It was a decision that was made. I was there when it was done. So I think that that's important to say. That's how you got more taxes because our property, limited property values went up with the 5%. It hasn't in the past. It just did. Taxation Title 42, which you spoke of, says that property values are capped, capped at 5%, not must go to 5%. I have the limited prop, here's the prop, this for each supervisor.

And it's on page two, page three of yours, but it's page three.

I just think it's extremely important that we understand what the law was made for and why it was made. And I think that some of the advice is incorrect. So one of my questions is And this is my minutes, if you want my speech. My husband and I decided not to build a home on the property next to us, which is a vacant lot, because of the way property taxes are being handled in this county. We have a shortage of houses, and yet people are choosing not to build homes. That should concern you. other thing that concerns me is that we have homes in my current neighborhood within one mile of me on the same street that have not sold for eight months homes are not selling we have another problem this presentation showed that I think that they're telling the supervisors that you are not responsible for this increase and it's no big deal and you can tell your people we didn't allow it but you did allow the five percent increase in the limited property value and I think that another CONSULTATION FROM SOMEBODY ELSE, MAYBE THE ARIZONA REVENUE WOULD BE A GOOD THING TO KNOW BEFORE YOU VOTE. I'M REALLY CONCERNED ABOUT THAT. I DISAGREE WITH THE INTERPRETATION. AND THE INFORMATION THAT I HAVE COMES FROM THE ARIZONA DEPARTMENT OF REVENUE. AND IT SAYS LIMITED TO. NOT REQUIRED TO. MUST BE. SHOULD BE. IT'S NOT A GHOST WORD. IT'S LIMITED. AND THAT WORD REALLY CONCERNS ME. I think you have control over the limited property values and I think that we need to be aware of that we have that control. I just completely disagree in that paperwork that I gave. If you read it, it's right from the Arizona Department of Revenue and it's Title 42. It's the same presentation and the same number he gave you. Please look at it, thank you.

Thank you. Mr. Ramos, do you have any response?

Yes.

I believe that the intent of the law was to have boards and school boards and fire districts and community boards to have an expectation for the following years to have, it was brought by ATRA, which is the Arizona Tax Research Association. They went for that bill on that 5%, so you guys could have a good expectation look into the future to see what you were going to be able to levy. And that's how they came up with that 5%. So that 5% that we have to do is different variables. It doesn't have to be 5% across the board. It can be, if your full cash value is pretty close to your limited property value, it's not going to be 5%. You cannot exceed that. You cannot exceed. The limited can never exceed the full cash value. You have new property, your limited property value can go up 90% or 80%. If you make an addition to your house, it can go up 20, 35%. If there's no changes to the property, it's capped at 5%. So as long as your full cash value, it's not close to that 5%, it can go up 5% a year. Well, we don't have a number. We don't have a way of saying it's going to go up 2%, 3%. It goes up 5%. I don't believe, I mean, maybe Mr. May can answer for us and help us, but I don't think the board has the power to limit that percentage. It's all based on the statute, Title 42, like you said, which is the taxation part of the statutes and the Constitution, Title 11, that we can go up to that 5%. So, I mean, it might be a matter of going to court over it and deciding if the board can cap it or not, but based on all the training that we have and based on the statutes that we have to follow, is that 5%, it can go up to 5% less or more. So that 5% is just a number. that it's intended for future use of the board so they can know what their expectations of values are for the following year. For making a budget? Yes. For what you're saying. For tax rate purposes.

I understand that, but what triggers it going up would be an improvement, a combination of thoughts, selling, but me just living in my home and doing nothing where I don't have to get permits. No improvements, no driveway improvements, no adding extra land, no building an outbuilding.

Yes, if you go further into the manual that we're reading, there's a Rule A and a Rule B. Rule A constitutes there's no change to the properties. It can go up to 5% depending on your full cash value and limited property value. Then we have the Rule B calculation, which is that can go up more than 5% depending if you make constructions, additions, or whatever you do to your property. Yeah, you can make a small addition as long as not over 15% and you're still gonna be rule 8 which is that 5% So it's it's and based on the sales. I know they were saying that in your area There's a lot of sales. I mean we have the community development directors here We can see there's a lot of building permits in the county, especially like the Northeast part of Rio Rico towards calls of Fina and I said, there's a bunch of building permits going out there.

I

Well, the Patagonia market, if you see the values, you can't even get a lot for $50,000 now. Yeah. Yeah. Well, for us, if we see the sales that are starting declining because of the mine, let's say, then the values are going to go down because we have to follow the market, basically. So based on the studies that we have, the market's not going down anywhere in the county.

I think we're good. I think we're good.

I'll have to look at your area specifically, but yeah, that's what we have.

Just if you want to add this part of the section, which is that statute, it automatically tells us that we need to calculate that 5%. So you can handle them over that statute.

Yeah, along with that 42 is 42.13.301, which is the limited property value statute where it says that we have to go up to that 5%. What's the worst? It's paragraph eight, the limited property value property for property taxation purposes is the limited property value of the property in the preceding valuation year plus 5% of that value. And it's 42.13.301. Well, it doesn't say that it doesn't have to. That's right, it doesn't. Yeah, so, I mean, for us, there's no way of us capping it. We just have to go by that 42-13-301 and base, I don't believe they had the authority to cap it. I think they did. Well, that's a legal matter, but at our end, we have to do that 5%. Thank you, sir.

Okay. Is there any other folks who would like to discuss at this time before we move to the budget?

Go ahead, sir.

All right. Thank you, sir. Thank you, sir. I don't know

Gary Levine, Camino Cumbre, Rio Rico. First of all, I'd like to say that that previous speaker raised an excellent point, and I think from listening to Assessor Ramos that he totally danced around the question and did not answer it, and that you have an obligation to find out whether you do have the authority to raise it less than 5%, because that question was not answered, and she was citing some very specific language. Board of Supervisors, the bottom line is that the property tax bills of our county residents are going up. This is so utterly wrong. This is so utterly wrong. No increase in the amount of property taxes paid by our county residents is warranted. In fact, the facts would dictate that we should be lowering the tax bills of our county residents. I was going to talk about how the county has just been sitting on 2,400 Viteri properties for five years now after taking them over for nonpayment of millions of dollars of taxes. Those properties could have and should have been auctioned off to new owners. And had you done so, the county would now be collecting the tax revenues that you're talking about and probably more. but instead you want to see our county tax residents' tax bills increase. In an article in the Nogales International on July 28th, 2023, our former treasurer was quoted, Jesus Valdez, our new county manager, is currently working on a plan. They're working with the assessor and coming up with a price, maybe per acre per lot. They'll do an online auction. That was over three years ago. And yet this board, wait, Jesus, I can't tell you how disappointed and upset I am that nothing has ever happened with that. Just recently you're starting to talk about it now. And yet this board recently awarded our county manager, who I like as a person, a huge $193,000 salary plus benefits. What is wrong with that picture? And at the last Board of Supervisors meeting, Supervisor Malero stated, we need to move slowly on selling these Viteri properties. You said that. It's on video. How long have you been on the Board of Supervisors?

You need to understand the complexities.

I understand the complexity. I very well understand the complexity. It's apparently our supervisors who don't, okay? I know about the restrictions. I know everything about the Viteri properties. How long have you been on the Board of Supervisors? With all due respect, Supervisor Malera, you should be embarrassed, okay? If you were moving any slower on this, we'd be going backwards. You start getting personal, sir? Sorry, I'm not, I'm just, okay.

I'm going to have you removed.

Okay, then I'm sorry if you consider that personal. I'm not trying to be personal. I'm talking about, and then I apologize if you're taking it personally. I'm not attacking you personally, but I'm just saying, I'm just talking out of frustration. Okay, because this has been going on for years. Okay. And fortunately, my wife and I can absorb this tax increase without any problem. But there are so many residents in this county that cannot. Okay, I'm speaking on their behalf. And I was also going to talk about how our current county treasurer Alejandro Paz has disclosed that we have thousands of property owners in this County that have not been paying their tap property taxes, some for more than 10 years. That's a fact. Alejandro has said that and John has heard him say that. Okay. You are well aware that the state of Arizona has a process that allows counties to take over such properties and sell them to new owners. of get them back on the tax rolls so that they're generating tax revenues. But like the Viteri properties, that has received zero priority from this county. I was going to talk about those things, but what's the point? Residents have been urging our county for years, including Sheriff Hathaway, to sell those Viteri properties, but they've been wasting their breath, okay? The property tax deadbeats have been allowed to go on, ignoring their tax liabilities. year after year without any accountability. The Viteri properties have not been sold for five years now, okay? So let's be honest, today's meeting is nothing more than a legal formality to comply with the state law, okay? It's a foregone conclusion that county residents' property tax bills are going up. So instead of going after the deadbeats who haven't been paying their property taxes or putting in the time and effort to sell off those Viteri properties, you're taking the easy way out, okay? And letting the county residents pay some additional taxes, okay? Adding another burden to many poor people who are struggling just to get by day after day, okay? As I said, my wife and I are very fortunate. It's not gonna hurt us, but it's gonna hurt them. and especially now when prices on everything are going up and parents are struggling to feed their children to put gasoline in their cars to pay their utility bills to afford health insurance okay you're supposed to be representing the best interest of the people who elected you But when you allow this increase in tax bills, I don't care how small it is, okay? It matters to those people, okay? When you do that, it will be obvious to everyone that you're not representing the best interests of the people here. Mauricio, when you present this thing about the impact on a $100,000 house, that's disingenuous. Houses cost a lot more than $100,000. Why aren't you presenting a $200,000 house? I see a lot of really small, cheap houses being built, okay? They're selling $200,000, $300,000 here. Why aren't you presenting that information instead of making it smaller by presenting $100,000? Come on.

I can respond to that. The $100,000 figure, it's something that's set by the state. So it's a figure that that's how we have to advertise. It's a clear amount of number. I understand, Mr. Levine, that no house is worth $100,000. However, simple math will do, multiply it times two, times three, however you want to fit to every different household. It's very challenging to anticipate all the home values that I would have to put up there to indicate. So the $100,000 amount, it's a figure that's set by the state.

It's set by the state, but how hard would it be to add, to say, if you have a $200,000 or $300,000, that's enough, just to give people a general sense. It's not hard. come on mauricio i'm a finance guy myself okay that's what i would be doing i say here it is for a hundred thousand dollar house but for a two hundred thousand dollars or three hundred thousand which would be pretty representative of what's in rio rico and and the rest of santa cruz county it's not hard come on don't be disingenuous Thank you very much.

I don't believe that I am, Mr. Chair, members of the board. It's just a simple multiplication. Thank you, sir. So if we get that $5.41 amount, if Mr. Levine is asking for a figure of 200, 300, 400, whatever we might do, then we multiply it times that. We multiply it times two, times three, times four, times five, and it'll give you that amount.

Thank you, sir.

Would you like to move forward with number two? Yes, Mr. Chairman, members of the board, if we can move to the second presentation, which is the final budget.

Yes, please.

Next slide, please.

Mr. Paz, would you like to say anything? I apologize. Yes, please.

Thank you Mr. Chair, members of the board, county management, and members of the public. Let me start off by directing directly to Mr. Levine. We will get to it, Mr. Levine. I am busy. That email is not a lie. I know, but you're putting my name out there in a bad light. I am working extremely hard day in and day out since I was appointed and elected in this office. I am doing every, let me finish. I have been doing everything in my power to make sure this county is in the best possible situation. And we are. The fact that I haven't got into what your concern is does not make me a bad treasurer and also does not make them bad county supervisors or bad county management. We are handling an embezzlement. I am still working through it and I cannot correct everything in this office or make all the changes that everybody wants to see overnight. It's going to take some time. I understand your frustrations. I understand your concerns. We have them there. I have them there as top of mind, and I will get to it. The Vatari lot situation, I was going to speak to them later on. I will personally recommend that you do not auction off these Vatari lots. I recommend that you seek more legal counsel. to ensure that we are doing the right thing because just like some of us weren't some of our constituents are so not well informed that there could be implications by purchasing a vatari lot that has restrictions why the county might not impose them when a constituent who maybe some of them here want to purchase it as a buffer to have extra land or to avoid a neighbor some others may want it to build a home At the time that their home is finished, will the financer give them the loan? And then who will be at fault then? Right? It's going to automatically always come back to the county. And that is not fair. So if we are taking our time on some of the situations, it's because maybe in the previous administrations, they have rushed into things. We are taking our time. And now I'm going to speak directly by myself. I am taking my time. I've said this multiple times. I am learning the job. I am learning all the responsibilities and the duties that we have in our office to make sure we are doing right by every single one of our constituents. I reside here. My family resides here. My kids go to school here. I care, which was the reason that I wanted to get appointed and then elected. So we're working really hard. And it's about time we also notice the hard work that is happening in this county. The other lots from the state of Arizona, we will also get to. That is a process that we will work with the state to figure out how we do that. It is going to happen. We do want them back in our tax roll. We want to alleviate as much as we possibly can. Now I want to be certain from here right now because in two years when that happens or in one year or in six months or next week whenever it happens if we don't see the desired decrease you are thinking you're going to receive we're going to hear about about it again from you. It's not going to be that significant of an impact that doesn't make it less important. But it's going to be an insignificant impact to the parcels to your individual parcel. Your tax bill is based on the assessed value and the tax rate set by your corresponding school districts fire districts and the county. So let's get all our information before we make assumptions and before we throw out accusations and assaults. Thank you for your time.

Thank you, sir.

Thank you.

And with that, Mr. Chavez.

Thank you, Mr. Chairman, members of the board. I wanna go ahead and, next slide, please. Next slide. And begin with the presentation of the final budget. This budget reflects our continued commitment to our responsible financial management while ensuring the delivery of essential public services to our residents every day. Throughout the budget development process, staff focus on maintaining long-term financial stability, support of our workforce, investing in critical infrastructure, and preserving the county's financial position. During today's presentation, I will provide an overview of the county's financial plan, discuss our major revenue sources and expenditures, review the general fund, and highlight key initiatives and recommendations. Next slide, please. As we presented in the tentative budget, this slide It's a proposed $155.8 million budget supported by an equal amount of available financial resources resulting in a structurally balanced budget. The county employs 417 full-time equivalent positions with 239 funded through the general fund. 178 positions are supported by other funds including grants and enterprise operations. Our budget continues to emphasize conservative budgeting practices while maintaining essential county services. A major priority this year is continuing the property tax reduction plan which we spoke about earlier and the truth in taxation reflecting the board's commitment to reducing the tax burden. Any questions on this slide, Mr. Chairman, members of the board?

No, sir. No, sir.

Next slide, please. This shows the general highlights of the general fund. We're looking at a $47.1 million budget, which includes 26 departments that provide services to the community. Public safety continues to be one of the county's highest priorities as they combine safety functions account for approximately $13 million in their budget, representing about 29% of the general fund budget. Overall, this budget reflects the county's commitment to providing essential services, maintaining public safety, supporting county operations, and responsibly managing the resources to meet the needs of our residents. Next slide, please. this information provides and it'll illustrate how all our expenses are distributing among the general fund important to note that the Board of Supervisors represents you'll see the largest portion of it but I'll get to that category a little later and explain why that amount is so large this category includes a broad range of services that are dependent funded through the general fund And then the Sheriff's Office, which is our public safety, accounts for about 17% of the general fund spending. Next slide, please. This is the Board of Supervisors more detailed budget that represents that 21% figure. So the board is responsible and in their budget, they have what we have our operating transfers out. Those are the funding mechanisms that fund the animal control, the idea that we have with the city of Nogales. It funds the environmental health services. It funds our bond debt service, which is the outstanding bonds that the county has. And we also pay for our 1904 historic courthouse and make the annual funding for the fair and rodeo association. looking at those are those bar graphs that's the top amount that's funded through the board's budget you see the operating transfers out which are on the right hand side also including in that in that budget in the board's budget are legal services injured and injured in defense which provides all the expenses that the courts have. That's basically when people are in need of attorneys and they cannot afford one, of course that's your right. And then that right is provided through the board's office and we fund that through the courts. And then the employees, there are a portion in other professional services. City of Nogales library contribution is embedded in there. And then our capital lease loan program, which we are currently leasing our vehicles and our computer systems. And then public utility services. That's two utilities for all our county buildings are funded through the board's budget. Any questions on those details, Mr. Chairman, members of the board?

No, sir.

Okay. Next slide. I won't go much into detail on this slide. We went over this slide back in the Truth in Taxation hearing, and it'll give you an idea of where all those tax distributions go. They go to the public schools, fire districts, the provisional college, and the JTED, and also to the county. Next slide, please. Again, I'll go with a slide quickly. This also just provides another picture of the plan of reducing the tax rate for the next four years at 3 cents. We're currently there in the circle at 3.9465. Next slide, please. Then once we look at our budget, It's governed by different schedules. So we have Schedule A, B, C, D, E, F, and G. In every schedule, there's a purpose. So Schedule B, that pretty much is governed with the primary and the secondary property taxes. Under the statute that you see there, we are allowed, and the board's allowed, to have a primary tax levy limit of 21,946,000. Every year it changes, and that's a state figure. The Arizona Department of Revenue provides that amount. However, that rate, you choose not to go with that levy amount, which is the 21 million, or as a rate, would be $4.59. The proposed rate that's before you, it's $3.94. That primary property tax will generate about $18,867,000. So you're well below the maximum amount levy that you are authorized to levy. Next slide, please. Since we're lowering the tax rate on the primary tax amount, we also have to do the same thing for the secondary, which is the flood control district for our case. So our current tax rate for the flood control, it's .7953, it's gonna revert to .7893. Next slide. As we spoke about in the truce and taxation, I just wanted to add this slide as well, that it may have an impact on certain homeowners. And again, Mr. Ramos already indicated that it varies. I know there's public concern on that, and it's going to be about 541 per $100,000. based on, you know, Mr. Levine's recommendation, I understand if we multiply it, you know, in a home of 200,000, then it'll be 1082. If we do a home of 300,000, then it'll be about $16. Correct, 1623, and so on and so forth, depending on the value of that home, correct. Next slide, please. So how is that supported? Where are the revenues coming from? So we have a variety of revenues. Mainly our number one, our largest would be our primary property tax, which is about 49% of that. We have our state shared. at almost 20% that state shared revenue. That's the distribution that the state of Arizona distributes to all the 15 counties based on sales tax that's collected across the state. And moving up on that line would be our local Our sales tax, that's the sales tax that we receive here at the local level, and that's our half-cent sales tax that we receive. So that amounts to about 12% of our revenues. Then we have our vehicle license tax. Those are the auto renewals, and any time you purchase a new vehicle, those are the license tax revenue that we have. The federal payment in lieu of taxes, and we have it, we call it PILT for short. That's the federal land that the federal government doesn't pay property taxes for the federal land that's in Santa Cruz County. So they provide, based on a formula, they provide an amount to the county on an annual basis. We have our county assistance funds, which we call the lottery money. And then the rest is just city, state, federal reimbursement, fines and forfeitures. Those are mainly from the courts. And we have interest on investments, charges for services, and then building permits. I'll stop now if you have any questions for me.

No, sir.

OK. Next slide, please. So this is a more detailed version of the previous slide, and that's removing the property taxes. This is coming from Schedule C of our budget. This is removing that large amount, and that gives you a distribution, and it puts an amount to those percentages that I shared previously. Now you look at that the state share becomes the larger pie there, and then after that it becomes our local sales tax, how important that is. then our vehicle tax and then all the other amounts on the right that provide about 60% of our revenues. Next slide please. When we went over the Board of Supervisors detailed budget, I spoke at the beginning about the transfers out. This is an important to understand what we need to pay on behalf and what we're required to pay on behalf of certain operations that were statutorily required. For example, the largest ones that you see there are gonna be the jail district. Once we have, and the jail district was created, which was voted on by the voters, they created a jail district back in 2008, creates a maintenance of effort. That's under a regulation by the state of Arizona that we need to, and it's based on a formula. Every year it changes, and it's based on assessed values, it's based on the current inflation factor and it's based on many different factors that we come up with a certain amount so that amount you're looking at the jail district for adult detention 3.4 million and then for the jail district also the juvenile detention 1.5 that's about almost 5 million dollars that the general fund has to cover the jail district on an annual basis now that's required by arizona revised statute So that's part of the large amount that's embedded in our general fund budget that needs to go out to the jail in support of the jail operations. The other ones are the smaller ones. I went over the Board of Supervisors one, the 1.7. I already went over that. That provides funding for the animal control, environmental health, and other items there. And then there's small items that you see there for the county attorney's office, the airport department, and then the parks and recreation. Those are smaller amounts. Those are for grant matches. Any questions on the transfers out piece? This slide is coming up from Schedule E, and it provides an overview on expenditure by fund. So the county's total recommended budget is approximately $155.8 million, which includes all governmental and other funds. Of that total, the general fund accounts for about 47 million, representing 30% of the county's overall budget. The general fund finances the county's core government services, including public safety, the courts, elections, finance, public works, and other general government operations. The largest portion of the county's budget, approximately 54%, is comprised of special revenue funds. These funds are legally restricted for specific purposes such as grants, transportation, public safety programs, and other dedicated activities. The remaining budget consists of capital projects, enterprise funds, which is our landfill for us, and debt service funds, each of which serve a distinctive purpose and support dedicated funding sources. It is important to note that while the county's total budget exceeds 155 million, only about 30% is discretionary general fund spending. The majority of county expenditures are restricted by law, grant requirements, and voter approved purposes or enterprise activities. Next slide. as you saw today in the earlier meeting there's a lot of support and we see a lot of good things happening with animal control and i know that the board's mission is to continue to support and provide funding for that department and we're looking at different avenues we have reached out. I know that the county manager, Mr. Valdez, has reached out to Pima County officials and their Pima County Animal Care and Control to evaluate their operational need models also so we can see if we can adapt those best practices. Clearly, I think we're in the right track. As you saw today's meeting, it was being designated a no-kill shelter. It's a huge undertaking that was accomplished. They have a good team there. They're making good progress there. But it's your commitment that you asked me to provide, and we're ready to move forward in providing additional funding for the animal control. This provides an overview of Santa Cruz County workforce and personnel compensation budget for this coming fiscal year. We're budgeting 417 full-time equivalent positions and total compensation is about $38.1 million which includes salaries, retirement contributions, health care, and other employee-related benefits. The general fund supports 239 positions and accounts for approximately $22.9 million of that. Special revenue funds support 172 positions with compensation costs of approximately $14 million. Overall, this budget reflects an investment of $38.1 million in our workforce supporting the employees who provide essential services to our county residents. I do have a different that's not up there that I researched after this slide was complete. I compared it to some other counties that I had information available. So how do we compare on our general fund compensation to other counties? So compared to other counties, we have about 48% of our budget is for employees. Cochise, for example, is about 50%. Coconino's about 45%, and Mojave's about 55%. So we're in that mix. We're not the highest, we're not the lowest by a couple of percentages there, but we're in that mix of what other counties have with their personnel. compared to last year we had a full-time equivalent of employees of 236 in the general fund and this year we have 239 so we're only increasing it by three and overall we're actually decreasing it from 431 last year to 417 this year and this is due to a lot of grant programs that have ended and we've you know those those folks are no longer with the county any questions on that slide mr chairman members of the board As we spoke during the tentative budget our employees are our most valuable asset and maintaining a competitive workforce is essential to providing quality services to the residents of Santa Cruz County. Our proposed budget includes a three percent cost of living adjustment to help the county remain competitive in attracting and retaining qualified employees This recommendation is supported by economic indicators. The 2026 Social Security cost of living adjustment is currently at 2.8%. Early forecasts for the 2027 Social Security COLA range from 3.8% to 4.7%, which is really a large jump from what I've seen in past years. Their consumer price index increased 4.2%, reflecting continued inflation pressures. Healthcare costs also continue to rise. County employee healthcare insurance premiums are increasing at 8.7% this year. In that particular situation, we belong to a pool to have more competitive advantage with other smaller counties in Arizona. And that's an 8.7% increase, even though that seems like a substantial increase compared to the larger counties, it's not that of a large increase that we see. There's gonna be an impact there to the general fund of about 344,000 plus employee related expenses. Our recommendation is for the county to absorb the employee's share to increase and help minimize the financial impact to our workforce. This proposal is contingent upon your approval of the budget today.

Next slide please.

This document is provided by the Arizona Department of Revenue. It emphasizes again the maximum allowable levy limit that you are authorized in an amount and then the maximum allowable tax rate that you are authorized to set as a tax rate. Just want to emphasize that you are no near that amount. I would not recommend near close that amount. The 4.5907, that's the ceiling, but my recommendation is that 3.9465. And of course, the levy amount is a lot lower of what we're recommending. Next slide, please. This concludes my presentation of the fiscal year 26-27 final budget. This budget reflects a balanced financial plan that supports essential county services, invests in our employees and infrastructure, maintains long-term fiscal stability, and continues the Board's commitment to reducing the property tax rate. I would like to express my sincere appreciation to the Board of Supervisors for your leadership and support throughout the budget process. I also want to thank County Manager Mr. Valdez, the Assistant Finance Director Ms. Martinez, and the Human Resources Director Mr. Romero, as well as all elected officials, department directors, and the rest of the finance department for their hard work, collaboration, and dedication in assisting us in developing this year's budget. Together, we have prepared a budget that is fiscally responsible, transparent, and focusing on serving the citizens of Santa Cruz County. I'll entertain any questions the board might have.

Thank you, sir.

Mr. Chavez, Ms. Martinez, I just personally want to thank you for your hard work and your staff. Thank you for your detailed presentation, sir.

Mr. Chair.

Mr. Chavez, thanks for everything. Would this presentation be available for the public or not?

Mr. Chairman, members of the board, yes. Once we conclude today's meeting, we might have the budget and the presentation on our website. Of course, the presentation, copies of the presentations and copies of the budget were in the back table at the entrance of the room here.

One other thing I want to thank Mr. Ramos and Mr. Potts as well and their staffs.

Thank you. I'd like to thank the staff, Mr. Ramos, for all that information. Mr. May, I posed a question to earlier. Do we have any answers or on the 5%? Oh, okay.

I think what we may want to do is move to an executive session and then I can provide that and then that can be presented afterwards.

With that said, I'll entertain a motion to move into executive session.

Mr. Chair, move into executive session, ARS 38-431.03A3. Second.

I have a motion to second. Any further discussion? Without hearing any discussion, all those in favor, please signify by saying aye. Aye. Motion carries unanimously. We are now in executive session. Okay. At this point, I'll entertain a motion to reconvene into the public hearing. Second. Moved and seconded. Any further discussion? Hearing none, all those in favor, please signify by saying aye. Aye. Motion carries unanimously. Before we move forward, I just want to... let people know that at no point was there any indication that we were not going to let people speak once we came back from our short executive session. So with that being said, if anyone has anything further they'd like to say prior to moving into a special meeting. Seeing none, hearing none. At this point, I believe we're going to move into a special meeting. Do I need a motion for that, Mr. Mayor? Because we're going from a public hearing to a special meeting.

Sorry, Mr. Chair. Oh, I see what you're saying. No, because Mr. Chair, you can move into the special meeting and then start to identify each of the items that are before the board.

Okay. Prior to making any motions, would it be acceptable for you to discuss the law as it pertains to the 5%? Sure.

Well, there's a couple of issues, Mr. Chair and members of the board. What is before and what has been made part of the agenda is two things. The truth in taxation hearing that's required, and Mr. Chavez has provided a very thorough explanation of that. The truth in taxation is dealing with the tax rate, not the valuation of properties. So as more of a point of order, what is proper for the board to be considering as far as the truth and taxation hearing is the tax rate. I didn't hear any issue with regards to the tax rate. What people, at least the two speakers had identified was their concerns and their challenge to their assessed value. So that was not necessarily before the board. I believe Mr. Paz properly articulated that there is an appeal process, at least as to the full cash value.

Mr. Ramos.

Oh, I'm sorry, Mr. Ramos. Sorry, I'm thinking of his chief deputy. Mr. Ramos was correct in his interpretation of that. And there's certainly an appeal process for the full cash value assessment. The limited property value issue, again, that's not currently really before the board other than somebody has at least one, if not two, of the public have raised that. The statute that's most pertinent to that is, as noted, ARS 42-13301, and it goes into the limited property value assessment. Again, Mr. Ramos properly interprets that because the plain language of that is that under subparagraph A, the limited property value of property for property taxation purposes is the limited property value of the property in the preceding valuation year plus 5% of that value. The proper statutory interpretation by the courts will be that unless it's vague or leads to absurd results, they will take the plain language of the statute. They will interpret it as the plain language of the statute reads. They will not incorporate anything or imply anything if the plain language seems to be straightforward. In this case, it does appear that the plain language of the statute is straightforward and that the LPV would be the prior year plus 5%. And that's actually echoed within the document that was provided to the board today too. So that's on, I think on page two, the first paragraph. So again, Mr. Ramos's interpretation and application seems to be in order. Okay. Yeah, I think that's the two things.

Mr. Ramos, do you have anything that you'd like to add?

Well, thank you, Mr. May. I fully believe that we're following state guidelines and state statute regarding the limited property value and the 5%. Another thing, just as a comment, I mean, the previous boards have never came to my office or anything indicating that we should lower or increase values to help tax rates. So it's just the way we do values based on statute.

Thank you. I believe that was mentioned prior.

It was.

Mr. Chair, you can ask.

Mr. Robinson, I have a quick question.

I have a quick question. How many years consecutive has there been a 5% increase in your experience?

It's based on law. We do it every year. The 5% came into effect since it was approved. I think it was 2015 or 2017. Since that time, it's been that 5%. Prior to that, it was Rule A or B, depending on the circumstances, but it could have been more or less. But 5% is after the statute was order approved. And it's done on a yearly basis. Our evaluation cycle's on a yearly basis. We value property every year.

Thank you, sir, and I'd be remiss if I did not ask, if someone has any questions with the 5% and they'd like to discuss that with you, I'm hoping that you're open to that, or one of your teammates will be able to discuss that with anyone who has a question. Yes. It is very intricate. I sat for a half an hour at least during our meeting, and although I did get a gist, I'm still, it's still, there's a lot to learn.

Yeah, it's a very complicated formula. I mean, as most of you know, the Arizona property tax system was one of the most complicated systems in the nation due to the two values that we have. So yeah, if anyone wishes to come by the office, I'll be more than happy to explain to them how the rule A, rule B work and regarding to the limited property value and the 5% increase.

Thank you, kind sir.

All right, thank you. Thank you.

Go ahead.

At this time, we'll move to B1, discussion possible action to approve resolution number 2026-09 to adopt the Santa Cruz County budget for fiscal year 2026-2027. Do I have a motion?

I move.

I'll second. And under discussion, Mr. Chair, I just want to, again, thank Mr. Chavez and Martinez. I'm disappointed. that people come up and grandstand and provide frivolous information accusing the board of lowering or increasing value. That's not what we do. That's the assessor's job. And it's just disappointing because this board prides itself in being transparent. And we will continue to be transparent. And if you would like to visit us, we have open door policies any time. Thank you again, staff, Maria and Mauricio. We appreciate what you do. And Bob, thanks for the interpretation. And Paolo.

Thank you and Ms. Registrar I'd like to say thank you to you for bringing that up and that's why we went into executive session to make sure that we are interpreting that correctly. I know there still may be some discussion that you'd like to have with Mr. Ramos but thank you for bringing that up but that's the reason we went to executive session to make sure that everything was in order so thank you. um with that we'll go ahead and move forward with the vote all those in favor please signify by saying aye aye motion carries unanimously two discussion possible action to approve resolution number 2026-10 designated the chief fiscal officer for officially submitting the fiscal year 2027 expenditure limitation report to the arizona auditor general do i have a motion move to approve It's been moved. Second. Second.

Any further discussion? One last thing. Mr. Register, that comment was not meant for you. You brought in a good point, and we looked into it. And for that, I personally appreciate what you did. OK?

For B2, Mr. Chavez, could you explain a little bit

Mr. Chairman, members of the board, this is an annual approval that the board is required to provide as a resolution in order to designate an official chief fiscal officer for the county when we submit the expenditure limit report to the AG's office. Thank you.

Thank you. Let's move. There's been a motion and a second. Move forward with the vote. All those in favor, please signify by saying aye. Aye. Motion carries unanimously. B3, discussion possible action to adopt fiscal year 2026-2027 tax rates for jurisdictions within Santa Cruz County. Do I have a motion?

I move.

Second. It's been moved and seconded. Discussion?

I would like to say something really quick. So basically, I want to thank everybody for the presentation. I know it was a long meeting. But as you guys can see, like the committee should see that We're open for all the questions. I mean, I wish people would have stayed here until the end of the meeting. Mr. Ramos, if you wanna talk to him, he's open. My office is open, the same as the rest of the board. I mean, if anybody has a question any time, and if we don't know the answer, we're gonna make sure that you get the right answer. And as you guys saw, all the presentation was long, The rates, we only control two rates, the primary and secondary rate. Other things impact the rates. The schools, the tax districts, and their boards come up with those rates. The bonds, the overrides, all that has an impact on property taxes. So I want to thank Mr. Chavez because I know he worked a lot in this presentation. I think everything was clear. And if something is not clear, like I said, the doors are open for you guys. If anybody's watching on YouTube, they can come anytime, set a meeting. We'll try to answer all those questions. Like we're not hiding anything. It's like the information is there. Shannon has been doing a really good job in communicating, getting this information out. So just know that we're here to try to help.

Thank you, sir. With that, and I want to reiterate what Dr. Davis said about we can only control what we can control. So with that, there's been a motion and a second. All those in favor, please signify by saying aye. Aye. Motion carries unanimously.

Move to adjourn. The public hearing, I mean the special meeting.

There's been a motion. Do I have a second? Second. It's been moved and seconded. Any further discussion? Hearing none, all those in favor, please signify by saying aye. Aye. We are now adjourned from the public hearing and special meeting. We will take a five-minute break and resume after five minutes back into the regular session.