DALLAS – Officials in Pima County, Ariz., are looking for answers to what went wrong after voters decisively defeated the largest bond proposal in the county's history.
None of the seven bond propositions totaling nearly $816 million was approved Nov. 3, with margins of defeat rising beyond 60% on four of the proposals, according to a preliminary count.
"This marks a pretty decisive shift to no," said Pima County Administrator Chuck Huckelberry. "We'll be looking at all the voting patterns and considering whether we could do a different formulation."
Huckelberry said the low voter turnout in an off-year election and the size of the proposal may have doomed the bonds.
If the citizens' Bond Advisory Committee recommends returning the bonds to the ballot, voters could see them again as early as November 2016, Huckelberry said.
"Because it's a general election, there's really no cost to bringing it back for a vote," Huckelberry said. "That will be a presidential election year, and we've always had higher turnout in those elections."
Preliminary returns put the last week's turnout at 38.5%. In 2014, when there was an Arizona gubernatorial election, Pima County turnout was 55%.
Larry Hecker, chairman of the Pima County Bond Advisory Committee that helped formulate the seven proposals, told reporters he was shocked by the outcome. The committee had not drafted a bond proposal since 2004.
"I was feeling so great because of the coalition and unification that I saw," he said after the election results came in.
In 2013, with the economy in Tucson and its surrounding county still struggling to recover from the 2008 recession, county supervisors decided to delay the election a year from its proposed 2014 date. It was the fourth deferral of a county bond election since 2008.
"The property tax base still hasn't recovered enough to make a bond election prior to 2015 practical," Huckelberry wrote in a 2013 memo to the bond advisory committee.
In the interim, supervisors enlarged the total package to $816 million from $650 million by seeking additional road funding.
Included in the seven proposals were 99 projects, including funding for public health and neighborhood development, economic development and libraries, parks and recreation projects, conservation and historic preservation and flood prevention.
The largest proposal, which would have provided $200 million for road maintenance and a new highway called the Sonoran Corridor, was more narrowly defeated than others with 53% opposition.
A plan to provide $98 million for tourism promotion appeared to receive the strongest opposition, with 67% voting no.
Opponents targeted the proposed tax increase that would have come with passage and a debt load of $1.2 billion. The property taxes on an average Pima County home would have risen about $59 per year, according to estimates.
"Voting for the $816 million bond package will definitely satisfy a number of special interest groups, but at the expense of taxpayers of the fifth poorest metro area in the U.S.," said Bond Advisory Committee member John Boogart, who opposed the issue. "Pima County needs new money that private investment brings, not government money which amounts to a transfer of wealth."
Despite that anti-government rhetoric, supporters of the bond proposal included pro-business groups such as the Tucson Metro Chamber of Commerce.
"The opponents of the bond package had it easy," chamber president Mike Varney wrote in a commentary after the election. "All they needed to do was scare voters into thinking their taxes would skyrocket and that Pima County officials would mishandle the funds raised by selling the bonds. Neither is true."
Varney said that opponents misrepresented Pima County's total tax burden in comparison to that in Maricopa County, the state's most populous that includes Phoenix.
"The difference exploited by bond opponents is the difference in how the two counties classify the components of their tax schedules," Varney explained. "Maricopa County, for example, does not operate wastewater treatment facilities. Pima County does. Maricopa County taxpayers pay for their wastewater services through their municipalities. Most Pima County taxpayers do so through the county. And that's just one example."
Huckelberry told The Bond Buyer that advocates of the bonds must stick strictly to the facts in seeking approval of the issue, while opponents are less restricted in what they can say.
"We always like to ask our voters if we can issue debt," Huckelberry said. "This marks the 13th time we've gone to voters since 1974. In the previous 12 elections, 54 of 58 proposals have passed."
Opponents noted that Pima County has the highest debt of any county, a fact that Huckelberry and others say is misleading. While Maricopa County has nine sizeable cities that issue their own debt, Pima has only five. A large percentage of the population lives in unincorporated areas, giving the county government responsibility for basic services such as sewers, water treatment and roads.
With schools and special districts included, Maricopa County owes $17.9 billion or $4,605 per capita compared to Pima County's $3.6 billion or $3,659 per capita, according to government estimates.
University of Arizona professor Thomas Volgy, a former mayor of Tucson, said the county's demographics generally favor passage of bonds for public purposes.
"Were this an on-year election, it probably would have passed," Volgy said.
The university is the county's largest employer with 11,000 employees, followed by defense contractor Raytheon with 9,900, the state government with 9,000 and Davis-Monthan Air Force Base with a similar number.
"While we consider the regional economic base to be diverse, its reliance on the aerospace, defense and government sectors has contributed to a weaker recovery relative to areas less dependent on federal, state, and local government spending," Standard & Poor's analyst Sarah Sullivant wrote in rating the county's general obligation debt AA-minus on Feb. 27.
"Recent declines in property values, though not as severe as those experienced in other parts of the state, have weakened per capita market value to $63,000, while projected per capita income in the county is 92% of the national level," Sullivant wrote.
S&P rated the county's debt and contingent liability profile as "good," with a 2015 direct debt burden equal to roughly 63% total governmental funds revenue, and total governmental funds debt service equaling 14.6% of expenditures in 2014.
"We understand the county plans to issue its remaining $20 million in authorized GO debt in fiscal 2016, which would not substantially alter our opinion of its debt profile," Sullivant said. "The county's debt management policy calls for a maximum amortization period of 15 years for GO, appropriation, and revenue debt, and we understand that any future GO authorization would comply with the policy."
The bond election votes will be canvassed at the Tuesday, Nov. 10 meeting of the County Board of Supervisors.
