Santa Cruz County voters will decide in November whether to authorize up to $20.5 million in additional spending by the county as new revenues are generated.
Officials have conducted multiple “Get the Facts” presentations throughout the county to explain the reasons behind Proposition 417 and what approval or rejection of the ballot measure would mean for the county.
Increases in the state-mandated Annual Expenditure Limit (AEL) have been approved by voters in many of Arizona’s 15 counties, and residents of Pima, Yuma and Graham counties will also vote on similar spending limit increases in November.
Deputy county manager and finance director Mauricio Chavez has been the county’s point man in the public presentations. His pitch in favor of raising the spending limit is that the county’s expenses are growing at about 6 percent per year, but the AEL formula allows its spending to increase by 3.5 percent per year. Without increasing the limit, services may need to be cut.
The math behind Proposition 417 is as follows:
- The county’s spending limit is governed by a formula that was passed by voters in 1979, which established a “base limit” of expenditures in 1979-80 and is adjusted annually based on population growth and inflation factors.
- Santa Cruz County’s base expenditures in 1980 were $2.3 million for a population of 19.5 million. Based on the AEL formula, the county’s spending limit for 2026-27 is $30.4 million to serve a population of 66.5 million.
- The county projects that if expenditures continue to increase by 6 percent while the spending limit goes up by 3.5 percent, it will have $68.8 million in expenses by 2041, but a spending limit of $49.26 million — creating a spending gap of more than $19.5 million.
- Proposition 417 proposes a permanent $1.5 million adjustment to the 1980 base limit. When the population and inflation factors are applied to the adjusted limit, the revised spending limit would be $52 million, starting next fiscal year.
The timing of the ballot measure relates to the anticipated influx of new revenues from the Hermosa mining project in the Patagonia Mountains. Additional property and sales tax revenues will be coming in, but the county would be unable to spend them.
“It’s just going to sit in the bank, and we’re not going to be able to spend it in required initiatives that the community needs,” Chavez told a meeting of constituents at the Elgin Club in August.
District 3 Supervisor John Fanning said analysts are predicting about $6-8 million in additional revenue once the mine is up and running, which is projected for late 2027.
“It’s going to be coming in, whether it’s $6 million, whether it’s $8 million, whether it’s $2 million, and then you have all of the companies that are associated with the mine that are going to be here in Santa Cruz County,” Fanning said.
“So it’s not that we want more money. We’re going to have the money. It’s just a matter of being able to spend those funds. Without the expenditure limit increase, we cannot spend the funds.”
At the meeting in Elgin, Chavez repeatedly emphasized that the proposition comes with no out-of-pocket costs for taxpayers and county residents. If revenues don’t increase, spending limits will remain in place. “And then annual budgets will continue to require Board (of Supervisors) approval, and there will be public input.”
“It’s not that we want more money. We’re going to have the money. It’s just a matter of being able to spend those funds. Without the expenditure limit increase, we cannot spend the funds.”
John Fanning
The proposition does not specify spending priorities if the limit is raised, but county literature suggests several potential priorities for optimizing public services:
- Public safety services, equipment and emergency preparedness
- Road improvements, transportation planning and flood mitigation
- Community services, including animal care and control facilities, parks and recreation and library services
- Environmental projects, including water quality and groundwater studies and preservation and restoration initiatives
- Tourism initiatives, including heritage areas
- Affordable housing studies and planning
- Educational services and workforce development programs
The lack of specificity was among the concerns raised by residents at public meetings.
“We need clear details on where the additional spending authority would go and what safeguards would be in place,” said Jay Thompson of Rio Rico. “It must come with detailed planning, specific priorities and greater transparency on how these funds will be used.”
Fanning acknowledges those concerns but says it’s too early to be specific.
“Those eight items are not things the Supervisors and necessarily coming up with,” he said. “It’s from the constituents.
“I would love to see some type of (citizen) oversight committee that can kind of filter what’s coming in, because we’re certainly not going to be able to take care of all of the concerns. So we have to have some type of vetting process.”
“Santa Cruz County has the third highest tax rate in the state. Well, other counties that have mines, their tax rate isn’t anywhere near ours. So how come we’re not looking at a 25 or 33 percent reduction in our property tax rate? That would be meaningful for a lot of people in this community.”
Bruce Bracker
Attendees at the Elgin meeting voiced a recurring concern that even if spending is increased, they rarely see any tangible benefits on the eastern side of the county.
“I think most people in Elgin and Sonoita agree that if we need a deputy, they’re an hour and a half away,” Elgin resident Sue Downing said. “We don’t have a restroom for tourists here. We don’t have a garbage can. We don’t get potholes fixed. You’re asking us to approve this, and we look at the list and we get none of it.”
Perhaps the greatest headwind facing the proposition faces is one of trust. The embezzlement of nearly $39 million by former county treasurer Elizabeth Gutfahr is a cloud that is not going away any time soon.
“The formula makes no sense to me if someone can just walk off with $40 million of what was allocated,” said one attendee of the Elgin public meeting.
Similar sentiments were expressed at a meeting in Nogales: “I don’t believe the Supervisors of Santa Cruz County have atoned for the sins of the treasurer.”
In reality, the Gutfahr embezzlement has no connection to the proposition and the request for additional spending capacity, but perceptions sometimes become reality.
“You know, the issue with the treasurer has always comes up, and my answer to that is we can’t go back and change what happened, but we can put measures in place to make sure that never happens again, and we have,” Fanning said.
“I mean, as long as I’m alive, it’s going to be around. And you know what? It’s fair. In a small county like this, when you lose that much money … I want to continue to move forward, continue to hopefully gain people’s trust.”
Bruce Bracker of Tubac preceded Fanning as supervisor for District 3 and agreed that the focus should not be on the embezzlement — “that’s a total misperception” — but the proposition itself. And from his perspective, it’s a misguided overreach.
“It’s excessive,” Bracker said. “They don’t need to go for $20 million this cycle. This is a hard no for me.”
Bracker suggested that the county would have been better off projecting expenditures for the next four to six years, asking for an additional $6 million instead of $20 million, and then coming back with another smaller increase in a few years if warranted.
Instead of banking the additional incoming revenues, he proposes a massive cut in property tax rates. While such a proposal wouldn’t allow for enhanced county services, it would be welcome relief for many.
“Santa Cruz County has the third highest tax rate in the state,” Bracker said. “Well, other counties that have mines, their tax rate isn’t anywhere near ours. So how come we’re not looking at a 25 or 33 percent reduction in our property tax rate? That would be meaningful for a lot of people in this community.”
Bracker acknowledged a tax cut could be a short-term hit on county services, but it might lead to a more palatable spending increase in a couple years’ time.
“They asked us for $20 million instead of asking us for $6 million,” he said. “That’s on them.”
Chavez pointed out that the other three counties with spending limit increases on the November ballot are all asking for a larger increase than Santa Cruz.
“This is a conservative ask compared to the other counties,” he said. “This is a number that’s going to take us through the next 15 to 20 years.”
Added Fanning: “The fact that 11 out of the 15 counties have either gone through this or will be going through this, and 84 out of 91 towns and cities in the state of Arizona have gone through with the home rule, to me, that signifies that something’s broken. And the fact that we’re going through this, this is the way to fix what’s broken.”