The Joint Legislative Budget Committee approved an increase in mileage reimbursement for state employees using private vehicles and aircraft, though they left the door open to implement a two-tiered mileage system in the future.

Reimbursement rates, effective Dec. 16, are increased to 37.5 cents per mile from 34.5 cents per mile for private motor vehicles; reimbursement for the use of private aircraft was more than doubled to 99.5 cents a mile from 42 cents per mile.

The Arizona Department of Administration (ADOA) estimates the annual fiscal impact of the changes on state agencies will cost $303,000. The state universities were unable to isolate all of the mileage expenditures incurred, but did calculate a combined increase will be approximately $149,000.

No state or university official has used a private aircraft for travel on state business in at least five years, ADOA said.

The last increase in mileage reimbursement rates was 2001, when the rate was raised to 34.5 cents per mile from 32.5 cents per mile. In 2002, JLBC rejected an increase to 36.5 cents per mile because of concern over funding.

JLBC also requested ADOA perform a study on the impact a two-tiered reimbursement system would have on state agencies. Such a system would likely be similar to the federal government’s system, in which employees are reimbursed 37.5 cents per mile when a government vehicle is not available, but only 27 cents per mile when a government vehicle is available and the employee chooses to use a private vehicle.

The report was requested to gauge the annual usage impact on the various state fleets and any cost increases expected with the potentially greater use of fleet vehicles.

Lodging Reimbursement

The committee also modified the lodging reimbursement rates for state employees staying in hotels while on state business. The maximum standard reimbursement rate for all non-specified in-state and out-of-state markets was raised to $60 from $55, effective Dec. 16.

JLBC also raised the lodging rates for nearly 700 specified geographic or seasonal markets nationally an overall 10 per cent to align with federal guidelines. ADOA estimates the new rates will result in an annual increase in cost of $664,000.

State Compensation Fund

No action was taken on the State Compensation Fund (SCF) budget because of the SCF’s belief that any action by JLBC has no impact on how a budget is set or how money is spent.

State statute (A.R.S. § 23-981E) requires SCF to submit two one-year budgets to JLBC every other year “for review and approval” by the committee. In 2002, JLBC only approved the calendar year 2003 SCF budget, though budgets for 2003 and 2004 were submitted. Though the 2004 budget was never approved, SCF has spent more than $75 million this year.

“There are some questions as to what [the statute] means,” said Wayne Miller, a representative of SCF, “but we feel we totally complied with the statute…

“We feel the statute directs us to submit a budget.”

SCF is bolstered in its belief, Mr. Miller said, by an April 2004 Maricopa Superior Court ruling that SCF money is not public funds. The ruling stemmed from a dispute over whether the Legislature could transfer money from the SCF to the General Fund, an action the court deemed would be unconstitutional.

In light of SCF’s interpretation of the statute, no action was taken, though Sen. Bob Burns, R-9, JLBC chairman, said he was confused as to how SFC officials came to their conclusion.

“An agency director doesn’t have the authority to redo their budget,” he said, “so it just seems to me that the animal may be a little bit different, but the animal should operate the same way.” —