Counties, cities hope HURF restoration will become permanent

For cities and counties, 2016 represented at least a temporary reprieve in the long-running sweep of road maintenance funds they’ve spent years trying to reverse.

The state budget for fiscal year 2017 includes $96 million to offset for one year the ongoing impact of the long-running sweeps from the Highway User Revenue Fund, which receives money from various fuel a vehicle taxes and distributes hundreds of millions to cities and counties every year to pay for road construction and maintenance.

Of that money, $66 million will go to the state for highway projects. The remaining $30 million is to be divvied up among the cities and counties that have for years pined for a reversal of the sweep.

All told, the HURF money that the state has swept since 2009 represents only a drop in the bucket for cities and counties.

According to an analysis published by the League of Arizona Cities and Towns in early April, cities were expected to receive a cumulative total of about $358 million in HURF funds in fiscal year 2016. The budget will add about $16 million more for FY17. Meanwhile, the additional $14 million that Arizona’s 15 counties will receive pads a total HURF budget that’s expected to be about $250 million in the next fiscal year.

Nonetheless, HURF has been the subject of repeated battles since the Great Recession, as cities and counties fought unsuccessfully to restore the fund sweep.

Minor HURF sweeps had been a fact of life for years. But in 2009, the budget crunch caused by the Great Recession led lawmakers to divert $60 million worth of HURF funds to the Department of Public Safety. In 2014, half of that sweep was restored to the cities and counties. Local governments are now hoping for the remaining $30 million to come back.

Until then, the one-time money appropriated to offset the ongoing HURF sweep is appreciated, said Tom Belshe, deputy director of the League of Arizona Cities and Towns. Belshe said the money isn’t as much as the league wanted to see, but it’s better than what the cities have been getting.

“Especially when it comes to maintenance, every dollar counts for us. And so it does have an effect, it really does,” Belshe said.

Craig Sullivan, executive director of the County Supervisors Association of Arizona, dismissed the notion that the $30 million was just a drop in the bucket. Sullivan said the sweeps have forced counties to hold back on a lot of road maintenance projects.

“Road maintenance is the top constituent concern at the local level, and they hear regularly from citizens who are concerned about road grading, concerned about road maintenance, concerned about new roads being built,” he said.

Others took a more skeptical view of the one-year restoration. Charlie Cassens, the city manager of Lake Havasu City, said it will take a permanent restoration of the sweep to have a real impact.

Cassens said Lake Havasu City’s share of HURF funds is about 1.3 percent of the total, and the sweep has cost it about $432,000 per year. That, he said, is enough money for about 16 miles of roadway or one large pavement rehabilitation project. The FY17 budget is expected to replace about $191,000 of that money, Cassens said.

“We didn’t make an alteration in our road maintenance budget to accommodate it. Certainly we will use it. We’ll put it into our HURF fund, and we’ll use that for road maintenance,” Cassens said. “But as far as allowing us to do any new or major or expanded programs, it really has not had that great of an impact.”

The money from the one-time allocation isn’t much on its own for Lake Havasu City, which will receive more than $4.7 million in HURF funding this year. But the cumulative effect of years of sweeps has taken a toll on the city, Cassens said. Whereas the city used to spend more than $1.2 million per year on road maintenance, he said, that figure is now down to the hundreds of thousands.

Local governments are hoping that the one-time allocation for fiscal year 2017 will presage a full restoration next year or beyond. Jennifer Marson, executive director of the Arizona Association of Counties, was optimistic.

“State revenues are better,” Marson said. “We definitely heard from leadership, at least at the beginning of this legislative session, that it’s not feasible for all of the cuts to counties to come back in one year, which speaks to how much there have been over the years. So we knew that that was never going to happen. But I’m hoping that even though we’re going to have brand new leaders, whoever they are, moving into the next year, I’m hoping that cuts will continue to come back consistently.”

Others were somewhat skeptical. Though HURF restoration has long had plenty of advocates in the Legislature, Cassens worries that the longer the sweep continues, the harder it will be to convince lawmakers to end it.

“The dilemma for us … is that this reduction in HURF allocations to the cities and towns has gone on for so long and there are so many new legislators that may or may not even be aware that these raids took place in years past because they just weren’t there that it will somehow get forgotten and this lost revenue will be forgotten at the Legislature, and it will just become a part of the state’s allocation,” Cassens said.

Whether a full restoration is on the horizon will depend on multiple factors. One is revenue. The other is leadership. Both chambers of the Legislature will have new leaders next year, and they, along with Gov. Doug Ducey, will play major roles in determining whether cities and counties get their HURF money back on a permanent basis.

Sen. Steve Yarbrough, who is currently running unopposed for Senate president, said there’s a lot of enthusiasm among lawmakers to restore HURF. But revenue will be the deciding factor.

“I think there would be quite a bit of interest in trying to do it from general fund regular ongoing revenue. But like I say, it always depends on the revenue. And if the revenue is there, I think that’s going to be a popular item for members on both sides of the aisle,” said Yarbrough, R-Chandler.

Rep. J.D. Mesnard, one of several candidates for House speaker, said he also expects to see more interest at the Legislature for restoring HURF next year, revenue permitting.

“We had one-time money this year,” the Chandler Republican said. “Obviously the budget needs to be structurally balanced, so that’s going to be a consideration as well. But I suspect it will be at or near the top of the priority list for restoring as we move forward, to the extent that it doesn’t blow a hole in our budget.”