The recent failure of a home-rule option vote in the city of Tucson has brought home to Oro Valley leaders the prospect of a similar fate befalling the town.

If the home-rule option were defeated by voters, "we would be out of business as a town," said Oro Valley Town Councilman Barry Gillaspie.

Local voters will decide the town's spending future in March, when Oro Valley's home-rule option goes up for renewal.

Home rule, a provision of the state constitution under which most municipalities operate, allows cities to set their own spending limits. A public vote is required every four years for renewal.

Cities or towns that don't pass a home rule provision must operate under a state-imposed spending formula under which they would almost certainly face significant budget cuts.

"Sometime it can be drastic," said Tom Belshe with the Arizona League of Cities and Towns.

Belshe said it wouldn't be unusual, depending on how the spending formula affects a city, to cut spending by more than 25 percent.

In Oro Valley's case, Finance Director Stacey Lemos has estimated the town would have to cut significantly more from its budget.

Recent budget estimates forecast a total operating and capital budget of about $108 million in fiscal 2011, which begins next June. Under the state-imposed formula, the town would be limited to spending about $22 million.

The remainder of funds would be collected, but remain unspent.

The two largest budget areas for the town are the police department and water utility. The estimated police budget for fiscal 2011 nears $12 million, and the water utility approaches $16 million. Spending from the two departments alone, nearly $28 million, would exceed the state-imposed limits.

"Home rule can have a devastating effect on a city," said Roy Delgado, a councilman in El Mirage, a city northwest of Phoenix.

El Mirage voters rejected a call for home rule renewal in 1998. Delgado said that at the time, the government had lost the trust of the electorate.

After voters rejected the call to renew home rule, the city council decided to simply overspend the limits imposed by the state formula. The Legislature moved to act against the town, issuing more than $250,000 in fines against the small city in the process.

Delgado said the strictures imposed on local spending by the state formula had a negative impact on government services.

Ultimately, the Legislature waived the fines. City voters the next year passed a home rule question on the ballot.

"What it showed us was that you have to be very diligent and open with the people," Delgado said.

Officials in Tucson have not yet determined the extent of cuts the failure of home rule will have on local services, but initial estimates suggest the cuts won't affect the city as much as they would a smaller municipality.

"It will be a reduction of overall budget capacity of $25 (million) to $40 million," Tucson City Councilman Rodney Glassman said. Tucson's annual budget in fiscal 2010 was more than $1.3 billion.

Glassman said the rejection of home rule for the city was a measurement of confidence people have in local leaders.

"It hopefully will provide a wake-up call to the council to focus on the priorities of citizens," Glassman said, adding that public safety and parks should top any list.

While the home-rule option, or local alternative spending limitation, places formula-based caps on local spending, it does nothing to curtail the amount of money municipalities take in through local taxes and state-shared revenue.

Even in cities like Tucson where home rule doesn't pass, taxes likely would remain the same.

Gillaspie said he wants Oro Valley residents to understand that a vote for home rule won't mean more taxes.

"The main thing is it's not a new tax," Gillaspie said. "If we want to spend more of the money we already take in, we have to pass home rule."

Public hearing on home rule this Wednesday

One of two public hearings on the proposed home rule option is being held this Wednesday, Nov. 18, at 6 p.m. before the Oro Valley Town Council. It is being conducted in council chambers at 11000 N. La Cañada. A second public hearing is planned for Dec. 2.

State spending formula if home rule fails in OV

FY     Revenue estimate    spending cap        

2011    $108.3     $22.3

2012     $99.3     $23.1

2013     $97.4     $23.9

2014     $95.5     $24.8

*All Dollar figures in millions

Source: Town of Oro Valley

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