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Cochise supervisors back drafting fix to expenditure limit so pension payments won't trigger penalties
Summary
Supervisors proposed drafting legislation for the County Supervisors Association to address a two-year lag in the state's expenditure-limit calculation so counties that pay down pension liabilities in good faith are held harmless or can apply offsets rather than face automatic levy-limit reductions.
Cochise County supervisors on July 7 asked staff to draft a legislative proposal to the County Supervisors Association that would ease the way counties pay down pension liabilities without triggering punitive levy-limit reductions.
Chair (S1) said the county's current expenditure-limit system is effectively two years behind and can punish counties that budget in good faith. "If there is a way that we can draft legislation that says, if we follow the spirit and the intent of the constitutional amendment ... apply the population plus inflation formula ... and we budgeted that in good faith ... there should be a mechanism for us to correct," the Chair said, urging either a refund mechanism or an offset to avoid forcing a dollar-for-dollar levy reduction.
Supervisors and staff described how the rule encourages borrowing rather than paying pension liabilities because a one-time pension payment can be counted against the expenditure limit in the year it is recorded. S1 cited recent unplanned costs, including a roughly $400,000 fire-alarm repair, as examples of ordinary expenditures that can combine with pension payments to push the county over the limit.
Staff and board members discussed possible alternatives: allowing a post-hoc correction when audit adjustments arrive, carving out pension payments from the calculation, or using a capped buffer ("spend up to $1 short" of the estimate) to avoid inadvertent breaches. Committee member (S4) noted several counties have used pension-paydown strategies, and supervisors debated whether a proposal exempting pension payments or allowing an offset would gain CSA support.
The board agreed to refine the language with county counsel and legislative staff and to include the proposal among the county's submissions to CSA, which must be finalized by Aug. 14. The item will return to the supervisors for final review before the CSA summit in October.
