By Monica Alonzo
By Ray Stern
By New Times Staff
By Stephen Lemons
By Chris Parker
By Monica Alonzo
By Stephen Lemons
By Robrt L. Pela
Bruner can boast, rightly, that he steadfastly held the line on property-tax increases while in office, and that he cast the high-profile swing vote in the decision to raise $250 million in sales taxes for a downtown baseball stadium.
Bruner's campaign literature undoubtedly will not point out that, at the same time, the county was sinking into utter financial crisis.
Bruner and current board chairwoman Betsey Bayless are the only two supervisors who held office during the full span of the county's plummet into debt.
They--and fellow supervisors--say they were given no warning of the impending disaster. The county's staff, they charge, fed them bad information. When they asked about the county's finances, the supervisors claim, they were assured that everything was fine.
"I would look to them and say to the chief financial officer, 'Give me your perspective on how we stand financially,'" Bayless says. "I always got a response that we were in fairly good shape."
Bruner says it was not until last fall that he began to learn the true extent of the county's problems, and he "exploded" when he did.
"I have never been so mad," Bruner says.
Bruner and Bayless assert that they were duped by the county's staff--specifically, former county manager Roy Pederson and former finance chief Ray Smith. Ironically, Pederson and Bruner have a long history of close ties, dating back to when Bruner was a Scottsdale city councilmember and Pederson was Scottsdale city manager. In fact, Bruner was the one who recruited Pederson for the top county administrative post after Pederson got caught in political crossfire while serving as a city manager in Colorado.
Accepting the supervisors' assertion of ignorance requires taxpayers to believe that two savvy politicians--two people who actually have jobs as financial-planning experts--somehow missed warning signs that have been showing up in the county's own budget documents for four years.
Bruner, an attorney, is the former chairman of the board of a bank, and since 1991, he has worked as a financial and estate planner for Snell & Wilmer, one of the state's most prestigious law firms.
Bayless, an investment banker, has been acting director of the state Department of Revenue; headed the state Department of Administration when it managed an $85 million annual budget; and served as an assistant director for the state Board of Regents, which oversees the budgets for the state's three universities.
Since 1987, Bayless has been a vice president at the investment banking firm Peacock Hislop Staley & Given, where she specializes in public finance. Ironically, the county has hired Bayless' firm in the past to help arrange some of the short-term credit it needed to patch over budget shortfalls.
(When she was first appointed to the Board of Supervisors in 1989, Bayless filed the required disclosure of her relationship with the firm, and does not vote on matters involving it. The firm is under consideration for an $18,000 contract from the county to help sort out its financial mess.)
On paper, it would seem that Bruner and Bayless have the credentials to spot potential financial problems from a mile away. During the past three years, there have been plenty of red flags waiting to be spotted. For some reason, they either completely missed the obvious--or chose to ignore it.
What made Treasurer Doug Todd and deputy county treasurer Jim Hogan recognize the county's financial problems soon after taking office was a huge difference between the income the county had projected it would receive and the amount of money that actually came in. Year after year--for five years, in fact--the actual revenue flowing into the county's general fund from a number of different sources increased at the remarkably steady pace of about 4.5 percent per year.
And year after year, the county had been projecting it would take in far more money than that.
The steady increases in revenue flowing to the county should have made it relatively simple for county budget analysts to come up with annual revenue projections, Hogan says. The accuracy of revenue projections is essential in developing a balanced budget, because projected expenditures need to be based on projected revenue.
During most of the 1980s, county budget officials, led by finance director Ray Smith, were able to accurately project revenue for upcoming budget years. "We never had a problem with projecting revenues," former supervisor Tom Freestone says.
But something happened in 1990, the last year the county had a sizable cash reserve--$20.2 million--and the same year Pederson became county manager. After ten years of being on the mark, the county's financial department suddenly seemed incapable of coming up with an accurate revenue projection for the upcoming budget year.
The county overestimated revenue for fiscal year 1990-91 by $22.8 million. As a result, expenditures exceeded revenue, and the county's reported cash reserves dropped to $7.5 million. (About this time, the county appears to have begun hiding a portion of operating deficits by borrowing.)
At this point, Hogan says, a crucial decision was made. Instead of adjusting its revenue estimates downward for the upcoming 1991-92 budget year to make sure expenditures weren't too high, the county budget forecasters increased their projected revenue. Once again, actual revenue came in $22 million less than projections. Expenditures again exceeded actual revenue, and cash reserves slipped to $3.4 million.
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