Why Growing Smarter Will Grow Old Fast

The so-called Growing Smarter measure would prevent the state from enacting strict growth controls. At the same time, however, it would free up $220 million for land preservation.

Governor Hull challenges Baron's skeptical outlook. She says the legislature will appropriate the money every year, especially if another ballot measure--the Voter Protection Act--is approved. The voter-protection measure would force the legislature to actually implement propositions approved by voters.

Furthermore, Hull says, if elected, she will lobby as governor to keep the funding intact.

"I wouldn't back out of it," Hull pledges.
The controversy erupting over Proposition 303 is just a prelude to a constitutional battle that is brewing to reform the state Land Department.

Democratic gubernatorial candidate Paul Johnson wants a constitutional amendment passed to allow the state Land Department to set aside 10 percent of its 9.4 million acres of state trust land for conservation purposes.

The Land Department controls about 500,000 acres of urban land, which, if classified for conservation purposes, could provide vast open spaces in the state's fastest-growing urban areas while providing habitat for native plants and animals.

Johnson's proposal is similar to a constitutional amendment approved last year by Colorado voters and strongly supported by Baron and Sierra Club leaders.

Developers and Governor Hull are opposed to the plan. Developers historically have enjoyed immense subsidies from the purchase of trust land, which has long been sold well below market value.

Hull says the sale of state lands for development directly benefits public education, and that setting aside nearly one million acres of trust land would sharply reduce funds for schools.

"I consider our state land kind of like the oil of Texas, and I think managing it brings us in a great deal of revenue and income," Hull says.

The state constitution requires most of the money derived from the sale or lease of state trust lands to be dedicated to public education.

"My concern would be how much money would the school trust lose if that happens?" Hull says.

The answer to Hull's question is clear: not much.

It is charitable to say the state Land Department has done a miserable job in fulfilling its constitutionally mandated duty of maximizing revenues for public education.

And what funds the department does generate for public schools from the sale and lease of trust lands accounts for only about 2 percent of the money allocated by the state legislature for public education.

The Land Department generates revenue for public education in two ways. Proceeds from the sale of state land are deposited in a permanent trust fund which is invested in interest-bearing securities. Only the interest earned from the investments are available for public education. In 1996, permanent fund investments generated $48 million for public education.

The Land Department also generates revenue through commercial leases of state land. In 1996, lease income available to public education totaled $15 million, bringing the total allocated to public education from the sale and lease of state lands to $63 million. Last year, the amount of Land Department funds allocated to schools increased to $68 million.

The amount is minuscule when compared to the more than $2.5 billion spent by the legislature on primary, secondary and university education.

Rather than being an asset similar to Texas oil, the state land is generating a paltry income for its primary beneficiary.

"It's a bogus argument the money is needed for the schools," Paul Johnson says.

To the contrary, the below-market sales of state land to developers, which the state auditor general found to be rampant, increase the burden on taxpayers to fund construction of new schools on state land sold to developers in outlying areas while older schools are being closed in urban areas with declining population.

Not only is the Land Department providing a tiny fraction of public-education funding, the department has seen the inflation-adjusted value of the permanent fund decline by $252 million since 1984. (Proposition 102 on the November 3 ballot would diminish the erosion of the fund's value by allowing the Land Department to invest in stocks and other higher-yielding securities.)

The loss is even greater when taking into account that most of the state-land sales were at below-market prices and that the value of the land greatly increased since 1984. The increased value would belong to the people of Arizona--rather than private developers--if the department had simply held the property.

Holding the property--particularly environmentally sensitive lands in urban areas--is exactly what proponents of amending the state constitution want the Land Department to do.

"The long-term solution is to amend . . . the constitution to require that these lands be preserved as open space," Baron says.

Not only would the state lands provide open space, Johnson says, the Land Department would play a vital role in managing urban growth rather than encouraging sprawl.

Utilizing state land for conservation purposes could help redirect growth toward central cities, Johnson argues. The department controls huge stretches of land in the northern and northwestern sections of the Valley, plus additional holdings to the southeast of Apache Junction.

The Valley will continue its relentless outward expansion unless something is done to turn growth inward. Maricopa County's population is expected to increase by one million people in the next decade.

"The issue," Johnson says, "is where are they going to go?"
Only a handful of Arizona developers are focusing on residential development near urban centers. Tempe developer John Benton is among the most notable. His projects have played a pivotal role in the commercial and residential redevelopment of downtown Tempe.

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