Opinion ID: 1201005
Heading Depth: 2
Heading Rank: 3

Heading: constitutional expenditure limitation

Text: Article IX, § 20 of the Arizona Constitution prohibits expenditures by political subdivisions in excess of certain limits, and contains several provisions which allow expenditures over the limits in certain situations. Expenditure is defined as any authorization for the payment of local revenues. Ariz. Const. Art. IX, § 20(3)(c). La Paz County argues that this action concerns the division of county assets, not the payment from revenues or expenditures. La Paz reasons that the judgment and any associated costs or fees from this action, therefore, do not fall within the purview of Article IX, § 20, which concerns limits on spending. La Paz argues that it is entitled to the judgment as its proportionate share in the division of county assets. Yuma, on the other hand, believes that the judgment and any costs associated with this action do fall within the spending limits set up by Article IX, § 20 of the Constitution. As a result, Yuma could pay La Paz the judgment over an extended period of time in order to keep within the mandated spending limits. The special master's report indicated that two subparagraphs of Article IX, § 20 might apply to this situation. Subparagraph (4) of Article IX, § 20 provides that the Economic Estimates Commission may adjust the base limit (local revenue payments for fiscal year 1979-80) to reflect subsequent transfers of all or any part of the cost of providing a governmental function. We do not believe that this paragraph is applicable to this case. There has been no transfer of the costs of providing a governmental function; this case involves a division of assets between two counties. Subparagraph (5) of Article IX, § 20 also does not apply to this situation. It simply allows the Economic Estimates Commission to adjust the base limit to reflect any subsequent creation ... of a new political subdivision. In other words, the commission may establish the spending limits for the new counties. This subsection is not an exception to the basic rule in subparagraph (1) that political subdivisions may not spend over a certain limit. The special master also cites several statutory sections which implement the constitutional spending limits (A.R.S. §§ 41-562 et seq.). However, none of these statutes address the issue whether the supreme court's judgment on the division of county assets falls within the constitution's spending limitations. A.R.S. § 41-563(A)(7) does deal with county division, but only insofar as determining the expenditure limitations for each of the new counties. The special master also cites A.R.S. §§ 42-302 et seq. A.R.S. § 42-302 provides that the governing board of each political subdivision shall prepare a financial statement and an estimate of anticipated expenditures. It does not address whether payment of a judgment on the division of county assets is an expenditure within the meaning of Article IX, § 20 of the Constitution. It is clear that the purpose of Article IX, § 20 of the Arizona Constitution was to limit expenditures of political subdivisions to fiscal year 1979-80 levels modified by annual adjustments to reflect changes in population and the cost of living. This case, however, involves the division of property and revenue formerly held by Yuma County prior to its division. The case is simply a division of assets between two political subdivisions that formerly were one entity. Thus, the judgment rendered in this case does not represent an expenditure of Yuma County's revenue, rather it represents a determination of the share of assets held by Yuma County which belong to La Paz County and which Yuma County is under an obligation to turn over to the new county. Such a division of assets does not constitute an expenditure within the meaning and intent of Article IX, § 20. Although the division of assets is not subject to the limitations mandated by Article IX, § 20, the expenditure of funds for costs, fees, and interest are another matter. Certainly, these items arise out of and are a part of the efforts to effect a division of the assets, but they are also separate items incurred after the division of the counties. They are not part of the assets to be divided. They represent the expense incurred in obtaining the division, and we believe they fall within the meaning of expenditures as used in Article IX. We hold that Art. IX, § 20 of the Arizona Constitution and its implementing statutes do not apply to the judgment but do apply to costs, fees and interest.