Maricopa County, Ariz., Delaying or Cutting Capital Projects

DALLAS - Maricopa County, Ariz., the nation's fourth most populous county, will delay or reduce most capital projects as part of a $122 million reduction in spending under the $2.1 billion budget that goes into effect July 1.

The deep cuts represent 5.4% of the $2.3 billion budget for the current fiscal year and will include payroll reductions and other measures approved Monday after months of disputes between the county's 50 departments.

Maricopa, including the county seat of Phoenix and its suburbs, is the nation's largest county rated triple-A by Standard & Poor's and Fitch Ratings. Moody's Investors Service's issuer rating for the county is Aa1. With the severe recession and collapsed housing market, growth in Maricopa County's population of 3.9 million is flattening.

The county's last lease-revenue debt of $138 million came in April 2007.

While delaying other capital projects, the government will direct $340 million to pay for a downtown court tower expected to open in 2011. The 16-story tower would add 32 courtrooms to handle caseloads that are expected to grow by 40% over the next 10 years.

The county Board of Supervisors postponed plans for a regional court in southwest Phoenix, shifting the $79 million to the tower, and also postponed plans to build a $100 million courthouse in the eastern suburb of Mesa.

While money is tight, construction costs are falling, which could help the board stretch its money. The Arizona Department of Transportation reported Monday that bids for projects covered by federal stimulus money came in $15 million, or 18%, below expectations. Next month, the Arizona Transportation Board will issue $440 million of revenue bonds backed by Maricopa sales-tax revenue for projects in the county. The issue will be the largest single issue in the board's history.

Until the recession hit in December 2007, Maricopa County was the fastest-growing in the nation. Covering a massive 9,000 square miles, it grew 45% between 1990 and 2000, representing 60% of the state's population. Between 2000 and 2007, population grew at the rate of 23%, according to officials.

The county joined 47 others as AAA by Standard & Poor's in January 2008. That was still fairly early in the housing collapse. In April 2007, Moody's analysts wrote that they expected Maricopa to retain one of the stronger economies in the nation.

In a rating report earlier this month on the $440 million of revenue bonds for road projects in the county, Standard & Poor's noted county unemployment rising from 4.8% in 2008 to 7% in March, still well below the nation's 8.5% rate.

The most recent S&P/Case Schiller housing index showed a 35.2% 12-month housing price decline for the Phoenix area in February, compared with 18.6% for the nation. In March, home foreclosures were 31% of sales, although better than the 51% level in February.

County sales tax revenues grew until June 30, 2008, when they fell 3.2%. Since last November, pledged monthly tax revenues have fallen 12% or more in each month compared to the previous year's period, including a 17.8% decline in each of February and March 2009.

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER