Santa Cruz County expects $3 million budget shortfall

NOGALES, Ariz. - Santa Cruz County Supervisors expect a roughly $3 million budget shortfall this year. They place part of the blame for the budget woes on sales tax receipts not meeting projections.

Board of Supervisors Chairman Rudy Molera put it bluntly: “It’s pretty bad.”

He believes sales tax receipts are down because fewer people are coming from Mexico to shop in Nogales.

Molera said new county expenditures required by the state, like contributions to the state retirement system, have also contributed to the county’s problem.

He said while staff work out a solution, the board has asked departments to cut spending where they can, including leaving vacant positions unfilled for as long as six months.

The county board is expected to approve the final version of the budget in early July.

“We're a small community and we rely a lot on our neighbors from Mexico and we just haven't had the amount of people coming across spending the amount of money right there at the border as before,” he said.

Business owners in downtown Nogales say they’ve been suffering low sales for years.

Data from the Department of Transportation shows border crossings in Nogales have struggled to return to pre-recession levels.

Debbie Bracker owns and operates her family-owned store, which stands a few hundred yards from the Morley Gate, a pedestrian border crossing.

“There have been fewer crossers from across the border, and our main business really came from across the line,” she said.

Bracker says customers tell her the wait to get into the United States at the port of entry is too long.

However the county-wide issue of lower-than-expected sales tax revenue is likely due to many factors, rather than a single change, experts say.

Vera Pavlakovich-Kochi, Ph.D., Senior Regional Scientist and Associate Professor of Geography and Regional Development, at the University of Arizona’s Eller School of Management has studied Arizona-Sonora border economics for decades. She says the county’s revenue shortfall cannot be pinned on single factor because there could be many reasons why spending has dropped including Mexican reactions to American border policies, the unfavorable exchange rate, or the availability of American goods in Mexico. 

She says a large, probably expensive, survey is needed to analyze exactly how, where, and why Mexicans spend their money in Nogales.

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