Fiscal Magician: Turning a Basket Case into a Showcase
David R. Smith
County Administrative Officer, Maricopa County, Arizona
David Smith arrived in Maricopa County in December of 1994 and quickly confirmed what he had already feared: The government he had been hired to run was in disastrous shape. Arizona’s largest county was $65 million in the red and could scarcely be said even to possess a budget — individual departments mostly just spent what they felt like spending.
Smith, 55, might have been excused for wanting to turn around and head back home to reclaim his old job in New York. In fact, however, he was hired by Maricopa precisely because of his reputation as a fiscal turnaround specialist. As assistant city manager in Yonkers, and deputy executive in Buffalo’s Erie County, New York, he had learned the nuts and bolts of shoring up a shaky government.
But even by the standards of troubled counties, Maricopa was in a class by itself. Smith found the separately elected sheriff, attorney, assessor, treasurer, recorder, clerk and school superintendent going about their business almost as if they weren’t part of any government at all. The assessor’s office was thousands of properties behind in getting new homes on the rolls and existing ones reassessed. The sheriff had actually gone to court to challenge the supervisors’ right to impose fiscal discipline on him. And the county hospital was a black hole that swallowed up millions every year. All told, government liabilities as a percentage of revenue hovered around a miserable 30 percent.
To make matters more embarrassing, Maricopa was the county that contained Phoenix, thought by many to have the most efficient urban administration in the United States. People used to joke that the nation’s best government and its worst were sitting across the street from each other. “Maricopa was a mess,” says Frank Fairbanks, the Phoenix city manager.
Smith didn’t have a lot of structural tools to use in solving the county’s manifold problems. Repeated efforts to deal with the problem through charter reform had failed. But in a situation that increasing numbers of residents recognized as a disaster, Smith did have a sort of bully pulpit, and he set about using it, preaching the ethic of financial discipline and molding his own team around a new reverence for sound money management. “The first thing we had to do,” he says, “was impress on people the importance of fiscal responsibility and budget integrity.”
Remarkably, Smith’s reformist approach took hold. “The place was so demoralized, but he reached out to everybody and changed this county’s whole way of thinking,” says Jan Brewer, chair of the Maricopa Board of Supervisors.
There was more to the fiscal repair effort than cheerleading and exhortation. Smith persuaded the supervisors to turn administration of the county hospital over to a professional health care management company. He lobbied successfully to get the state to devote its tobacco settlement money to helping counties boost indigent health care coverage.
In seven years, Smith has changed much more than Maricopa’s attitudes — he has changed the hard numbers. Today, the county’s budget is in the black, its bond rating is rising, and its liabilities as a percentage of revenue are down to a measly 5 percent. Last year, the county hospital turned an $18 million profit.
The independent elected officials, so troublesome in the past, have bought into Smith’s system. The backlog of assessments has been cleaned up. Even the county sheriff has abandoned his “lone wolf” stubbornness and cooperated with the administration most of the time.
But perhaps the most meaningful compliment is the one that’s been paid by Frank Fairbanks in Phoenix. Soon after arriving in Maricopa, Smith sensibly “recruited” some of Phoenix’s best employees to help get the county government back on its feet. Now, Phoenix is pilfering employees from the former basket case that sits across the street.
— Jonathan Walters
Photos by Reed Rahn
Photos by Patrick Pfister