State poised to withhold highways funds to Superior and Mammoth for not repaying non-statutory loans

Charges by the Arizona Office of Auditor General (OAG) that the towns of Superior and Mammoth misdirected funds targeted for road, bridge and transportation projects to other municipal uses could soon result in the state withholding further highway funds to both communities. Without such funding, local construction and maintenance of streets and bridges could grind to a halt.

Both towns, plagued by declining populations and tax bases, reportedly loaned these highway funds to cover shortfalls in the budgets of other municipal projects. But because of the economic downturn in late 2008 the two towns were unable to immediately pay the monies back into the highway fund.

OAG uncovered the loans in a 2011 audit, declared them outside the scope set by Arizona law, and has ordered the towns to restore the redirected funds. But due to continued revenue shortfalls, Superior and Mammoth have been unable to restore these funds, prompting OAG to ask the Arizona Treasurer’s Office to suspend sending further highway funds, which are derived from state and local taxes, until the lost monies are repaid.

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