Wednesday, January 30, 2013

The Utility Tax Strikes Again

The Town of Oro Valley is in the process of annexing an area southwest of Suffolk Rd.   The area includes: Tohono Chul Park, Platinum Fitness, the Catholic Church radio station, a motel, medical office suites and residential homes.

Annexation of an area requires that 50% of the property owners and 50% of the property values approve the annexation. To date, the area has not agreed to annexation.  The Town has until April to  finalize this agreement.

The "Law Of Self-Interest" also known as: "What's in it for me?" is the governing rule when it comes to annexation.  The enticement for those being annexed are the road improvements that would invariably be part of any "agreement" and the extension of the Oro Valley police in for the town,

The inducement for the town is the potential for additional sales tax revenues and revenues generated by the utility tax.    The revenues generated by the sales tax are a transfer from the Pima County coffers to Oro Valley's coffers since the annexed area would now be part of Oro Valley.   So to those being annexed the transfer is transparent to them when it comes to the sales tax.

The utility tax that is the  disincentive for those to join our town.   The utility tax is not a pass-through tax.  It is a 4% tax added to every utility bill: Water, gas, electricity.   It is, really, like a property tax. You pay it simply because you happen to own a property that uses these necessary products.   There is no comparable utility tax paid by these potential annexes.   The utility is an added cost of doing business.    It will cost those who annexed thousands of dollars a year simply because their property is now part of Oro Valley.  In effect, the utility tax is a disincentive.

We don't know whether the owners will approve this annexation.  What we do know is that we've never liked the utility tax.  We even hate it when we play "monopoly."  It is nothing more than a property tax in disguise.  It would good if this tax, "sold" to us as a temporary tax, went away.  Unfortunately, utility tax is a tax that keeps on hurting.


arizonamoose said...

Most Oro Valley citizens think that the original Oro Valley utility tax was created to develop a new source of revenue. The primary reason for the enactment of the 2006 utility tax was insufficient recurring general funds to support 18.5 new staff positions. The 18.5 new staff positions had been turned down twice in previous budget votes because of lack of funds. The 2006 Council originally wanted 4 % but the public outcry was tremendous so the Council placated those pesky taxpayers by reducing the tax rate from 4% to 2% and adding a two year sunset clause to eliminate the utility tax in two years. Tax passed!
The utility tax was extended on March 4, 2009. So much for any promises to taxpayers about a two year sunset cancellation!

Since then the utility tax has been doubled to 4% for even more revenue.

Incidentally, let’s not forget the utility tax still supports many of the 18.5 positions that were added in 2006.

Wow! I bet people and business think the utility tax is a great incentive for their relocation or annexation to Oro Valley as soon as possible.

John Musolf

Nombe Watanabe said...

I fail to see why anyone would vote to join OV. Just wait until you get your gas bill for the last month!

Add 4% to the "Freeze" bill and these folks will go into