Wednesday, October 23, 2013

Oro Valley Council Votes Not To Consider Any Change In The Utility Tax

The Oro Valley Town Council voted 6-0 last week to not direct the town manager to consider a reduction in the Oro Valley 4% utility tax as the town prepares its next 5 year financial plan.

Council Member Waters spoke about the history of the tax and why he, Mayor Hiremath, and Council Members Snider and Hornat doubled the tax in 2010.

Council Member Snider discussed why the utility tax provided useful public funds for public good. She too discussed her reasoning behind supporting this tax.  "Frankly, I've received little feedback saying that people are upset about it," she observed.

Council Member Hornat noted that he would in no way consider a change in the tax.  The town simply can not "afford it."  A1 percentage point change in the tax is worth $720,000 to the town.  "I don't see the point of even considering a reduction."

The council will discuss the tax further in November.

However, at the moment, they will not even consider a change in it.

Watch their remarks.

Tell us what you think.
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5 comments:

Nombe Watanabe said...

No problem, we need the money for police overtime.

Marlene Leeper said...

Perhaps we should discuss this AFTER the next election?????

arizonamoose said...

History of the Utility Tax

2006
The primary reason for the enactment of the 2006 utility tax was insufficient recurring general funds to support 18.5 new positions. The 18.5 new positions had been turned down twice in previous budget votes because of lack of funds. The recommended tax percent was 4%. The 2006 Council placated the 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.
Unintended Consequences: The Amphi School District had to budget about $33,000 yearly to pay the Oro Valley Utility Tax. This reduced the amount that the Amphi School District could have used in educating our children. Educating our school children should certainly have been a top priority for a Town of Excellence.

2009
The utility tax was extended on March 4, 2009 for “more revenue” needs because of budget crisis. So much for any sunset promises to taxpayers! The original basic 2% utility tax still supported many of the 18.5 positions (13 in the police department alone) that were added in 2006.
2011
At the March 2, 2011 Oro Valley Town Council meeting Stacy Lemos, Finance Director indicated that during the January 29, 2011 budget retreat there was a desire to close the projected Town budget deficit by considering increased revenues and further expenditure reductions. An increase to the utility sales tax was favored by a number of Councilmembers (Joe Hornat, Mary Snider) at that time and would generate an additional $1.3 million in revenue to help offset this projected deficit if enacted and effective by August 1, 2011.
At the May 4, 2011 Oro Valley Town Council meeting a motion was made by Councilmember Hornat and seconded by Vice Mayor Snider to approve Ordinance No. (O)11-14, amending the Tax Code of the Town of Oro Valley, Article IV, Chapter 8A, Section 480, relating to the utility services tax rate. The tax rate was increased from 2 to 4%.
MOTION carried, 5-2 with Mayor Hiremath, Councilmembers Hornat, Snider, Waters, Solomon approving and Councilmembers Garner and Gillaspie opposed.
Unintended Consequences: Because of the doubling of the Utility Tax, the Amphi School District had to then use $75,000 of its budget to pay the Oro Valley Utility Tax. This reduced the amount that the Amphi School District can use in educating our children. Educating our school children should certainly be a top priority for a Town of Excellence.

2013
At the October 16, 2013 there was consideration of reduction of the Utility Tax.
Council Member Snider discussed why the utility tax provided useful public funds for public good. She too discussed her reasoning behind supporting this tax. "Frankly, I've received little feedback saying that people are upset about it," she observed.
Council Member Hornat noted that he would in no way consider a change in the tax. The town simply can’t "afford it." A 1 percentage point change in the tax is worth $720,000 to the town. "I don't see the point of even considering a reduction."
Mayor Hiremath pointed out in his State Of The Town remarks, that Oro Valley had a budget surplus in 2013. The Mayor pointed out in his remarks that Oro Valley is no longer in a budget crisis. A budget crisis was the purported reason that the tax was doubled.

My Reaction:
Government is supposed to serve the taxpayer. Giving relief to the taxpayers seems appropriate. However, once a tax is created it will never die or be reduced. It’s no wonder that the typical citizen distrusts the government at the national, state, county or local level.
The Town of Oro Valley’s experience with their utility tax has been a sterling example for the taxpayers to ponder prior to even thinking of supporting any increased form of taxation.

It is fortunate that property taxes require voter approval.

PaulE said...

It's a sad reality, but once a tax, always a tax. Given the history behind the imposition of the utility tax, established to close a budget hole that was economically driven, and to categorically state today that "there's no reason" to revisit this tax, says loud and clear that this tax, regardless of the state of the economy, is here to stay. A sad commentary on "business as usual" when it comes to taxing citizens.

Wouldn't it be refreshing for this council to actually represent Oro Valley taxpayers for a change? How refreshing would it be to actually recognize that the economy is, indeed, recovering, tax revenues are rising, and actually consider phasing out a tax?

Of course this might mean revisiting expenditures, not the least of which would be the OV police department - how about earmarking our "surplus" to conduct an actual management study of the department? Why have I sensed, for years, that certain people are "afraid" of the possible outcome of such a study - the closely guarded apple cart might tip over.

Imagine discovering meaningful ways to save money, and be able to return those savings to Oro Valley tax payers by eliminating the utility tax. Just a dream with the current administration.

Nombe Watanabe said...

Wouldn't it be refreshing for this council to actually represent Oro Valley taxpayers for a change? How refreshing would it be to actually recognize that the economy is, indeed, recovering, tax revenues are rising, and actually consider phasing out a tax?

PaulE has hit the nail on the head!!!

A demonstration of concern from the council (a 2% reduction for example) would be great, but do not hold your breath.

As we have recently learned from Washington DC, government is broken.