Back to the Drawing Board

After facing a throng of angry citizens, the Tucson City Council takes a new look at the budget

After facing a standing-room-only crowd of more than 500 angry citizens at a five-hour budget hearing last week, members of the Tucson City Council appear to be backing away from a proposed 2 percent rent tax.

But some members say they may still support a lower tax on housing-rental payments.

"I think that's much more likely ... that we could phase it in over time and start at a much lower rate," says Ward 3 Democrat Karin Uhlich.

Ward 6 Democrat Nina Trasoff also isn't ruling out a rental tax at a lower rate.

"I know I don't like it at all, but I also know we need to balance the budget, and everybody has to do something," Trasoff says. "I would have a very hard time voting for a budget with a rental tax, but I'm not willing to say 'absolutely not,' because I have to look at where else you can get money."

However, Ward 2 Democrat Rodney Glassman remains reluctant to support even a 1 percent rental tax.

"I do not support a new tax that falls squarely on the working families of Tucson in the middle of one of the greatest recessions our country has ever seen, especially when the dollars are not going to be used for the core services that those renters need," Glassman says.

The rental tax—which would cost a household paying $600 in rent a total of $144 a year—was the most controversial component of roughly $18 million in new taxes proposed by City Manager Mike Letcher, who took the reins of the city after the council fired Mike Hein last month.

But the rent tax also generated the most money: an estimated $10 million a year that would help make up for declining sales-tax and income-tax revenues.

Uhlich says she was still reviewing budget options and that it was premature to speculate on her preferences.

"There's still a lot of work going into identifying viable alternatives," says Uhlich.

But she says the council could consider a larger hike in the city's utility tax on gas, electric and water services in exchange for a smaller increase in the rental tax.

"It might be that the community would see that as a more fair option, because it's spread across the entire community rather than only renters," Uhlich says. "Ultimately, any choice we make is going to be tough and unpopular."

The council is also looking for budget cuts that would reduce the need for additional revenue. Among the likely items on the chopping block: a proposed $2 million contribution to the city's fledgling Housing Trust Fund for affordable homes.

There also appears to be support for Letcher's proposal to increase fees for Parks and Recreation sports leagues, ramada rentals, leisure classes and swimming-pool admissions. Those rates had been reduced when Trasoff and Uhlich took office in 2005; both had been sharply critical of previous council members who raised the fees.

The council last week also took the first step toward raising bus fares. Last summer, Uhlich led the opposition to a similar plan to boost bus fares, which led to a fight with Hein over budget numbers. The council considered firing Hein at the time, but they worked out their differences until last month, when four members of the council—Uhlich, Regina Romero, Shirley Scott and Steve Leal—voted to can him.

Uhlich says she's now more comfortable with the fare increase, although she wants the additional revenue to be reinvested in the public-transit service.

Trasoff, who voted against the fare increase last summer, says she wished the council had moved more quickly to increase fares.

"I suppose I was remiss in not bringing it back sooner, but other things get on your plate," Trasoff says. "I wish we had done it back then."

Glassman, who supported last year's fare increase, says the move to hike fares is "long overdue." He pointed out that the city missed out on an opportunity to bring in $2 million by not increasing fares last year, and that the reluctance of his colleagues to increase fees for city services is one reason it is facing a financial crisis today.

"There is demonstrable proof that the council's unwillingness to adjust rates incrementally has put us in a tight situation," Glassman says. "The irony is, if our leadership is willing to make smart, incremental decisions, then the politically charged decisions come around less often."