Part 179: What'll It Be--Ever More Oppressive Property Taxes, Or Perhaps A Creepy Little Sales Tax?
By Chris Limberis
IT'S NOT A question of whether you'll pay more to Pima County. The question is how: Continued spiraling property taxes, with rates that already are the highest in the state? Or a sales tax that could spawn voter revolt?
Pima County government is eating money at a rate of $2.04 million a day. The record $747 million budget for fiscal year 1998-99 will soon be eclipsed and voters have no one to blame but themselves. They put Pima County on the spending binge with approval of a $369 million bond package last year.
Now the operating and maintenance costs are coming due.
At the Juvenile Center, voter-approved expansion from 86 to 306 beds will jack up the juvi budget by between $8 million and $10 million a year. The annual juvi budget will double. At the bursting-at-the-seams main jail, the bill will jump by $35 million when construction on the overdue expansion is completed. The need can hardly be argued. Three months ago, the inmate count topped 1,500. A scary figure considering the jail was designed for less than half of that--731.
Costs also will increase, by $1 million to $2 million a year, for the new parks, pools, ballfields and other recreation facilities voters approved in May 1997.
To satisfy those voracious demands, the county's primary property tax rate, used to pay for daily operations, must be increased by 20 percent. The difference for the owner of a $100,000 home will be $72 a year.
Property taxes are calculated for each $100 of a property's value. The county has five distinct tax rates, ranging from daily operations to flood control. Combined, they add up to $5.24 per $100 of assessed value, or $524 in this year's taxes for a property that is on the assessment roles for $100,000.
If you're getting a little blurry-eyed, know this: That's the highest in the state. Pima County's primary tax rate, used to supply money for daily operations such as the jail and juvi, is $3.69 per $100. That's more than double the combined rate--$1.65--in wealthy Maricopa County.
NOW COMES the half-penny sales tax.
County Administrator Chuck Huckelberry is hoping it will diversify the county's revenue stream and cut its reliance on property taxes.
But sales tax increases are so reviled by voters that even rookie politicians and cubbie reporters can recite their terrible record: Defeated by 57 percent to 43 percent by county voters in a 1986 transportation measure; trounced 61 percent to 39 percent in 1990 in another transportation issue; and finally, a quarter-cent sales tax for jail and juvi expansion was crushed 70 percent to 30 percent in 1994.
Pima County won approval in 1990 for a set of three sales taxes: the half-cent for transportation and the quarter-cent for jails required voter approval. The third, a general, half-cent sales tax that could be spent on anything, requires only a unanimous vote of the Board of Supervisors. Ray Carroll, the Republican who won election last week to the seat he received by appointment last year, is the holdout. He believes his eastside and Green Valley District 4 won't go for a sales tax. He wants it sent to voters.
It was then-Assistant County Manager Bruce Postil who engineered the lobbying effort to gain legislative approval for the sales tax trio. As The Weekly has previously noted, Postil was scarcely hindered by the outwardly anti-tax, but craven pols he worked for. He believed the trough would hold something for everyone's greed. But he, along with Democratic Supervisor Dan Eckstrom, thought that much of the sales tax revenue should be used to replace a portion of the burdensome property tax.
"Counties should diversify their tax base if they can," says Steve Barela, a senior research analyst with the conservative Arizona Tax Research Association.
But Barela notes that the counties that have imposed the general sales tax have not lived up to commitments to use the sales tax revenue to offset property taxes.
Twelve of the 15 Arizona counties levy a general sales tax. Maricopa was not permitted to do so under the legislation. But Maricopa, with voter permission in 1986, used a half-cent sales tax to pay for new roads. And Maricopa, snubbing voters, slapped on a quarter-cent sales tax to pay for the Arizona Diamondbacks baseball stadium, known as Bank One Ballpark.
Consumers here pay 5 percent in state sales tax. Pima County gets $67.3 million of that back. Tucson, South Tucson, Oro Valley and Marana also charge 2 percent sales tax.
According to projections, including from University of Arizona economist Alberta Charney, a Pima County half-cent tax would raise $48 million in its first year. The tax law actually allows the counties to ask for 10 percent of the state sales tax, which for hotels and motels is 5.5 percent. That would boost the county and state sales tax at hotels--separate from another county bed tax used to support major league spring training and the dubious Metropolitan Tucson Convention & Visitors Bureau--to 6.05 percent. Perhaps the most attractive piece of a sales tax: tourists and other visitors would pay up to 20 percent of it.
Although food and medicine are exempt from sales tax, critics say the tax is regressive and hits the poorest the hardest.
But Huckelberry flatly likes the sales tax as a consumption tax. "The more you consume, the more tax you're going to pay, as opposed to property tax, which has very little to do with consumption of goods or services."
Huckelberry, a Flowing Wells native and engineer who has spent 25 years with county government, sees the sales tax as progressive. "The more you make, the more you pay because traditionally those who make more spend more."
Under the crush of the demands, particularly in justice and law enforcement for which spending has increased by $65 million in the last 10 years and which now accounts for half of the county's general fund, Huckelberry is reluctant to part with most of his "progressive tax." He's also encouraged that the half-cent revenues will grow to $69 million in 10 years.
CRITICS BELIEVE THE county won't erase sufficient parts of the property tax. And they say the only hope for sales tax passage is an exchange for a property tax, at least in the early years. With partial year receipts combined with $48 million in the first full year, the county could build up a $60 million reserve.
The county receives about $1 million for every 3 cents on the property tax rates, depending on how well taxpayers are paying. At the $48 million mark for a sales tax revenue, somewhere between $1.30 and $1.44 could be shaved off the county property tax rate, meaning a savings of between $130 and $144 a year for the owner of a $100,000 home and $720 for a the owner of a $500,000 business.
On the other side, the half-cent sales tax would mean an additional $127 in annual taxes for someone with an income above $70,000. Retirees, a group the skittish Carroll must heed, are predicted to pay between $30 and $51 a year in new sales taxes if the half-cent is approved.
A new pair of jeans, at $35, will mean an extra 17.5 cents. A $3 rental from Casa Video would mean an extra 1.5 cents. A $17,000 car would mean an extra $85.
Huckelberry is focusing on eliminating, at a maximum, 54 cents from the property tax rate. Sales tax revenues, under his optimum plan, would cut the Flood Control District property tax, now at 32 cents per $100 (roughly $32 for a $100,000 house) and the 22 cents from the Library District. That's a $54 savings for a $100,000 property. Huckelberry would leave to property taxpayers the secondary taxes, used to repay voter-approved bond debt, now at 96 cents per $100.
Business properties would see bigger gains from the property tax reduction--$125 for a $100,000 property, $623 for a $500,000 property and $1,246 for a $1 million property.
And Huckelberry, with Eckstrom's guidance, is staying away from supplanting portions of the primary property tax rate --now at $3.69 per $100--with sales tax revenues. That's because the county should leave its primary tax at the high level to take advantage of state law that limits the combined primary taxes --schools, city, state and community colleges--for homeowners at $10 per $100. Thanks to high taxes in the Tucson Unified School District, homeowners in Tucson and South Tucson and TUSD have primary tax rates that are $10.07 per $100. That means TUSD homeowners in the city get a nominal break--$7--from the state on their tax bills.
Huckelberry may be playing it smart, or at least more honestly than counterparts, when he doesn't pledge all the sales tax to property tax cuts.
You can have your say on the proposed county sales tax when the Board of Supervisors discusses the issue November 17 at 9 a.m. in the first-floor hearing room of Superior Court, 110 W. Congress St. Good luck finding parking.
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