On Tuesday, Aug. 13, the Town Council will consider the adoption of a public safety fee for property owners and an increase in the local sales tax in an effort to improve revenue projections for the town.
Over the next several weeks, leading up to that meeting, The Times will run a series of stories highlighting those issues. This first installment will focus on the information staff provided in making a recommendation supporting those moves.
A staff report to the council dated June 6 states: “Based on the fact that the Town of Fountain Hills will be facing a revenue shortfall in the very near future, it is recommended that the Town Council consider enacting measures to increase revenues.
“The first recommended source of revenue is to increase local sales tax rate by 0.3 percent from the current 2.6 percent to a total of 2.9 percent. Staff estimates that the three-tenths of one percent increase will generate approximately $1,050,000 annually in new revenue.
“The second recommended revenue option is to establish a public safety fee of $185 per year, per parcel. This fee would be apportioned by $150 going to the General Fund and $35 going to the Environmental Fund. The implementation of this fee would increase revenue to the Town by $2,886,000. Based on historical collection rates of the environmental fee, a total of $2,597,400 is expected to be received per year.”
At a special session on Thursday, April 18, the council discussed these revenue options and staff was directed to proceed with the notification process to get these proposals to a formal vote.
“While the proposed sales tax increase and public safety fee will address the revenue shortfall in the near future, primarily due to anticipated public safety cost increases, the Town of Fountain Hills will likely need to find additional revenue sources beyond the next five years,” the staff report states.
Revenue shortfall projections are not new to the town. Costs of running the town have been outdistancing income since before the onset of the “Great Recession.” However, since the town must balance its budget by law, staff has managed its way through fiscal woes by deferring budgeted items, reducing staff and fund transfers.
Staff has reached the point where it believes that “soldiering through” the revenue shortfalls is no longer an option.
Annual increases in public safety contracts for law enforcement and fire and medical response services are eating away at any increases to sales tax and other revenues. The Maricopa County Sheriff’s Office is bearing the albatross of an out of control state public safety pension system for which there seems to be no solution. The town is anticipating a 10 percent annual increase for law enforcement for at least 10 years, and more likely beyond.
Staff and many council members have long advocated for what might be deemed as more “stable” revenue sources, however, voters have refused a primary property tax for the town. The most recent defeat in 2018 was the fourth, so the council has no desire to go back to the voters anytime soon.
The options on the table, sales tax increase and public safety fee, can be implemented on a council vote alone, and in fact cannot by state law be referred to the voters.
There are a number of details to these proposals that will be discussed further in the coming weeks. Next week we will report on the background of the public safety history in Fountain Hills.