Citing issues with annual costs outpacing revenues, the Town Council voted 5-2 on Aug. 13 to increase the town’s local sales tax. The .3 percent hike will be effective on Nov. 1, this year. The local rate will go from 2.6 percent to 2.9 percent, taking the overall sales tax rate for Fountain Hills to 9.2 percent, which includes county and state sales taxes.
Mayor Ginny Dickey noted the increase comes to 30-cents on a $100 purchase.
Town staff projects the increase will bring the town about $1 million annually.
Finance Director David Pock explained that the new tax would place the town in about the middle of the pack for sales tax rate among Valley cities. However, the town’s budget is and would remain the lowest per capita cost among Valley municipalities.
Mayor Dickey, along with Vice Mayor Sherry Leckrone and Councilmen Dennis Brown, Alan magazine and Mike Scharnow voted in favor of the hike. Councilmen David Spelich and Art Tolis were opposed.
Tolis said the council has a problem with accountability.
“There is a perception that we spend frivolously, but look how much we have cut,” Tolis said. “We need to focus on a driver to bring people here.
“We don’t have the retail base to support this tax, even this modest increase.
“I oppose this because it sends a wrong message. We should be reducing our sales tax and send a big message that Fountain Hills is open for business.”
Dickey said keeping the status quo or even reducing the tax as suggested would continue to cost the town.
“It would cost about $1 million per year over the next four years,” Dickey said. “We have the responsibility right now to address public safety and our other obligations.
“I feel we are at a point where we really can’t go forward unless we address this.”
“Status quo doesn’t mean surviving,” he said. “We are falling farther behind every year.”
During the public hearing there were residents who mentioned the accountability issue with the council, but others were more in line with remembering those having their own financial woes.
Pam Aguilu agreed with Tolis that the retail base would not support the increase.
“There are a lot of people here on a fixed income, living paycheck to paycheck,” she said. “You need to be a little more creative.”
Aguilu said the increase would hurt the most those who can least afford it.
There were also those who supported the council decision on the increase, but still prefer a primary property tax.
“A primary property tax is still the most fair and financially stable method to address this,” Sheryl Ptak said. “We all love this community and we all know that fees will not cover this. A property tax is the way to do this, and we can’t be afraid of going there.”
Dennis Thompson said it is a lot like taking medicine, “it doesn’t taste good, but you know if you don’t take it you can get pneumonia.”
“I support a primary property tax,” Thompson added. “We have little choice but to use the sales tax increase, and/or a public safety fee.”
The council was to also address a proposal for a public safety fee of $185 per year per property parcel at the Aug. 13 meeting. However, after a closed-door executive session with the town attorney prior to the regular meeting, it was announced that the fee was being removed from the agenda due to “new legal challenges that could possibly put the town at risk.”
Mike Sabatini told the council he commends them for making these tough choices.
“These are tough decisions and I support you,” Sabatini said.