Let the campaigns begin. The Mesa City Council on Wednesday called a May 16 election to ask voters to approve a primary property tax and sales tax rate increase from today’s 1.5 percent to a record 1.75 percent.
If approved, Mesa will have its first property tax in 60 years and avoid a projected $37 million in budget cuts next year.
"It’s not something that’s going to be easy, but I think it’s worthwhile," said Councilman Mike Whalen. Last week, he was the only council member willing to commit to a property tax proposal, but successfully swayed three others to his side.
The primary property tax rate would be about $1 per $1,000 of assessed value, or roughly $250 per year for a $250,000 house and $625 for a business with the same assessed value.
The council capped the property tax revenue at $30 million per year.
A primary property tax is used to fund general city operations.
The sales tax proposal would increase the rate to 1.75 percent, higher than neighboring Chandler and Gilbert’s 1.5 percent, but slightly below Tempe and Phoenix’s 1.8 percent. Mesa’s sales tax will reduce to a 1.25 percent rate in July. The new increase asks for a .30 percentage point increase dedicated to street construction, operations and maintenance, and a .20 percentage point increase for general city operations.
The decision comes two days after a marathon meeting ended at midnight Monday with no resolution and after months of council deliberations and flip-flopping.
Vice Mayor Claudia Walters and Councilmen Rex Griswold, Kyle Jones and Mike Whalen voted "yes" to placing the property tax proposal on the ballot. Walters and Griswold had voted Monday against the idea, but Griswold said moments later he would switch sides if it would mean a majority. In exchange, Whalen and Jones — who wanted the sales tax increase to not exceed 1.5 percent — went along with the 1.75 percent rate to earn Walters’ vote.
"Someone had to give," Walters said.
Mayor Keno Hawker voted against the property tax but for the sales tax proposal. Councilman Tom Rawles and Councilwoman Janie Thom opposed both proposals.
The decision was met with approval by groups such as the Chamber of Commerce and police unions, which have turned up the heat on council members the past week with threats to only support a proposal that included a primary property tax.
Mitzi Pearce, chairwoman of Mesa Main ACORN that represents low- and moderate-income residents, praised the decision Wednesday.
"The most important thing is citizens having the right to vote on the (property tax) issue," said Pearce, whose group organized a candlelight vigil in front of the main Mesa library earlier this month to protest possible library cuts.
Mesa Chamber of Commerce president Charlie Deaton said discussions will start immediately to prepare for the campaign.
Meanwhile, Valley Business Owners (And Concerned Citizens) president David Molina said his group could start discussing the issue today. Molina said he personally opposes the primary property tax and expects the group to do the same but was not ready to take a position on the sales tax proposal.
"We don’t need a property tax," said Molina, whose group most recently fought the Mesa Riverview tax incentives and successfully repealed the sales tax on food. "The council only gave lip service to cutting and has never done anything serious about it."
The council’s final decision was nearly identical to the recommendation of the Mesa 2025: Financing the Future citizen committee, which studied the issue for 19 months.
The May ballot will also include two city charter amendment proposals. The first would have the city auditor position reporting directly to the council rather than the city manager. The second would eliminate the need for the council to introduce a zoning ordinance.
Currently, the council votes to introduce an ordinance, and then actually votes on the ordinance two or three weeks later. This change would accelerate the process by eliminating the introduction step.
The council unanimously agreed not to place $273 million in utility bonds on the May ballot because of concerns about asking for too much at one time.
The council had previously agreed to proceed with selling portions of Pinal County land purchased in 1985 to secure water rights.
The May 16 ballot
• Primary property tax to yield up to $30 million (a rate of about $1 per $1,000 of assessed value)
• Sales tax rate increase to 1.75 percent
• Two city charter amendments: One to create a council-appointed city auditor position and one to eliminate introduction of zoning ordinances.