Scottsdale in hunt for added tax revenue - East Valley Tribune: East Valley Local News

Scottsdale in hunt for added tax revenue

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Posted: Saturday, January 10, 2004 5:46 am | Updated: 4:57 pm, Thu Oct 6, 2011.

Scottsdale faces an increasingly shakier financial future unless it can boost revenue in the next year or so, undoubtedly with higher taxes.

A funding-options report issued Friday by city budget officials concludes a combination of sales and property tax increases and new bond programs would be needed to pay for city programs.

Fire and police services and expansion of the city’s McDowell Sonoran Preserve are the major areas in need of additional funding, the report says.

"We’re looking pretty tight. We can’t expect the gravy train to keep running here," said Craig Clifford, Scottsdale’s chief financial officer. "From a financial perspective, what I see facing the city is a major desire to continue very costly (preserve) land purchases."

The city estimates completing the preserve could cost as much as $500 million.

Adding to that is Scottsdale’s landmark challenge of forming a city-run fire department. The private Rura l/Metro Corp. in November abruptly announced it will sever its fire-protection contract with the city in mid-2005.

Rural/Metro’s pending departure is one of the chief reasons the city is considering a new tax for public safety. Without the additional costs of forming a municipal fire department, the city would be debating only how to fund the preserve, Mayor Mary Manross said.

"Rural/Metro made their announcement a year or two sooner than we thought they would," Manross said. "That changed the landscape significantly and I think that’s one of the reasons we have to make this really difficult decision next week."

The City Council is to meet Wednesday to consider holding a referendum for a salestax hike to fund additional land purchases for the preserve and public-safety needs.

The city estimates it needs to raise an additional $59.2 million to fund fire, police and emergency medical services.

The booming 1990s, when Scottsdale’s revenue grew by double-digits, are long gone, Clifford said.

He paints a bleaker picture for coming years.

The city faces revenue shortfalls in three of the next five years unless it significantly cuts back on services and programs, or unless voters approve tax hikes, Clifford said.

The city is even considering a once-unthinkable option: Dipping into its "rainy day" fund.

Without new revenue sources, Scottsdale would be forced to tap into the $20 million emergency reserve to pay for city operations.

Council members have been discussing a preserve tax that would mean another 2.5 cents on every $10 in sales.

But Clifford’s report says a general obligation bond backed by a property tax increase would be the best long-term solution for funding the preserve expansion.

The report points out, however, that a combination of a sales tax hike and a bond might be the most expedient approach for preserve funding.

Preservation advocates agree.

"We know the City Council has a lot of things they have to take into account, but they have to remember that to keep from losing land for the preserve we need at least some interim funding on the ballot in May,’’ said Carla (her full name), director of the McDowell Sonoran Land Trust, which promotes the preserve effort.

Councilman Wayne Ecton, a retired financial executive, said his early inclination would be to ask voters to approve a combination of taxes that would fund both the preserve and public-safety needs.

"I’m not inclined to give the whole chunk of money to the preserve," Ecton said, "and then end up with problems about how we are going to finance the fire department transition and the needs we have in public safety."

A property tax or a special facilities district that has been discussed as another preserve funding option would take two to three years to generate revenue for land purchases, and that would risk losing some ground to developers, Carla said.

In addition, a recent poll done for the city’s Preserve Commission showed residents preferred a sales tax over a property tax to fund the preserve.

"In five to 10 years from now, for the rest of the preserve funding, we should look at those other options, but for now we need the 2.5 (sales tax hike) on the May ballot,’’ Carla said.

The funding-options report shows the council "has hard decisions to make,’’ Clifford said.

"Multiple ballot issues are needed. The message is that we can’t make (funding) it all as simple as we’d like. And that’s going to make it a tougher decision for voters, too,’’ he said.

McDowell Sonoran

Preserve numbers

• $300 million - Estimated approximate cost of 16,460 acres in the original preserve boundary.

• $500 million - Projected potential cost for 19,940 acres in the expanded preserve boundary

• Current portion of city sales tax going to purchase land in original preserve boundary: 2 cents for every $10 in sales

• City sales tax increase Preserve Commission says is needed to cover costs of purchases in expanded boundary: 4 cents for every $10 in sales

• Amount of sales tax hike City Council members have said they would consider for the preserve: 2.5 cents for every $10 in sales

• Average annual per capita cost of a bond program backed by property tax to pay for completing the preserve: $49, or an average of about $107 per household per year

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