Tempe’s leaders clashed this week over a possible $40 million property tax increase to fund a laundry list of largely nonessential roads, parks and parking lots.
In an often personal and emotional debate Thursday night, City Council members argued for and against the tax by telling tales of humbler times when they, for instance, lived in a home with a dirt floor or spent a winter without heat.
A small tax increase would allow the city to pay for the top tier of citywide capital improvement projects over the next five years. The tax increase would be necessary to cover unexpected cost increases for some projects, city officials said.
But several council members want to fund a second-tier list by taking advantage of record surges in home values. By keeping the tax rate where it is, the city would get $40 million a year in extra money due to increased home values.
Other council members proposed cutting the tax rate in such a way that the city would receive a smaller revenue boost.
Among their arguments:
Mark Mitchell argued Tempeans live in the city for its many parks and other public facilities.
The city has the second-lowest property tax burden when compared with eight similarsized communities in the Valley, which Mitchell said is a sign that Tempe can afford to spend more.
Ben Arredondo spoke of his childhood home in Tempe that didn’t even have concrete floors, but said Tempeans now have higher standards.
Barb Carter said it would be negligent to let facilities deteriorate.
Mayor Hugh Hallman, on the other hand, said it’s his duty to run a fiscally responsible city.
“This is a great city not because of what we spend, but who we are,” Hallman said.
Vice Mayor Hut Hutson objected to a $40 million hike, citing a growing national debt, rising home foreclosures and other “dangerous” indicators not seen since the troubling financial times of the 1930s. The unfunded improvements aren’t essential when a recession could be looming, he said.
“I cannot raise your taxes another $40 million and then look for places to spend it,” Hutson said. “I’m not sure what you’re smoking, if you think the unfunded (list) isn’t a pie in the sky.”
The elected officials who wanted a lower rate — down from the current $1.40 — generally favored a rate of about $1.26, which would generate about $101 million in bonding capacity for the work. The city would add funds from a real estate sale and some sales tax revenue in order to spend about $136.3 million on capital projects, which include park improvements, police and fire equipment, and facilities and street maintenance.
Hutson, Hallman and Councilwoman Onnie Shekerjian supported taxes at about $1.26. That leaves a 3-3 split on the council, with one member still undecided.
Councilwoman Shana Ellis likely will cast the swing vote later this spring, but she wants more time to sort out the issues.
Shekerjian said she and her husband went without heat for some time when they first bought a home and were trying to make ends meet.
“I remember worrying, where am I going to get the money to pay taxes,” Shekerjian said.
Tax rate figures
The city’s tax rate is $1.40 per $100,000 of assessed valuation. But the average home value in Tempe rose 34 percent this year, which means taxes will be higher if the tax rate stays the same.
The tax bill on a $132,000 home — the average in Tempe in 2006 — would rise to $246.84 from $184.12.
For the tax bill to stay flat, the city would have to lower the rate to about $1.10 per $100,000 in assessed valuation.