What a difference six weeks and more than 6,000 signatures make. The Gilbert Town Council voted 7-0 Tuesday night to rescind three tax hikes that the same council approved on a 5-2 vote June 30. The reversal came as the city was faced with a voter referendum drive that seemed certain to at least put tax collections on hold.
What a difference six weeks and more than 6,000 signatures make.
The Gilbert Town Council voted 7-0 Tuesday night to rescind three tax hikes that the same council approved on a 5-2 vote June 30. The reversal came as the city was faced with a voter referendum drive that seemed certain to at least put tax collections on hold as the matter went either to the polls or through a court battle over their legality.
But there still could be a tax election as early as next May, depending on what comes out of the Citizens Budget Committee the council is setting up in order to get recommendations on how to close anticipated budget shortfalls of around $15 million over the next few years.
Mayor John Lewis, who voted against two of the three tax increases when the council approved them in June, said Thursday the town holding a special election on a tax increase would be a better outcome than allowing the referendum effort to proceed, likely at a March special election.
“The Town Council needs to be the leadership on this, and not necessarily leave it to the referendum vote,” he said.
The council must first attack shorter-term concerns for the current fiscal year, which began July 1. The council let approximately $10 million go when it rescinded the quarter-cent sales tax increase and 1 percent use tax and rental tax on small-scale residential landlords it had previously approved.
This would have gone into the general fund, which pays for most daily operations and salaries. Five and a half million dollars is being transferred from a vehicle replacement fund into the general fund for this fiscal year, a one-time hole-plugging maneuver which can’t be repeated next year.
Town Manager George Pettit said Wednesday this leaves the general fund about $4.5 million short, the gap about $2 million smaller than projected this spring due to budget cuts, fee increases and stronger-than-expected building permit numbers as the entire East Valley struggles to recover from the longest recession since World War II.
Pettit is still cautious about the long-term outlook, though. “Two months does not mean a recovery,” he said.
Town Councilman Les Presmyk said the general fund budget includes about $3.1 million set aside for equipment or construction projects, which the town may be able to delay, depending on the circumstances.
Large-scale construction projects such as roads and buildings are generally funded by bonds, state-shared gas tax money or other restricted sources, which make up most of the town’s overall $734 million budget. But this comparatively small segment of the $114.5 million general fund could make a big difference, Presmyk said.
“I think we’ll be able to get through this year,” he said. `
The council has twice postponed adoption of a final budget for the 2009-10 fiscal year, and the vote is now planned for Aug. 25, though under state law Gilbert has no requirement to do so, because it does not have a primary property tax.
This comes as a surprise to current or former Town Council members who say they’d always thought their final budget had to be adopted by July 31. “I was mayor for 10 years and I never heard that,” former Mayor Steve Berman said Wednesday.
Current Councilman Steve Urie said he thinks the council may be relying too much on Pettit and other town staffers to provide crucial information and need to take a more active role.
“We’ll be taking a closer look and checking our facts this time,” he said.
Town Attorney Susan Goodwin told the council this spring that the sales taxes would not be subject to voter referendum under the state constitution. The vote to rescind the taxes followed a closed session held Aug. 6 to get updated legal advice.
Presmyk said the message the council essentially got during the meeting was “we wouldn’t have gotten the taxes anyway,” with the town probably barred from collecting them while the town either held an election or fought with the petitioners in court over their legality.
The town’s general plan committee has until November 2011 to get a new land-use map to a public vote, but the Citizen’s Budget Committee will likely get just two months to get in-depth knowledge about what the town does and how much it costs, then make recommendations on how to reduce the town’s costs or otherwise balance the budget shortfall.
The committee could end up recommending a tax increase should be part or all of the solution, and send the matter to voters in any case. It would cost around $200,000 to hold a special election, Town Clerk Cathy Templeton said.
But Kevin Ross, who with Jan Hibbard led the drive which gathered around 2,400 voter signatures on each of three petitions circulated to put the tax increases on the ballot, said the voter feedback through the petitions and Town Council meeting testimony should prove tax increases are “off the table.”
“I have a real hard time believing they would do something like that,” Ross said.
As of Thursday morning about 80 people had applied for one of the 56 spots on the committee, Templeton said. Applications are being taken through Saturday, and the first committee meeting will be held Sept. 17.
When the tax increases were first proposed, Pettit had proposed a 2009-10 budget which laid off about 20 employees, cut most recreational programs and contained across-the-board furloughs that raised concerns about police and fire response times.
The Gilbert electorate appeared more evenly split over the sales tax hikes when they were first proposed, but the tide turned as the petition drive gained steam and concern in the town’s historically conservative voters about spending at all levels of government grew.
Ross, a former Maricopa County assessor who was convicted of violating conflict-of-interest laws but had the convictions overturned, said the fight in Gilbert is part of a broader movement.
“This is the first shot over the bow for the governor’s tax increase,” he said.