Gilbert council rescinds tax increases - East Valley Tribune: News

Gilbert council rescinds tax increases

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Posted: Tuesday, August 11, 2009 11:04 pm | Updated: 2:30 am, Sat Oct 8, 2011.

The Gilbert Town Council voted unanimously Tuesday night to rescind three tax increases that were adopted June 30 to close a $8 million budget shortfall.

The Gilbert Town Council voted unanimously Tuesday night to rescind three tax increases that were adopted June 30 to close a $8 million budget shortfall.

The decision threw the future of many town projects and departments into doubt and the scheduled adoption of the town’s final budget was postponed for another two weeks, to the Aug. 25 meeting.

The vote came after about an hour of public testimony during which more than 30 people said — either by speaking or on a card — that they wanted the taxes to be rescinded. Three people spoke in favor of keeping the tax increases as enacted.

“This isn’t time to raise taxes on your citizens,” said Kevin Ross, the leader of the effort to put the taxes to a public vote. “They’re speaking so loud, you’d have to be deaf to not hear that.”

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Councilwoman Linda Abbott, who proposed the quarter-cent sales tax increase that created the most controversy among residents, made the motion to rescind the tax measures and the rest of the council followed suit.

Councilman Les Presmyk said that state law formerly barred Gilbert from taking a tax to the voters before enacting it. “At one time we clearly thought we could not take these issues to you (voters) and a number of years ago that was the case but the law was changed,” he said.

The three rescinded taxes are:   

• A quarter-cent sales tax increase, which boosted the town’s rate from 1.5 percent to 1.75 percent. Instead of having the same municipal rate as Chandler, Gilbert’s would be higher than its neighbor to the west and identical to Mesa’s. Town officials projected the increase would bring in about $7.3 million annually.

• A 1 percent use tax, which the town would collect on items used in Gilbert but purchased in another jurisdiction — county, city or state — that has a lower tax rate than Gilbert. It was expected to have the biggest impact on Salt River Project and local school districts, and generate more than $2 million per year. Forty-four Arizona cities, as well as the state itself, currently have a use tax.  

• The lifting of an exemption from the town’s rental tax for property owners who lease three or fewer residential properties within the town. The exemption is an option under the Model Tax Code of the Arizona League of Cities and Towns, and was intended to give a break to small-scale landlords renting to family members.

The council enacted the three taxes by a 5-2 vote June 30. The taxes are to take effect Sept. 1 and expire after two and a half years.

Three separate petitions to refer the measures to the ballot were turned in July 30, each containing around 2,400 signatures. According to the Town Clerk’s office 1,797 valid signatures are necessary to qualify the measures for a referendum election.

About 15 residents who spoke said they did not support the tax increases because they would create additional hardship for during the current recession, and that the town should concentrate on cutting costs by eliminating what they considered nonessential services, generally anything that did not relate to public safety, streets or utilities.

“I haven’t met any people who were great because of a government program, but I have met a lot of people who are great because of their families,” Gilbert resident Michelle Peterson said.

Denna Ray, one of the organizers of this summer’s anti-tax TEA Parties which attracted thousands to Gilbert Town Hall, presented the council members with “The 5,000-Year Leap,” a book often recommended by TV and radio talk show host Glenn Beck. A banner referring to the TEA Parties was unfurled in the back of the council chambers during the testimony.

Tami Smull spoke in support of the tax increases and said the populace had seemed more evenly divided on the subject during the initial public debate back in May.

“I don’t understand what’s happening here,” she said, adding that she was concerned about what would happen if the taxes were rescinded.

Abbott proposed the sales tax hike in response to Town Manager George Pettit’s initial budget proposal, which cut about $6.5 million in expenses through layoffs and across-the-board furloughs which raised concerns about police and fire response times. Most recreational programs were also cut.

A one-time transfer from the town’s vehicle replacement fund of $5.5 million closed the rest of the budget gap.

With the town’s financial situation and the state budget battle still unresolved, Pettit said he would present the council with the size of the town’s current shortfall at the Aug. 25 meeting.

The council vote could change the role of the citizen budget committee, which will spend two months this fall going through the town’s finances to recommend additional budget cuts, or possibly propose tax increases which would then go to a public vote.

Because the taxes were rescinded, the council will likely have to make significant budget cuts for this fiscal year, which began July 1, leaving the committee to suggest additional cuts.

The council made several other budget decisions Tuesday, voted 4-3 to not spend $5,000 on a fireworks display for the annual So Long To Summerfest event, to be held Sept. 12 at Freestone Park, and also reviewed council reimbursement policies.

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