Gilbert council considers hiking tax rates - East Valley Tribune: News

Gilbert council considers hiking tax rates

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Posted: Saturday, May 30, 2009 6:11 pm | Updated: 2:51 am, Sat Oct 8, 2011.

The Gilbert Town Council could vote Tuesday to raise the sales, rental and use tax rates in order to bring in more money, and the town's 1,200 employees probably will not be furloughed during the upcoming fiscal year.

That was the general consensus among council members after a budget study session held Saturday. The fates of about 20 full- and part-time employees, who could be laid off, as well as the future of many recreational programs, also still hang in the balance after Saturday's session, when town leaders facing a June 30 deadline for closing a $14.7 million shortfall in the 2009-10 budget were able to come to consensus on a few points but didn't come close to closing the whole gap.

No formal votes could be taken during the meeting, but the council agreed in principle to take $5.5 million out of the town's vehicle replacement fund as a one-time measure to balance the budget, and to pull the funding for 14 vacant positions, which saves almost $750,000.

But that leaves about $8 million that still needs to be cut or made up for in some way next year, and the town is projecting similar deficits for the next five years.

"This is not a one-time problem, this is something we'll be dealing with for the next several years," said Councilwoman Joan Krueger, who will actually leave office June 16 after losing her seat in this month's elections. Mayor Steve Berman and Councilman Don Skousen's terms are also ending, making way for three new members who will probably not be making any major budget decisions but will be adopting the final budget as one of their first acts.

Everyone currently on the council except Berman supported a debate and possible vote Tuesday night on whether to raise the town's 1.5 percent sales tax and to revisit two tax proposals considered and rejected by the council within the last year: imposing a use tax on materials purchased outside of Gilbert but used within the town and removing an exemption from the 1.5 percent rental tax for landlords who rent out just one residence in Gilbert.

Based on current retail sales figures, a quarter-cent sales tax proposed by Town Councilwoman Linda Abbott would raise about $7.25 million, according to figures provided by town staff.

The use tax, already levied by most other East Valley cities, gained new interest from the council Saturday after Town Manager George Pettit said one possible source had been overlooked: the fuel that generates Salt River Project's Santan Generating Station at Val Vista Drive and Warner Road. As a result, the estimate on how much money a use tax would bring in has jumped from $500,000 to $2.3 million.

Councilman Les Presmyk, a longtime SRP employee, said he had not been aware at the time of the September vote that the utility would be subject to a use tax.

Abbott said she was "frustrated" that staff hadn't done enough research at the time to know this information, and chalked that up in part to a smaller financial staff.

Other options available to the council include raising sales tax on certain kinds of businesses, such as restaurants or hotels. If the council does approve some kind of sales tax increase, it will have to decide whether that money will go strictly to public safety operations as Abbott proposed, and whether other funding should then be diverted to other services.

On Tuesday, the Town Council also will review exactly how much it costs to provide youth sports, special needs and other recreational programs facing elimination under Pettit's plan, with an eye toward keeping them going if the public is willing to pay more.

According to figures presented Saturday, user and rental fees cover about 56 percent of the cost of operating the town's four recreational centers and 38 percent at Gilbert's five public pools, though the number varies widely among facilities.

Pettit's proposed budget for the fiscal year beginning July 1, released a month ago under the assumption no taxes would be raised, recommended the layoffs and having all remaining employees take 12 unpaid days off.

These furloughs would have saved the town about $3 million. Pettit has said that the idea of a furlough was preferable to most employees over an across-the-board salary cut, but Berman said he would rather see the pay cuts, noting there have been market-based and/or market raises available to them for most of the last decade.

Fire Chief Collin DeWitt has said the furloughs could end up taking two to three trucks, each of which has a crew of four, out of service.

At 1.03 officers per thousand residents, Gilbert also has a lower police presence per capita in the East Valley, and police Chief Tim Dorn said between patrol and training, his officers would be spread very thin if the furloughs were imposed.

Pettit also recommended eliminating the town's participation in special events, saving about $583,000. The fireworks for the upcoming Fourth of July display at Mesquite High School have already been ordered, so that show is expected to go on. Berman and Krueger weren't able to get enough support Saturday for cutting all funding, but the town's new Special Events Task Force for reviewing how much is spent for each occasion will probably have much less money to work with next year.

The council is trying to balance annual operating costs of $117 million for the current level of services versus the $103 million that officials project the town will take in from local sales tax, state-shared income tax and other funding sources. Nearly two-thirds of that money, as well as two-thirds of town employees, are devoted to police, fire and other public safety services.

Several recent council meetings have been consumed with debate by residents either for or against a sales tax increase, but only one member of the public spoke on Saturday. Anita Christy said she opposes any tax increase, no matter how small, as an owner of two small businesses who has watched many of the town's residents struggle during the current recession.

"They have a revenue problem. You don't have a revenue problem, you have a spending problem," she told the council, adding that they would be considered "heroes" if they balanced the budget with spending cuts instead of tax hikes.

Tuesday's meeting will begin 7 p.m. in the council chambers of Gilbert Municipal Center, 50 E. Civic Center Drive. The council is already scheduled to vote on several other budget-related issues that night:

Whether to adopt rate increases of 6 percent for wastewater and 6.6 percent for the purchase of treated water from the town's sewer plants. Two water rate increase plans will also be under consideration: a straight 6 percent increase and a structure, which would place the burden of the increases on high-volume users. The higher rates would take effect July 5.

Whether to set the secondary property tax rate at $1.15 per $100 of assessed valuation, the same as the current fiscal year. This money can only be used to pay off bonds for brick-and-mortar projects.

On Saturday, the Town Council also held a closed-door session for legal advice on a possible appeal of a recent Superior Court decision against the town in its battle to condemn land owned by county island resident Leni Cazden to widen Higley Road south of Williams Field Road.

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