As expected, Mesa’s Financing the Future committee has recommended a tax double-whammy to head off a looming deficit. The group wants the City Council not only to create a municipal property tax but to raise the sales tax.
The committee came up with the recommendations after more than 18 months of fact-finding and deliberations. No doubt the final report was not drafted hastily or without considering Mesa’s conservative electorate.
Still, it’s a long shot to expect voters to take the one-two punch without protest. Even getting one of the two tax proposals approved could be very difficult.
The panel points out that Mesa faces a $24 million revenue shortfall by 2007-08, which will grow to a $78 million shortfall by 2010-11 under current expense and revenue projections. Committee member Eric Jackson told the City Council this week that the group "sought to establish a stable, reliable revenue source" — hence, the property tax proposal.
Bureaucrats love the property tax because it insulates government from economic downturns. Residents and businesses still have to pay their property taxes even if their income drops. But they can cut other spending, which makes sales tax revenues so sensitive to economic cycles.
This raises a question the Mesa council needs to answer before placing a property tax on the May 2006 ballot: Why should City Hall be spared the pain of economic downturns that most everyone else suffers?
Mesa voters in 1998 approved a half-cent sales-tax increase for public safety and "quality of life" amenities such as the Mesa Arts Center. A quarter-cent of that tax expires in July, and the committee recommends bumping it up by a half-cent at that time.
It’s a safe bet that Mesa voters would at least maintain current tax levels if it was necessary to preserve the level of municipal services they expect and enjoy. Thus, restoring the quarter-cent sales tax due to expire in July would pose the least difficult challenge, as long as city officials made the case that it’s needed.
Anything beyond that could be enormously difficult. At the very least, opponents would point to the escalating cost of the Mesa Arts Center in recent years as evidence that City Hall lacks fiscal discipline. Unless Mayor Keno Hawker and the council have some very convincing answers, voters won’t bite.