A unified group of six Mesa City Council members voted to approve a controversial new utility ordinance as Mayor John Giles triumphed over Councilman Jeremy Whittaker, who cast the lone dissenting vote.
But the matter is far from settled and the next round may figure prominently in the upcoming mayoral and city council elections this fall.
Whittaker is considering a mayoral bid, at least two of his allies running for office and Whittaker is pursuing an effort to charter amendment on the ballot that Giles considers too drastic.
Giles is seeking another term and Vice Mayor Mark Freeman and council member Francisco Heredia, also are running for re-election. Julie Spilsbury, a supporter of Giles, is challenging Whittaker in his district if he runs for council rather than mayor.
For now, the new ordinance is slated to take effect on July 1. It creates a 30 percent discount on water rates for low-income seniors and addresses the age-old question of how Mesa uses utility revenues from its Enterprise Fund to pay for public safety and other city services.
Mesa is one of the largest cities in the country that does not have a property tax and voters also repealed a food tax.
Utility revenues are used as a substitute for the property tax, with capital improvements handled through bond issues made possible by the secondary property tax.
Whittaker argues that Mesa’s utilities are too expensive and opposed Giles new ordinance.
He contends it does nothing to lower water rates and actually increases transfers from the Enterprise Fund, despite the city’s statements to the contrary.
Giles argues the water rates are only marginally higher than other cities and that the historical transfer from the Enterprise Fund to the General Fund, to pay mostly for public safety, is essential to compensate for the lack of a property tax – which has been repeatedly rejected by Mesa voters.
The new ordinance sets the yearly transfer at 25 percent for public safety and also authorizes an additional 5 percent transfer for other city purposes. Mesa’s utilities will pay another 4 percent in franchise fees to the General Fund.
A Utility Assistance Fund also will grow to $125,000 from $100,000 and utilities cannot be shut off during heat warning days, under the approved measure.
For Whittaker, that’s way too much reliance on utility revenues. He noted it adds up to a 33 percent transfer while a 2005 city council study recommended a cap of 17 percent.
“We have the highest water rates in the Valley,’’ Whittaker said, arguing that utility customers should not be burdened with supporting other city services.
“You can’t extract 34 percent of the revenues from our utility system. It’s reckless, destructive and will inevitably bankrupt our utilities,’’ he said. “It increases the transfer. It does nothing to make utilities more affordable.’’
By contrast, Whittaker’s charter initiative would cap transfers from the Enterprise Fund at 20 percent.
Councilwoman Jen Duff, alluding to Whittaker’s Yes on Affordable Utilities campaign, said the city cannot cut up to $50 million in spending without cutting public safety, which amounts to about 70 percent of the total city budget.
“Our enterprise system was built to support our budget,’’ Duff said. “There is no way that anything less than what we do now will not impact public safety. I think this is critical, in this ordinance, that we secure these funds for public safety.’’
Councilman Kevin Thompson criticized the new ordinance but voting for it anyway as a better option than Whittaker’s initiative.
Thompson cited the uncertainty ahead in city revenue reductions from the COVID-19 outbreak, including the cancelation of the Cactus League and the decline in business in the virus’ wake.
“I think anytime we start playing games with our budget, it’s bad public policy,’’ he said. “However, faced with the alternative, I will be supporting this ordinance.’’
Tyler Montague, a longtime Mesa resident, said the higher water rate is still better than a property tax. He said he likes the city spelling out the use of city revenues.
“The alternative plan would be devastating to public safety,’’ he said. “In this present environment, which is unprecedented in my lifetime, I cannot think of a worse idea than cutting our first responders. I think that would be a terrible idea.’’
Mike Hughes, CEO of A New Leaf, and Sally Harrison, president/CEO of the Mesa Chamber of Commerce, also spoke in favor of the ordinance.
Montague and Giles both said Whittaker’s proposal would undermine the public’s vote for a small sales tax increase to increase funding for the hiring of police and firefighters.
“You could not insulate public safety from impacts. That would more than undue the vote to approve the sales tax, to add money to our public safety departments, not take money away,’’ Giles said.