Fountain Hills voters will get to decide whether the town can levy a new primary property tax with a question that will be on the ballot in May next year.

At its Nov. 21 regular session the council formalized a tentative decision it made last month to put the question to voters.

The vote was unanimous, although three council members were not there in person; two of them participated by telephone, making the tally 6-0. Councilman Dennis Brown was absent.

The council is asking voters to approve a primary property tax levy of $7 million per year. Election Day will be Tuesday, May 15, 2018. The proposal will be presented on an all-mail ballot with additional election process information to come closer to the vote. The practice by the county elections department has been to send mail ballots out 28 days prior to Election Day.

Primary property tax is based on the county assessor’s valuation of the property. That amount is usually about 80 to 85 percent of market value.

Each property in Fountain Hills is individually assessed by the county, and it is unlikely that any two properties would have identical assessments. For the purposes of estimating, however, and based on current valuation numbers, the proposed $7 million levy would cost a person with property valued at $500,000 approximately $760 per year in new taxes.

The town will be releasing information to help property owners determine how the tax would impact their individual property.

Why needed

Town Manager Grady Miller said the decision to ask council to pursue the property tax is based on the fact that town revenues are not keeping pace with ordinary expenses.

The town’s General Fund revenue sources include local sales tax and state shared revenues, which include a portion of state sales taxes, vehicle licensing fees and Highway User Revenue Funds (HURF).

With the town’s population stabilizing, it is losing ground to other growing communities in regards to its portion of the state shared revenues. The faster other communities in the Valley and state grow, the smaller portion of the pie the Town of Fountain Hills will receive.

Add to that the fact that, during the recession, the State Legislature swept up money from the HURF and reallocated it to other needs in the state budget. That has left the town in an indigent state when it comes to maintaining its streets.

Voters approved an $8 million general obligation bond for rebuilding Saguaro Boulevard but adequate routine annual maintenance on streets has become impossible due to lack of funding. Currently, it would take $2-$4 million annually to provide proper upkeep on the town’s pavement.

While that is a big part of the $7 million the town is asking for with the primary property tax, it is only part of the story. Currently public safety contracts for law enforcement (Maricopa County Sheriff’s Office) and emergency fire and medical services (Rural/Metro Corp) account for more than half of the town’s annual General Fund budget – about $7 million annually. Those contracts include automatic annual increases of three to five percent, something staff does not find unreasonable.

Town Finance Director Craig Rudolphy told the council that major expense drivers for the town include the three items previously discussed, pavement management – maintenance and replacement, and the two public safety contracts. He also said the town needs to prepare with an annual contribution just under $1 million to reserve for facilities replacement projects. He is also figuring on costs for construction as well as manning and equipment for a third fire station within the next 10 years.

Other options

Councilman Art Tolis said that it has become clear in recent months that the public has no taste for developing the kind of regional public attraction in town that could generate revenues.

“I have decided this is the right path for addressing our revenue issues,” Tolis said.

He asked Miller what other options staff has evaluated when it comes to potential revenue.

Miller said staff had looked seriously at the option for a public safety fee, similar to what was implemented for environmental costs two years ago. He said state law only allows the town to collect the same amount from all property owners, meaning the owner of commercial property like Target pays the same amount as the owner of a small condominium.

He also said the experience with the environmental fee has been difficult to implement and the return is 85 to 90 percent.

Miller said staff also looked into re-formation of a fire district or community facilities district and found those to be costly to implement and they believe the CFD, in particular, could face a court challenge.

Councilman Cecil Yates said he took a particular interest in those options and found that they logistically made no sense for the town.

Miller also said they reviewed a possible sales tax increase and it would simply raise the rate too much in order to achieve the needed revenue.

Public comments made at the meeting by citizens were supportive and cautionary.

Jim Judge encouraged the council to vote to put the proposal on the ballot.

“No one wants to pay more taxes,” Judge said. “But if you want value, I can think of no better investment than our town.

“I paid taxes in the Midwest for many years, and I consider Arizona a bargain.”

Amberleigh Dabrowski struck a cautionary note to the council.

She said she is thankful to live in the community but has some concern about town expenditures.

She said the council needs to be certain of how it got where it is financially and assure that mistakes will not be repeated. She added they should make sure of transparency letting people know where the money comes from and where it goes, keeping residents fully informed.

The resolution passed by the council also sets additional dates of importance. The period for citizens or groups to submit arguments for or against the plan to be included in the publicity pamphlet is between Jan. 31 and Feb. 14, 2018. The deadline is 5 p.m. on Feb. 14.

The arguments are to be limited to 300 words and there is a cost of $100 per submittal to offset printing costs.

The written statements can be submitted electronically through the town website, fh.az.gov.

The last day to register to vote in this election will be Monday, April 16, 2018.