The Town Council will follow up its discussion on budget revenue options with a special meeting called for Thursday, April 18, at 6 p.m.

The session is set for the council chambers at Town Hall.

Following a lengthy discussion on March 26, town staff has gathered additional information for the council to consider in coming to a decision. Questions raised at that meeting that required a legal opinion will be discussed in a closed executive session prior to the April 18 special meeting.

A majority of the council has expressed an interest in considering an increase in the town’s local sales tax. Currently the local sales tax is 2.6 percent, and when added with state and county sales tax the total in Fountain Hills is 8.9 percent.

While the council may decide to pursue the increase, as there are notification deadlines, the amount will not likely be decided until the new budget is finalized in June. Staff has indicated that an additional .3 percent, increasing the local tax to 2.9 percent, is expected to generate just over $1 million in revenue. A couple of council members have indicated they would support a full .4 percent to a 3 percent total. That would bring the total sales tax in town to 9.3 percent.

The impact of Proposition 126, approved by voters in 2018, also needs to be evaluated with regard to sales tax.

Staff is also proposing an increase in the existing Environmental Fee implemented a few years ago. That fee is $3 per month paid annually at $36. The town had 15,192 parcels in the community invoiced last year and received 13,673 payments (about 90 percent collection) for $492,228 in revenue.

Actual Environmental Fund expenses for the 19-20 fiscal year were $854,145, nearly twice what was collected. Staff reports that a fee of $62.50 per year ($5.20 per month) would be needed to cover the total costs. The increase in fee may also result in reduced collections.

The Environmental Fee pays for storm clean-up, street sweeping, drainage improvements and repairs, permits and fees for state and federal agencies and similar costs the town incurs.

Staff is also proposing an adjustment to the distribution of the Vehicle License Tax that is collected by the state. Currently all the VLT funds received by the town are designated for pavement management.

The proposal is to split the VLT with 70 percent continuing in the Street Fund and 30 percent going into the General Fund.

Staff estimates these collections for the 19-20 fiscal year will be approximately $1.1 million. The allocation change would contribute an additional $331,000 to the General Fund, which staff has already projected.

Another recommended enhancement would be for the town to implement a Solid Waste Administration Fee. This would add $1 per month to the quarterly invoice customers receive from Republic Services ($3 per billing).

With approximately 9,000 residential accounts this would raise about $108,000 per year.

With seasonal residents suspending service while they are away this would result in somewhat less than the projected $108,000.

Also on the table for council consideration is an infrastructure-maintenance fee proposed by Councilman David Spelich.

The plan proposes an annual residential property fee to start at $350 and sunset after four years. The fee would also be reduced by $50 each year of the cycle.

A commercial fee would be set at $400 to begin, also reducing by $50 per year.

Based on data showing 11,699 residential units and 1,157 businesses, the fee would have the potential to raise more than $13.6 million over the four-year cycle.

The town would not have an effective collection enforcement mechanism likely resulting in a reduced total.

The town could also look at a Public Safety Fee to help recover increasing costs of law enforcement and fire and emergency medical services.

A fee of $100 annually would generate $1.2 million assuming 100 percent collection. If the town were to replace Rural/Metro with its own administration, costs are projected to increase by $450,000 a year.

The town could also consider franchise fees for EPCOR Water and Southwest Gas, which estimates state would generate approximately $200,000 annually.

Council would be ready to take possible action consistent with the results of a cost of service study currently underway. Proposed fee adjustments are unknown at this time.

Business license fees generated $133,000 in FY 17-18; rental fees collected totaled $141,000 for that same year; and charges for services were $164,456 during that previous fiscal year.

Staff suggests that any fee increases would not raise significant revenue when compared to the overall town budget.

The town has been approached about selling its cell tower leases and there is town-owned property that might be sold. These would generate one-time revenues.

The special session is open to the public, but public input opportunities for this session are uncertain. Public hearings will be scheduled for any definitive council action on these items.