The Town Council has directed staff to move forward with proposed revenue-generating measures aimed at keeping town finances out of the red.

At an April 18 special session the council voted 5-2 to move a sales tax increase, and also voted 6-1 to implement a public safety fee.

The sales tax proposal would increase the local tax rate .3 percent from 2.6 percent to 2.9. It would increase the overall rate from 8.9 percent to 9.2. Staff estimates that increase would generate an additional $1 million per year.

Vice Mayor Art Tolis and Councilman David Spelich were the no votes on the sales tax plan. Tolis called the increase a “bad idea.”

“There are a lot of [commercial] vacancies in town and the mom and pop operations are struggling,” Tolis said. “We need to do all we can to encourage people to shop locally.”

Spelich said he believes the town should focus its efforts on collecting money it is already owed before increasing taxes.

The council vote to implement a public safety fee would ask parcel owners to pay $185 per year for law enforcement and fire and emergency medical services.

Based on 15,600 parcels the $185 fee would generate up to $2.9 million annually for those services. The town has no means to enforce delinquent payment on this fee so the amount would depend on collection rate. The town’s current $36 annual environmental fee has a collection rate of about 90 percent.

The vote to move forward on the public safety fee also suspends the environmental fee and it provides for a hardship clause.

It was a resident, Michelle Webb, who stepped up to the podium and suggested the town set a public safety fee at $1 per day, or $365 annually.

Webb said all citizens depend on the public safety services and the $1 is cheap.

Councilman Mike Scharnow suggested 50 cents a day instead.

Councilman Alan Magazine agreed.

“I can’t support $365 but I can support half of that.”

“I understand the affordability of $1 a day,” Councilwoman Sherry Leckrone said. “But this is a big jump, and much more than proposed.”

The motion to approve the $185 annual fee was approved 6-1 with Spelich opposing. He told The Times he did not necessarily oppose the fee, it is very similar to one he proposed for infrastructure and maintenance earlier this year. However, he was looking for a sunset time in which the fee would expire, and he could not get that included in the motion.

Both Spelich and Tolis urged staff to do serious research concerning a community police department rather than contracting with the Maricopa County Sheriff’s Office. MCSO’s annual contract increases are primarily due to issues with the state’s Public Safety Pension Plan and are expected to be as much as 10 percent up to 20 years into the future, according to Miller.

“I want staff to come up with a very thorough plan for our own police department,” Tolis said. “In the future, we are going to have to do this.”

Spelich said there are a lot of talented retired law enforcement people living in Fountain Hills and he urged staff to tap their expertise in helping come up with a plan.

The council action last week allows for a 60-day notice period before the sales tax increase can officially be enacted. The proposal will come back for a final vote and public hearing at the council’s June 18 session. It would take effect in September, Miller said.

Along with approval of the public safety fee the council voted to allow for a hardship application for low income residents. Miller said Salt River Project has a good program and he would accept an SRP bill as an indication of hardship. Exactly how the hardship is determined will need to be worked out.

The town will plan to begin collecting the public safety fee in January, when the environmental fee was collected.

None of these new revenues collected within the next fiscal year can be spent during that year because it will not have been budgeted. Staff is proposing that the funds be placed initially in the Capital Improvement Fund to give that balance a boost.