Scottsdale budget proposes 2% hike in primary property tax

Scottsdale property owners would see a 2 percent hike in the city's primary property tax, under a budget proposal for 2011-12 released earlier this week.

The hike would come on the heels of a similar increase imposed by the council last year and now in effect as part of the current year's budget.

Leaner Scottsdale budget calls for staffing, service cuts


On Thursday, members of the City Council and Budget Review Commission got their first look at the 2011-12 budget covering the upcoming period from July 1 to June 30. The budget also calls for potential service cuts and other possible new fees.

General fund revenue is projected at $236.1 million, which covers basic services such as police and public works.

To help make ends meet, city officials have proposed an increase in the primary property tax levy at the maximum 2 percent allowed by law, which some council members oppose. More than half of Arizona's municipalities levy a primary property tax.

The tax goes toward the city's general fund to cover most operations, unlike special property taxes approved by voters that are dedicated to specific purposes such as bonds for capital projects.

The City Council ultimately decides whether to raise the primary property tax for the next fiscal year.

Last year, the City Council agreed to raise the property tax levy by 2 percent in this year's budget, bumping up the annual tax by nearly $2 for every $100,000 of a home's assessed value.

By law, the primary tax levy is limited to an increase of 2 percent over the previous year's maximum allowable primary levy.

At Thursday's meeting, Vice Mayor Bob Littlefield said voters in the fall election shot down a "benign" bond election that would have raised property taxes.

"I think it is clear what they want us to do is not increase taxes and fees but cut spending," Littlefield said.

In a possible hit to revenue, City Treasurer David Smith said the lag in state-income tax revenue and new census data this month could put a dent in state-shared revenue. State-shared sales taxes and urban revenue sharing, which is a percentage of the proceeds from state income taxes two years ago, are based on population, he said.

Scottsdale's growth in the past decade has been slower than some other cities and towns. That means its percentage of the overall revenues could shrink, he said.

"We expect Scottsdale's share will be modestly less than it was 10 years ago," Smith said.

Another potentially controversial topic is the ongoing use of "enterprise revenue," which includes money generated from water and wastewater fees.

Instead of phasing out the use of that revenue in the general fund, city officials have proposed a $5 million "enterprise rate stabilization." The debate lies in the source of the money, which some elected officials said is a separate tax and should not be used to subsidize the general fund.

City Manager David Richert pointed out that the subsidy is "nothing new." The city has been relying on it for some time, he said.

"The question is, how do we wean ourselves off of it?" Richert said.

Opposed to the continual use of the revenue, Mayor Jim Lane said, "If we decide we're not going to accept the $5 million out of water-resource funds, we need an answer as to how that's effectively going to be covered."

On the spending side, a $28.4 million projected shortfall in next year's budget forced budget officials to trim millions of dollars in city services, programs and personnel costs, which includes possible elimination of 94 jobs. Many of those already are vacant, Richert said.

Council members and commissioners had diverse reactions to the budget plan during Thursday's review.

Some of the more controversial cuts could close Palomino Library to the public, slash hours at the Granite Reef and Via Linda senior centers, and shutter the Loloma transit station.

Littlefield, who has previously opposed closing the library to residents, requested a rundown of budget savings for each proposal.

"As you know, some of those items are not going to sit well with some of us," Littlefield said. "We need to know how much you were counting on that to provide in savings."

by Beth Duckett The Arizona Republic Mar. 4, 2011 03:13 PM




Scottsdale budget proposes 2% hike in primary property tax