Safford looks to rescind half-cent sales tax sunset clause
By Jon Johnson
SAFFORD – American economist Milton Friedman used to say, “nothing is so permanent as a temporary government measure.” As that relates to the Safford City Council, it appears that nothing is so permanent as a temporary tax increase.
Finance Officer Alma Flores gave a presentation to the council at its Monday night meeting regarding the “sunset clause” of the city’s half-cent sales tax and implored the council rescind it. The sunset clause states the tax, which was enacted by council decree in November 2005, would end in 2025.
According to Flores, the tax currently generates a little more than $1 million per year in revenue with an average growth rate between 2 and 3 percent and makes up nearly 40 percent of the city’s total operating costs regarding its streets. Other revenue includes Highway User Revenue Fund (HURF), automobile taxes, grants and street patch funds.
The tax was initially passed to pay bonds taken out for a 12-phase streets renewal program that redid numerous streets throughout the city over a five-year timespan, including 8th Avenue. The measure increased Safford’s city tax from 2 percent to 2.5 percent. However, according to Flores, the bonds won’t be paid off until fiscal year 2030/31 and not rescinding the end date would be disastrous to the city.
“We know and realize that that debt is our responsibility and we need to pay it off,” Flores said.
Later, that realization prompted a response from Safford Mayor Jason Kouts.
“Basically, don’t run your house budget like the city runs theirs (sic),” he said.
Due to having to budget to pay the bonds, Flores reported that if the sunset clause was not rescinded the city would begin to have a deficit in its street’s department starting in fiscal year 2018/19 and much-needed street work, including 14th Avenue, would not be possible to fund. She added that if the sunset clause was not rescinded, by 2031 the city would have nearly an $8.2 million deficit in its street’s department. Conversely, she said if the city ended the clause and adjusted its capital projects, it would have a more than $700,000 surplus the next year and would end up with a nearly $300,000 surplus by 2031 while completing all the necessary projects.
While a majority of the council appeared to support extending the tax indefinitely, Kouts said he would rather honor the spirit of which the original council members who voted on it in 2005 had in mind by keeping it and letting the residents vote on a sales tax measure.
“I do think that all sales tax increases should go before a vote anyway,” he said.
However, in 2005 the council had the same conundrum and decided to enact it themselves instead of having a special election or waiting for a regular election. At that time, current Graham County Supervisor Danny Smith and former Safford City Councilor Ed Ragland both expressed their desire for the council to handle it.
“I’m not willing to hold an election every time a tough decision comes,” Ragland said in an August 2005 council meeting.
Ragland was at the Monday night meeting and spoke in behalf of rescinding the sunset clause.
“I think it’s great,” he said. “I think it’s one of the least painful increases or rates that your citizens are going to see.”
Ragland went on to add that a sales tax helps spread the burden of the city’s infrastructure around besides just the residents of the city because anyone who purchases goods at any store in the city helps pay. He also added that the rate has been the same for 10 years and people are used to paying it.
In addition to Ragland, Safford retail business owner John Howard also spoke in favor of continuing the tax.
At the end of the meeting, Safford City Manager Horatio Skeete asked for and received direction to bring back a resolution to the council for a vote to rescind the sunset clause. While Vice Mayor Richard Ortega and councilors Gene Seale and Steve McGaughey voiced their opinion in favor of rescinding the clause, and Councilor Arnold Lopez appeared to be in favor as well. Mayor Kouts expressed his opposition and councilors Chris Taylor and Michael Andazola Sr. played their intentions close to the vest and did not express how they would vote. Still, it would appear that unless something drastic changes, the council would likely rescind the sunset clause when the resolution appears on its agenda.