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The Prescott Daily Courier | Prescott, Arizona

home : latest news : local December 17, 2014

6/26/2013 6:00:00 AM
Prescott raises its primary property tax for coming year
Cindy Barks
The Daily Courier

PRESCOTT - In a move that generated opposition from a handful of residents, the Prescott City Council agreed this week to its first significant primary property tax increase in decades.

By a 6-1 vote on Tuesday, the council agreed to add $410,148 to its primary property tax revenue in the coming fiscal year.

That move will bring the city's total primary property tax revenue to $1,518,465 million - a 37-percent increase from the current $1,095,856 - and will increase the primary property tax for a $100,000 home from $21.78 to $29.85.

But because the city also retired the bulk of its secondary property tax debt (for the 1998 purchase of Willow and Watson lakes) this year, Prescott's overall primary/secondary property tax will go down. Estimates have the city primary/secondary total for a $100,000 house dropping from $48.32 for the current year to $31.09 for the coming year.

While council members have emphasized the overall property tax decrease, the explanation did not satisfy several local residents who spoke to the council prior to the Tuesday's vote.

"One of the reasons my wife and I decided to move to Prescott was because it's a beautiful area, and the property tax was low," city resident Bill Berry said, urging the council to "take into consideration the feelings of the retirement community."

Others, including local businessman Steve Silvernale, objected to the level of the increase. "Where did the 37 percent come from?" Silvernale asked.

A city memo explained that the proposed increase "is comprised of $160,022 from a reduction in (the past year's) levy, and $262,587 from new construction..."

City Budget and Finance Director Mark Woodfill said the calculations for increases are set by state law.

While noting that "37 percent is a lot," Mayor Marlin Kuykendall said, "It's a lot because our base is so low."

Kuykendall added that Prescott had traditionally kept its property tax low, because it was able to make up the difference through healthy sales tax revenues. "We were the shopping center of Northern Arizona," Kuykendall said. "The whole area was spending money in our town, and our property tax was almost zero. Now, there's competition all over the place."

Councilman Chris Kuknyo said the tax increase was necessary to ensure that the city can continue to provide the desired level of service.

"What it comes down is - what service levels do we want to have?" Councilman Chris Kuknyo said. "I think we have to have this increase and secure Prescott in the future and make those hard decisions."

Councilman Charlie Arnold cast the sole vote against the tax increase. After the meeting, he said, "I have a personal belief that raising taxes isn't the solution to spending problems."

Throughout months of consideration of the 2013-14 budget, city officials have pointed out that operational costs have been rising, while revenue sources have been eroded.

For instance, City Manager Craig McConnell said the Arizona State Legislature's recent approval of House Bill 2111 could cause the city to lose as much as $1 million per year in sales tax, after the measure goes into effect on Jan. 1, 2015.

The bill makes a number of changes in the way sales taxes are collected, including the tax on construction.

Arizona State Rep. Karen Fann explained earlier Tuesday that although the state originally considered changing the way prime contractors pay their sales tax, she said the bill evolved through months of consideration.

The bill that was approved earlier this month by the legislature leaves sales tax for prime contractors as it is, Fann said, but changes the taxing method for construction "service contracts" (including replacement, repair, and maintenance) from 65-percent of the entire job, to a "point-of-sale" tax.

Fann predicted that Prescott's financial impacts would be lower than the city is estimating. "I don't think Prescott is going to get that much (of an impact)," she said.

But Deputy City Manager Alison Zelms said after the council meeting that determining which projects are considered "service contracts" is still up for interpretation.

"The question mark is whether the project qualifies as a service, or whether it counts as prime contracting," Zelms said.

She added that 47 percent of Prescott's construction already is service-related. If the materials for those projects are purchased outside of city limits, she said, the city would not get the sales tax revenue from the project.

After voting on the tax increase, the council unanimously approved the final 2013-14 budget. The budget year begins on July 1.

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Reader Comments

Posted: Thursday, June 27, 2013
Article comment by: Long Time Employees Need Raises

Most City employee's haven't had a raise of any sort, including cost of living in 5 years. In fact take home pay has decreased, thanks to Obama. Yet new employees are hired on at the same step in the pay scale as employees that have worked in positions as long as ten years. On top of that, the new employee often has to be trained by the very employee that had to work ten hard years for the same salary the new person is starting at. And they wonder why morale is so poor. Want to be fair, here's an idea, Council. Give raises to the employees that haven't had a raise in 5 years. Don't give pay raises to employees that haven't worked for the City over 5 years. Don't give upper management raises either, they make more than enough money already.

Posted: Thursday, June 27, 2013
Article comment by: Boo Hiss

August is the time to rebel against the tax increase. Vote every incumbent out. Get these bozos off the council and give someone else the chance to hoodwink the public! Boo Hiss

Posted: Wednesday, June 26, 2013
Article comment by: Friend To City Employees

Lets remember like everyone else our City Employees bit the bullet and had no pay raise for 5 years. When we talk about city services we are talking about those that take care of our parks, roads, fire, police and the Regional dispatch center, including our water department. All of these sit in the background, what we pay for isn't just a golf course, or some crazy land purchase. The very heart of our community is in the hands of these fine workers. The city made them take the hit, now it's time to recognize that sacrifice. And before comments about plush benefits and retirements, it isn't true there is no big payoff, no plush benefits, most employees simple healthcare plans that require large input of cash if used, working in civil service is not a glory job. Remember also when the city pays its employees part of that money returns back to the city in form of sales tax and property tax. Keeping quality people is important to the success of this community.

Posted: Wednesday, June 26, 2013
Article comment by: Goes To Show You

That other towns economic development teams are taking it to Prescott. Apparently hanging your hat on tourism is not enough.

You use my money to buy land and lakes then have the gall to charge me a fee to use them.

We locals paid for them charge the user fees to all the tourists you bring up to raid the city every weekend.

Not a good decision Chris very disappointed you voted for this.

Posted: Wednesday, June 26, 2013
Article comment by: timmeah timmeah

Looks like we're weeding out the newcomers who don't want anything except cheap! If you don't like it here, please find somewhere else to bellow and stamp your little feet. I work and don't mind paying for streets, parks and an enjoyable place to live. Begone teabaggers!

Posted: Wednesday, June 26, 2013
Article comment by: Really Let's See !

Prescott has more retail shops today than in it's boom. Deals made with WalMart and others have expired so now they have that tax base coming in. So revenue is actually up, but when you have a bunch of Bozos on the council who don't know beans, it seems reasonable that their math is fuzzy!

Posted: Wednesday, June 26, 2013
Article comment by: Let's Face It

Government flacks (federal, state, local) raise taxes because they can. There is rarely any other thought process at work. And they all use some version of the same excuse every time they do it. Someone has to fund their benefits at the local golf course that loses money every year.

Posted: Wednesday, June 26, 2013
Article comment by: Glenn J. Gooding

Charlie Arnold has it right. Taxing is not the way to cure or curb spending problems. This council has approved spending on some of the most ridiculous things and seems to want to continue in the same direction.

We don't need to spend anymore on things like the "old clubhouse" or anything like it. Think before you spend. What is the benefit to the citizens of Prescott! That is who you are supposed to be representing, not special interest groups.

Posted: Wednesday, June 26, 2013
Article comment by: Easy Writer

Kudos to Charlie and a NO vote for the rest of the tax and spend "conservatives". I can only imagine what kind of spending scheme the Mayor will come up with next...another consulting contract? Expand the party house? You give these people more money and they WILL spend it - wisely or not.

Posted: Wednesday, June 26, 2013
Article comment by: Al Adab

Thanks to councilman Arnold. Even though the State is once again lowering the ability of the city to provide for its needs, this shell game tax increase is unwarranted. A tax that sunset ought to be allowed to rest in peace without some mirror image increase in another.

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