Half percent increase on retail, utilities and communications worries local business owners and residents
Last night the South Tucson city council voted 4-3 in passing a resolution to adopt a proposed budget which includes raising the sales tax on retail, utilities and communications by half of one percent. Council members Rita Rogers, Anita Romero and Acting Mayor Paul Diaz opposed the measure. The sales tax increase is estimated to bring approximately $140,000 in extra revenue to the city once implemented.
“It is absolutely business un-friendly,” Councilwoman Rogers said at last week’s public hearing on the increase, “We would win the trophy at 11.6 percent and I want you folks to know I think it is not right.” Rogers continued to oppose the measure this week and joins those concerned the increase will impact the city’s low-income residents, including the elderly.
“I have seen the statistics,” Soleste Lupu, co-founder and co-director of Dancing in the Streets Arizona, said in her plea for the elderly and other vulnerable residents, “I would ask you to think about the most vulnerable citizens … a school teacher does not have any kind of retirement or savings … in terms of businesses … why would a new business want to come here … these are your most vulnerable citizens … I hope none of you have to make the decisions between medicine and food.”
Council members in support of the increase see it as a stop-gap measure to avoid dipping into the city’s savings, which have increased year over year since the Great Recession, but mainly due to “one-time occurrences,” such as the 2017 sale of Sam Lena Library to the county.
Sales tax revenues sharply declined after the Great Recession but have recently held steady even with a number of businesses closing down or leaving the city, according to recent presentations given by Lourdes Aguirre, the city finance director.
Aguirre would like to see the current council lead the city to a more stable financial position from which it could do things like refinance a historical revenue-bond, but the city needs to meet requirements in order to do that, one being “improved fiscal management.” Lourdes estimated refinancing the bond could save the city upwards of $200,000 per year.
City Manager John Vidaurri said at last week’s meeting that the city ultimately needs to institute a secondary property tax in order to survive. “We will go to ballot and we will let the citizens decide,” Vidaurri said, ““This is a new city council … they’re trying to raise revenues … we’re not going to be able to do it without a revenue stream.”
Vidaurri was attacked by business owners at the July 8 public hearing for not following through on promises to meet and many called him “incompetent” even though he has only been on the job for four months. At that hearing, Vidaurri said the city may face disincorporation if it does not increase the sales tax and take other measures to become more financially soluble.
A secondary property tax was illegally implemented between 2011 and 2013 and the city and county are currently involved in litigation stemming from that property tax. But it appears a settlement is underway and the county will advance the city $1.1 million to pay the plaintiff’s and the city will pay back the county approximately $1.5 million over 19 years.
Members of the advisory budget committee attended last night’s meeting including Maritza Broce, owner of Preloved Chica Clothing, who attempted to address the council during the public hearing. Mayor Bob Teso said it was improper for Broce to speak because enough members were present to make a quorum. At that point members of the committee in the audience got up and walked outside and Broce continued to oppose the tax increase.
Broce thinks the increase will do more harm than good and will be a roadblock for further business development in the city. She said the council should use their leadership positions and tell the finance director to come up with better ideas than a sales tax increase.
“There’s been a lot of confusion and there has not been transparency,” Broce said. She also said the budget committee has been kept from meeting by city staff and council and thinks this is due to their unwillingness to come up with, or listen to, any better ideas.
Many of the business owners who attended the July 8 hearing also attended the meeting last night including Jerry Cooke, owner of C&C Auto Sales, who startled the city manager when approaching the microphone by putting his hands on Vidaurri’s shoulders and asking, “How you doing buddy?”
“You’re going make it so I’m going to turn my business into a storage and you’re not going to get taxes,” Cooke said. “We have paid millions of dollars into the tax fund … we’re in the hole still … an extra point zero five percent is going to put us out of business … the ball’s in your court, play ball, take a reduction in the money you collect from the taxes … and quit chewing gum while someone’s talking,” Cooke said with his last comment directed at Mayor Bob Teso.
The South Tucson fire captain and chief also attended and continued to advocate for the council to fund a fourth person in the department. Currently, South Tucson Fire runs three-person crews which limits their ability to fight fires and increases risks to the firefighters. The City of Tucson Fire Department has for some time now volunteered their services towards fires in South Tucson, in effect providing the fourth person, but is not required to do so.
Fire Chief Andy Luna reiterated that not having a fourth person may put the department in the position where they cannot fight a fire, and if Tucson Fire cannot help, such a scenario may become a liability to the city that could end up costing more than funding the fourth person.
““I’m certainly going be affected with a half a percent increase,” Councilman Akanni Oyegbola, who supports the sales tax increase, said, “When the residents voted for me … you voted for me to make tough decisions … one of our main responsibilities is to make sure the city is here.”
““I’m not going to go and dip into your savings … it’s people over politics with me … the finance comes first, you’ll thank us later,” Oyegbola said.
After the meeting some attendees said there is no way the city would ever disincorporate and such threats of disincorporation aren’t considering the county’s support of the city. They said the county needs the city’s Regional Transportation Authority vote and would likely go to whatever lengths to help South Tucson survive.
Currently, Pima County collects 6.1 percent in sales tax for retail, utilities and communications with South Tucson collecting 4.5 percent on retail and five percent on both utilities and communications transactions.