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City’s $1.3 billion budget includes tax on rentals, higher fees

The proposed taxes will likely be felt by renters, who officials estimate would have to pay $144 more a year.

The proposed taxes will likely be felt by renters, who officials estimate would have to pay $144 more a year.

The recommended budget presented to the Tucson City Council on Tuesday includes $17.4 million in new taxes and a proposal to raise some fees and set up a system of regular increases.

The guiding idea was to keep the city out of the mess in which it now finds itself: watching its income dwindle as its primary funding source – sales tax – plummets as consumers curtail spending in the weak economy.

By adding new streams of revenue, city officials argue that economic hard times won’t be amplified because city government won’t have to suddenly cut its staff and services.

Newly appointed City Manager Mike Letcher pointed out that his recommended budget was balanced despite an expected 20 percent drop – $68 million – in sales tax receipts next fiscal year.

The budget calls for most departments to cut their spending about 7 percent beginning July 1, when the fiscal year begins, and public safety agencies face cuts of about 2.5 percent.

The budget contains $28 million in one-time fixes, most notably in the form of debt refinancing and from windfalls such as a multimillion dollar court settlement stemming from an asbestos case. About $423.6 million of the $1.3 billion budget is unrestricted, and much of the rest is slated for the Water, Trash and Transportation departments.

Letcher said in his overview letter to the council that the $17.4 million in proposed new taxes is designed to take the edge off the budget decisions next year, when the revenue situation isn’t expected to be much better.

“The more stability we can bring to our annual budget, the more control we can exert over our economic future for the betterment of our community,” he wrote.

“The city cannot responsibly cut our way out of the challenge presented by declining revenues. To maintain critical funding for core services, revenue enhancements are the only alternative remedy to fill the gap. . . ”

The proposed taxes will likely be felt by renters, who officials estimate would have to pay $144 more a year.

Tucson Water customers, who together will pay the equivalent of a 10 percent boost in water rate revenue, will be covering an increase in taxes levied on utilities and a property tax aimed at Tucson Water.

Tucson Electric Power customers will also take a hit, thought to be about $9 a year for the average bill.

Some fee increases are recommended, though not yet written, said Assistant to the City Manager Marie Nemerguth, who oversaw the budget process.

Among those that may increase are Parks & Recreation fees, which in 1996 were ratcheted back to levels officials say are unsustainable.

The budget shows that the leisure classes offered by the city’s Parks & Recreation Department will “have minimal impacts.”

No bus fare increases are proposed.

The first of three public hearings on the budget is scheduled for April 28 at the Tucson Convention Center.

The Arizona Multihousing Association is already rallying people to attend to protest the rental tax.

When the tax was last proposed, in 2004, about 1,000 people protested and the tax was not imposed.

Courtney LeVinus, president of Capitol Consulting, which handles lobbying and governmental affairs for the trade group, said, “The AMA has always seen this as an unfair and regressive tax and we don’t support it under any circumstances.”

Letcher mentions in the budget that Tucson is one of two cities in Arizona that collects its own taxes but does not have a rental tax.


City budget

Read the proposed city budget: www.tucsonaz.gov/budget/docs/10RecBOOK-Op.pdf

Capital budget proposal: www.tucsonaz.gov/budget/docs/10RecBOOK-CIP.pdf

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