City manager cuts proposed rent tax in halfby Carli Brosseau on May. 09, 2009, under Local, Special
Looks elsewhere to help balance the budget
After two weeks of public hearings and negotiations about Tucson’s proposed budget, City Manager Mike Letcher has submitted revisions.
Letcher’s plan softens what hundreds of residents told the City Council was the most onerous part of the $1.3 billion proposed budget – a tax on landlords who own three or more residential rental properties in Arizona.
Several council members have hinted they’re opposed to the tax, which hundreds protested at recent public hearings. It is one of several proposed taxes and fee increases in Letcher’s budget that are expected to raise $17.4 million. The money could help balance a budget facing large shortfalls because of steep declines in sales tax collections.
Letcher now suggests a 1 percent tax on rental properties, instead of the 2 percent he initially proposed. The change would mean about $5 million in new revenue.
To help compensate for receiving about $5 million less in new revenues than estimated in his first proposal, Letcher suggested eliminating a $2 million payment to the city’s Housing Trust Fund that was intended to cushion the financial blow to renters. The trust fund provides down payment and rental assistance, among other services.
He also recommends increasing Parks & Recreation Department fees to bring in another $200,000. No details were provided on which fees would be affected. Letcher’s earlier proposal had left the fees untouched.
Cuts in payments to nonprofits and other governments considered “outside agencies” were also proposed as a way to balance the books.
Letcher suggested a $1 million cut in distributions to nonprofits and other groups from the current fiscal year, bringing the total to be divvied up to $11.7 million. Those groups got nearly $15 million from the city last fiscal year.
Letcher wrote in the letter delivered with his proposed budget that the council would have to decide how to allocate the “outside agencies” pool.
It’s a decision council members dread because the groups that have historically received the money have been strong sources of political support.
Ideas on how to enact the cuts range from making a strong statement of priorities with the money to using the list of last year’s recipients and slashing evenly across the board.
Letcher also looked to raise bus fares to make up some financial ground.
An increase in bus fares – the issue that prompted hundreds to speak out at council meetings last year – would be used to offset about $1.8 million of a proposed $32 million contribution from the city’s general fund to its mass transit fund. No fare increase was included in the city manager’s earlier proposal.
The council is considering raising regular fares to $1.25 from $1 and day passes to $3 from $2. Economy fares would not be affected.
Under an agreement with the Regional Transportation Authority, the city must contribute $32 million to the transit system next fiscal year as “maintenance of effort,” Transportation Director Jim Glock said.
Including bus fares in the city’s general fund payment would not violate the agreement, Glock said, noting that service levels would be maintained.
Councilwoman Karin Uhlich rallied opposition to a fare increase last summer. She has said she would prefer a fare increase be pumped back into the transit system.
Under that scenario, federal grants that are now used for maintenance could also help pay for new buses, said Roy Cuaron, transportation finance director.
The council is scheduled to discuss the changes during a study session Tuesday.
Also set for Tuesday is a public hearing on how the city plans to spend its $2.5 million federal stimulus allocation aimed to preventing homelessness.
The proposed expenditures include short-term rental assistance, moving costs and data collection.
IF YOU GO
• What: Tucson City Council meeting
•When: Study session begins at 2 p.m., regular session at 5:30 p.m. Tuesday
•Where: Council Chambers, 255 W. Alameda St.