Oro Valley Town Council inches closer to utility tax vote - Tucson Local Media: Import

Oro Valley Town Council inches closer to utility tax vote

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Posted: Tuesday, September 12, 2006 11:00 pm

Editor's Note: The story below has been updated since The Explorer went to print. Oro Valley Town Attorney Melinda Garrahan, citing a Pima County appeals court ruling, said the adoption of a utility sales tax could not be referred for public vote.

September 13, 2006 - Stacey Lemos, Oro Valley's financial director, wants to manage the town coffers like a personal investment portfolio - diversifying its investments, planning for the future and saving for emergencies.

But if all that means another tax, some Oro Valley residents just don't care.

The Oro Valley Town Council held its first public hearing Sept. 6 on the proposed utility sales tax. And though Lemos led the charge with a lengthy presentation on why the town needs the 4 percent tax, she was met with expected opposition from some audience members.

But not everyone spoke negatively about the tax.

"I'm not willing to sacrifice quality or reduce the level of service I moved to Oro Valley to receive," said Lory Warren, an Oro Valley resident who works in the town's public works department.

She said she paid more for a house in Oro Valley and anticipated paying a little more for services, too.

The sales tax on electricity, natural gas and water would be the first tax on utilities in Oro Valley.

It's the second time the council has considered the tax, after it shot down the idea with a five to two vote in October.

Lemos said the $2.1 million the tax is expected to generate would make up for falling construction tax and fee revenue and would pay for capital improvement projects that this year had to be funded by dipping into the town's rainy-day pot.

But more specifically, in what one audience member called "crafty political maneuvering," the council tied the tax directly to the fate of 18 and one-half new town jobs.

The council will not fund the new jobs, mostly police positions, unless the tax passes. Several town department leaders spoke to the importance and need for the positions to keep up the high level of services Oro Valley provides.

The hit to the town's payroll will be about $1.2 million for the new positions in the first year, which includes start up costs for equipment and training. The jobs will cost the town about the same each year following, taking into account raises and inflation, Lemos said.

Documents Lemos presented showed that Oro Valley is the only municipality in Pima County that does not have a utility sales tax. Across the state, only six towns don't have the tax.

Those untaxed towns include Tombstone, Miami, Winkleman, Quartzsite, Taylor and Oro Valley, the documents show. Oro Valley is larger than all of those towns combined.

This year, the town had to take $1 million from its savings account, or "rainy-day fund," to cover capital improvement projects, which are one-time expenses costing more than $20,000, such as replacement police cars, Lemos said.

For a household with an average of $150 electric and gas bill and a $37 water bill, the household would pay about $7.48 a month more. That's about $90 more per year.

Responding to a few audience members requests for a town-wide vote on a property tax instead of the utility tax, Councilman Terry Parish said he prefers the utility tax, because it's based on usage.

"This is a user fee," Parish said. "There are steps you can take to lessen your bill."

Doug McKee, speaking against the tax, said the town should question how the tax might affect the town's plans to possibly annex land on Ina Road that includes the Foothills Mall.

"You're going to have to convince them that it's in their best interest," McKee said. "Further tax just adds one more reason for them not to be annexed into Oro Valley."

McKee said the tax might be the "straw that breaks the camel's back."

Councilman KC Carter, who after the meeting vowed he wouldn't vote for the tax, said he worries that the southwest annexation won't happen if the tax is passed. He also said his constituents are mad about this tax.

"They're damn stirred up about this," Carter said. "It's gonna affect that mall. If you listen to Doug McKee, he told you truth. And when you start talking a $100 million park with a property tax, you're scaring these people. I will not support the utility tax. No way."

Art Segal, a vocal community member who opposes the tax, said he is "looking into" the possibility of a referendum, should the council pass the tax. Because the tax measure is a legislative item, Segal could collect 793 signatures and force the council to hold a town-wide election on the utility tax.

But Oro Valley Town Attorney Melinda Garrahan said a Pima County Court of Appeals opinion makes it clear that legislative acts, which have to do with "supporting or maintaining" state government cannot be referred.

Garrahan said the state constitution provides the framework for this ruling. The court ruled that levying a tax - such as the utility sales tax - falls under the "support" duty of local government.

"Support and maintenance isn't just appropriating money," Garrahan said. "It's having the money to appropriate, too."

Regardless, Parish called the threat of a referendum "shameful." He also said that as a Pima County sheriff he used to work in the Foothills Mall area and people who live there want the better services Oro Valley would provide. He said the tax wouldn't hinder the chances of annexation.

One audience member questioned the tax's long-term sustainability if the electric utility were to be deregulated. He suggested that if an out-of-state company were to provide Oro Valley residents with electricity, the company might not be able to levy the tax.

But Larry Lucero, the government relations manager for Tucson Electric Power, said that no matter who provides the service, the company would be responsible for collecting the taxes.

The next public hearing is scheduled for Sept. 20. The council is expected to vote on the tax following the hearing.

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