In a 5-2 vote, the Oro Valley Town Council voted during its regular May 4 session to double the town’s utility tax to 4 percent.
The 2-percent increase takes effect 90 days after the council’s approval, which is estimated to be some time in August.
Councilmen Will Garner and Barry Gillaspie voted against the controversial measure, while Mayor Satish Hiremath, Vice Mayor Mary Snider and council members Lou Waters, Joe Hornat and Steve Solomon passed it.
The tax issue was discussed for more than three hours of the five-hour-long meeting.
Council members were confronted by a number of citizens, who asked them not to approve the tax, or to table the matter for further discussions.
Councilman Garner, who attended the meeting via telephone, has been a proponent of holding the vote until after the council has more time to discuss the $94 million 2011-2012 budget proposed by City Manager Jerene Watson.
With no other option presented by Watson, Garner said he felt “boxed in to a corner.”
Garner motioned to table the vote, but it was denied.
Snider along with several other council members stressed to Garner and the public that they have studied the issue closely. She noted they have held multiple discussions and have considered how it will impact not only residents, but also businesses.
Residents with utility bills amounting to $300 should see a $6 increase, while businesses with a utility bill of $5,000 or more will face a $100 increase.
In voting for the increase, Hiremath called it a “Band-Aid” to a bigger problem. The $1.3 million in revenues generated from the increase will balance the budget, but the council will have to make some tough decisions in coming years.
In a short presentation, Town Finance Director Stacey Lemos said the general fund is facing a $2.6 million deficit due to a steady decrease in revenues since the construction boom in 2006.
Providing a five-year forecast without the increased tax, Lemos said the general fund balance could hit zero by the year 2014.
While most residents have been against the tax, longtime resident Bill Adler said it is important for the town to maintain a certain level of service.
“Costs have to be covered if you want to maintain a community of excellence. Benefits go beyond core services and public safety. We have parks, bike trails and arts and culture. I’m not frightened by $6 a month or $16 a month. We need to preserve quality,” he said.
Former councilmember Connie Culver said she voted against the utility tax when it was first introduced in 2006, and urged the council to take a closer look at the expenses proposed in the new budget.
“Don’t jump the gun. You have study sessions coming up. Show the town you’re willing to put forth the effort,” she said.
Besides increasing the utility tax, the council also voted to increase liquor license and parks and recreation fees.
The liquor license fee was increased from $50 to $500, to cover costs to process an application.
In parks and recreation, the council unanimously approved increasing fees to use the ramada, ball fields, daily and annual pool admission fees, and lane-rental fees for the pool.
Altogether, the budget estimates the increases will bring the city $73,500 in added revenues.