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11/7/2013 6:00:00 AM
Kingman council retreats from property tax idea
Only one councilman says tax should be looked at
About 40 people opposed to a tentative proposal to seek a primary property tax in Kingman attended Tuesday’s meeting. The City Council continues to look for a stable revenue stream. (DOUG McMURDO/Miner)
About 40 people opposed to a tentative proposal to seek a primary property tax in Kingman attended Tuesday’s meeting. The City Council continues to look for a stable revenue stream. (DOUG McMURDO/Miner)

Doug McMurdo
Miner Staff Reporter

KINGMAN - Two facts became crystal clear Tuesday when the City Council held a workshop to discuss Kingman's dismal financial situation.

One: If a stable revenue stream isn't soon identified and put in play, the city will have no choice but to dramatically cut services as early as 2016. What services might be cut is anyone's guess at this point, but it's likely a given more employees would be terminated since salaries represent the city's largest expenditure.

Two: Neither Mayor Janet Watson nor Council members have an appetite for a fight to reinstitute a primary property tax after a more than three-decade absence.

A spring election in which voters would be asked to put the burden of stabilizing the budget on property owners could cost between $50,000 and $80,000, with no reasonable expectation of success in the absence of a wholly effective public relations campaign.

The city of Kingman is currently in the recovery stage following the Great Recession, said Watson, who noted Kingman follows the Government Finance Officer's Association processes for recovery from financial distress.

Tuesday's workshop focused on the financial risk in which the city finds itself. There were about 40 residents in attendance, most of whom oppose the potential imposition of a primary property tax.

The City Council in a mid-October workshop discussed asking voters to implement local property taxes, which would be used to fund the Kingman Fire Department.

Primary property taxes haven't existed in Kingman since 1980.

No decision was made and the informal public budget discussion was one of many the City Council will likely schedule in the coming months to address the budget crisis, which has been on their radar for a few years.

If voters ever approve the measure, the property tax would be set at $3 per $1,000 in assessed value, or about $300 a year for the owner of a $100,000 home.

Finance Director Coral Loyd projects the tax would raise about $6 million, which is the current cost to fund the fire department.

Regardless of what is done to stabilize the city in the future, how it fell into crisis is no mystery.

The City Council that existed in 1980 voted to eliminate a primary property tax that at the time was 79 cents per $100 of assessed valuation.

That formula would raise about $2.9 million today, according to Loyd.

That year the City Council doubled the transaction privilege tax from 1 percent to 2 percent for purchases less than a few thousand dollars.

Purchases involving several thousand dollars, such as for a vehicle, remained at 1 percent until about 1990, when 2 percent applied to all purchases regardless of the cost.

In 1987 and 1988, voters approved home rule for the first time after Kingman outgrew the state expenditure limit and a 2 percent room tax was adopted.

Development investment fees were adopted in the boom days of 2005 and eliminated a couple of years ago after the boom went to bust in dramatic fashion.

In 2010 an additional 2 percent room tax was adopted, bringing a present value of $350,000 a year.

In 2011 and 2012, a 2 percent restaurant and bar tax was implemented. One percent was dedicated to highway user funds and one percent to public safety capital purchases. The increased revenue raised was $1.2 million, but it only lasted a year. The tax was reduced by 1 percent effective last July 1.

Currently, the city relies far too much on revenues generated through the transaction privilege tax, commonly known as sales tax.

"All of our eggs are in one basket," Loyd said, and the basket has shrunk by $5 million in revenue since fiscal year 2007-2008, before the recession hit.

Loyd said the city has cut expenses to match diminished revenue. Eleven percent of the city's workforce has been cut, she said, and employee salaries and benefits continue to be the city's largest expenditure.

There are 332 employees currently on the payroll. More than 40 positions have been cut and remain unfilled, according to Human Resources Director Jackie Walker.

Indeed, Loyd through the City Council has trimmed more than $5 million from the expense side of the ledger to keep costs below revenue in each of the last five years.

The city lost more than housing money when the recession hit, said Loyd.

To balance its own budget, the Arizona Legislature has sharply diminished or swept entirely the payment of Highway User Funds, lottery revenue and other state resources that traditionally were shared with the city of origin.

Federal grants the city long relied on have fallen by the wayside and despite a recent uptick in the state and local economy, Kingman continues to struggle.

The implementation of last summer's half-cent increase in the sales tax - the city's sole local revenue source - is projected to add about $2.5 million to city revenues, but the impact is significantly diminished by the $600,000 the city lost when it agreed to reduce by 1 percent the restaurant and bar tax, leaving a net balance of $1.9 million, said Loyd.

At risk is the city's "creditworthiness," said Loyd, particularly when it comes to the interest rate the city pays for major projects.

While its debt service rating is solid, the lack of diversified revenue sources harms the city. If new revenue isn't found, the City Council could be forced to take draconian steps.

At best, said Loyd, such measures might not be necessary for five or 10 years - it all depends on a vigorous and sustained economic recovery.

"At worst, by 2016 we need to do something," she said.

She conceded her projections might be overly conservative, but even if she's off by $1 million, the city will still require a new revenue source.

Watson and Council members noted the severity of the crisis, and to a person acknowledged "something" had to be done. They also agreed the Council would take the time to look at a host of potential revenue sources.

All but one said they opposed implementing a property tax.

"I'll put my head on the chopping block," said Councilman Larry Carver. "We need a stable revenue stream to sustain the city ... I think all of us need to look at this from the standpoint of where can we cut? The only thing left is services."

Tuesday's meeting was for discussion only. No action was taken.

ICT - Arizona Sommers Cooling and Heating
Related Stories:
• Kingman voters to decide fate of proposed property tax
• Kingman property tax idea resurfaces
• Cochran maintains Kingman property tax stance at mayoral forum
• Cochran: 'We need a property tax'
• Anti-property tax group forms to oppose Kingman effort
• Hey, Kingman - want to tax yourselves?

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Reader Comments

Posted: Friday, November 15, 2013
Article comment by: What the??

Back when i was going to school, quite some years ago, i remember new bus drivers being trained by riding on the bus itself to learn the routes. After they learned the routes THEN they was allowed to drive the buses. Ive never heard of trainees allowed to drive the buses until theyve done the proper ridealongs with experienced drivers that was already running routes. This kept buses on the streets to a minimum and lowered the tax dollars for the school districts.

Posted: Monday, November 11, 2013
Article comment by: Just Take Responsibility

Who brought the subject up again anyway ??? Will the culprit please "Just Take Responsibility" I really want to know!

Why would you suggest Kingman's resident's spend $80,000 on another vote just to be defeated unless you are suggesting the graveyard vote!

Posted: Monday, November 11, 2013
Article comment by: Too funny

county remove property tax?
are you serious? what do you think pays for the county 911 and sheriffs department? do you realize there is more to the county than your own little area?

Posted: Sunday, November 10, 2013
Article comment by: just wondering

privatize the golf course, receive taxes from the new owners, quit wasting our money on losing propositions. government function is not to run business, but to govern! Haven't we learned enough from the Obama, administration ?

Posted: Sunday, November 10, 2013
Article comment by: V Stokes

"when is our BOS going to REMOVE property taxation from county residents?"

And how exactly would you suggest the County continue to operate if they did that? Voluntary donations?

Posted: Sunday, November 10, 2013
Article comment by: DENISE BENSUSAN

So, now when is our BOS going to REMOVE property taxation from county residents??????

Posted: Saturday, November 9, 2013
Article comment by: good question

What is each council member doing to increase revenue in Kingman?

Posted: Saturday, November 9, 2013
Article comment by: Get Real

@we need a new council
Do you realize this council brought us through one of the worse recessions this city has ever seen? CIty did not go bankrupt like many. If I were on the council I would say forget it and get off the council. then let new council eliminate employees and degrade public service and eliminate some parks and pools. get rid of the golf course. then maybe everyone would be happy when people who really support the town decides to move or go elsewhere to buy there needs. too many criticize and don't give solutions to back up their complaints. From what I saw on the video only carver wanted the tax so why are you complaining it didnt pass.

Posted: Friday, November 8, 2013
Article comment by: Ben Franklin

So the buses I see with only 1 person on the bus is the driver actually being trained. Interesting. The guy who parks his bus on a deserted street for a half hour is actually in training. That is interesting as well. The buses I see in my neighborhood actually pickup and drop off kids at their front doors, just like a taxi cab. How convenient that is. When I went to school we all gathered at one spot and got picked up all at once. Boy, now I realize I got the short end of the deal by not getting picked up at my house!

Posted: Friday, November 8, 2013
Article comment by: we need a new council

we need a new council, now we need someone in the place that has a clue. you raise taxes the people have no money to buy things. raising the sales tax and not enforcing business to have proper collection of sales tax is like putting a dead horse in front of the cart. It is simple the city needs to enforce rules and not wait until someone complains about the illegal acts that take place here everyday. every business large and small should be licensed and be required to show a valid state tax license from the state as well. before being allowed to open.

Posted: Friday, November 8, 2013
Article comment by: nickel and dollar us to death .....

just got back from Safeway. Their "Five Dollar Friday" specials just went to $5.99 and $6.99, and other commonly-purchased food items are about ten to twenty percent pricier. Haven't checked vitamin prices, but must, since a pound of their Virginia ham yields only 16% of one day's iron requirement. Social Security's COLA this time around is 1.5% - most likely based upon the little-changing prices of hairpins and candle wax. But city authorities were thinking that another several hundred dollars per year won't matter to us. Oh, a can of cheap pink salmon (forget about the better red salmon) at Wal Mart just went up from just over two dollars to $3.38 - about 40% price increase. Are you all listening?

Posted: Friday, November 8, 2013
Article comment by: Jack a Lope

I see absolutely no reasin Kingman needs mor money. I says
1cut the PD, there are way to many Kingman Pulice running around here. we need les that haf that many.
2cut the fire department, they use to be vollunteers, we need to go back to that.
3cut out trash pickup there are 3 trash hauling cumpanys in this area, if you want your trash hauld, pay one of them or take it yerself
4 quit paving roads. they are not needed. dirt work good.

Posted: Friday, November 8, 2013
Article comment by: be positive

of course i would vote for a property tax before i lost fire protection. what is wrong with you people? you want services but don't want to pay for them. council backtracked and the only one who offered any kind of alternative was carol but it won't be considered because everyone just wants to raise taxes as an easy way out. election time is coming up so theya re walking on eggshells. Janet lead this town down a better financial path. either pass a tax or find something else to correct the issue.

Posted: Friday, November 8, 2013
Article comment by: Beth Romelsbacher

The reason you see buses performing in this way is it's called training folks. Yes, Kingman does train there school bus drivers. And no, I do not work for KUSD but I did apply and I did interview and was explained this is a normal procedure to train. So, there is the answer to your school bus question. I personally think it's a great idea and I am sure parents whose children ride these buses think so too!

Posted: Thursday, November 7, 2013
Article comment by: Beth Romelsbacher

I have an answer to part of this tax problem. It's called sales tax. All businesses collecting and paying proper sales tax with a sales tax return would provide the city with at least enough revenue for 2016 employee payroll.

What do I mean by this?

Today I was at a certain business buying my mean bean drink and I noticed it was taxable. So I asked the nice young man at the register why is it taxable here and not at the other business I purchase my mean bean (coffee & vitamins, yummy too!) and you can use an ebt food card to purchase the product. His reply cold coffee products such as mean bean are not allowed to be purchased with ebt cards and they are taxable. So I was charged .26 tax at this store but I can go to the other store and purchase without tax and use an ebt card to purchase???????
This has plagued Arizona for awhile because sales tax returns are difficult to prepare, I know, I did it for years in Ca. But the amount of tax revenue that is collected is huge.

Just a thought to help in the collection of tax revenue without raising any taxes.

Posted: Thursday, November 7, 2013
Article comment by: Hiram Fong

Appalling lack of accurate information about local government finance among the local readers. You have to know the difference between school districts, county and city. For the City, in the General fund, not the water or sewer or streets, that have their own funds, fire and police take by far the most expenditures. Development services is only 2-3 percent of the General Fund, where police and fire are 55-60%. Parks are the next biggest. For what it is worth, it is unlikely any private interest would buy the golf course. Heck the City originally got it when the old country club was going broke.

Posted: Thursday, November 7, 2013
Article comment by: I was going to say something - but,

....after reading the comments it became obvious that half the the respondents hadn't even read the news item! What I don't understand is how Kingman became such a nice town with beautiful parks and other perks when the populous, as demonstrated at this site, is so selfishly stupid! As the owner of a very nice home, I'm not opposed to paying for my benefits of living here. After all, I've had to pay everywhere else I've lived and received far less in services!

Posted: Thursday, November 7, 2013
Article comment by: Juan Gonzales

[Comment exceeded word limit.]

Posted: Thursday, November 7, 2013
Article comment by: What the??

@ ben franklin...

Ive seen the exact same thing at the school there behind the old frontier building. One day i was riding down main street and seen , not one but TWO buses running the exact same route(or near it) about 5 minutes apart with BOTH busses dropping off kids only about a block from the school on main street. i was saying to myself 'you CANT be serious!!... why cant these kids walk??' Personally i think maybe the City should rethink these bus routes as most of the bus stops ive seen the kids can walk to to and from school.

Posted: Thursday, November 7, 2013
Article comment by: Lumpy Rutherford

Too many people want something for nothing. Taxes in Arizona are already very low relative to many States. But the legislature takes money away from Cities for essential services, claims they balance their budget without gimmicks, and force Cities into these type of tax discussions. The legislature is run by crooks, and the cities pay the price.

Posted: Thursday, November 7, 2013
Article comment by: V Stokes

Schools are not a city function....

Posted: Thursday, November 7, 2013
Article comment by: Bob Smith

@ Ben Franklin

Since when does the City fund school buses? How can the general public not know the basics of government funding yet we expect them to know what they are doing at the voting booths. No wonder things are so screwed up in this Country.

Posted: Thursday, November 7, 2013
Article comment by: Watch Your Spending CITY

City: CONTROL your budget, like we, a small business has to in order to stay afloat! We would be more than willing to come on down & go over your budget with you ...

Posted: Thursday, November 7, 2013
Article comment by: Reap What You Sow

There really are only a few ways to get this city on sound financial footing. The city must move quickly to get the Kingman Crossing and Rattlesnake Wash interchanges in place. They missed one opportunity with President Obama's stimulus program. This type of infrastructure project would have qualified if the council and city staff had any type of leadership abilities because it would have to have been "shovel ready".

And the only other way to gain financial strength is to grow this community with good paying jobs. However the tourist element of this town - hotel owners, gas station owners and restaurant owners OWN THE TOWN. This handful of business people only care about filling their beds, serving meals, and pumping gas - all of their jobs are minimum wage. They do not want a slew of high paying jobs where they will have to compete to keep and attract workers. If you doubt this, just look at the city council's budget - look at what is allocated for tourism and what is allocated for any kind of economic stimulus.

Posted: Thursday, November 7, 2013
Article comment by: Janet's Council is Shaping Up As Politicians Not Leaders

So the trial balloon proved the answers for Janet and the gang. A few loud mouths, probably making up 5% of the city's population and the council backs away from what they probably should have investigated more scientifically.

Placing a questionaire in the water bills and adding a e-vote on the city's web page would have given the council a clearer picture of the likihood that such a proposal would be approved.

The council was told repeatedly a reliable revenue source is sorely needed. Yet, how many of the council members proposed solutions, went out to the public to collect ideas, or to push the idea of a property tax?

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