Kingman officials say they will consider property tax as a way to broaden the city's revenue base.
During a strategic planning session Tuesday, City Council members agreed to put a property tax on the Jan.
6 meeting agenda.
The council would have to call for a special election for voter approval of a property tax.
City Financial Services Director Coral Loyd said Kingman depends on the 2 percent local sales tax for 50 percent of general fund revenue.
Sales tax collection has been greater than estimated, but the sales tax is a volatile source of revenue, Loyd said.
Another 30 percent of general fund revenue comes from state sources.
Arizona's sluggish economy and budget-balancing by the Legislature have reduced state revenue shared with cities and counties.
State revenue shared with Kingman will be reduced $350,000 next year, Loyd said.
The state is expected to reduce grants for parks, police programs, transportation and other current financial support, she added.
"I expect the city to take continued hits on state shared revenue," Loyd said.
"Shared state sales tax may not be reduced, but we are likely to see several cuts in other state and federal sources."
The remaining 20 percent of the general fund revenue comes from franchise fees, license and permit fees, golf course income, interest income and parks and recreation fees.
Sewer, water and sanitation services are supported primarily from user fees and do not use general fund revenue.
"Kingman is holding its own due to population growth and construction," said Loyd.
"However, this is an opportune time to explore a more diversified revenue system and a revised revenue structure."
Mayor Les Byram said all cities and state governments across the country are having money problems.
"People from other cities I visited with at the national League (of Cities and Towns) meeting were all dealing with reduced tax collections," said Byram.
"Those with a property tax were in good shape."
Vice Mayor Phil Moon said Kingman has done well so far depending on a local 2 percent sales tax, but that time may be coming to an end.
"In some ways, we are victims of our own success," said Moon.
"We have a difficult task educating our residents on the possible need for a property tax."
Kingman did levy a primary property tax for many years until a previous City Council lost the authority by not using the property tax during a short span of years.
Now, voters would have to reauthorize a property tax.
Flood control is an area with needs that far exceed any funding sources said Roger Swenson, city manager.
Flood control demands increase with added development, but the revenue source through Mohave County is limited.
The city is primarily a service business and personnel costs represent a major expense.
The Community Development Department, police and the fire department account for a major portion of the general fund personnel costs.
The city contribution to the retirement fund for city employees will more than double during the next year.
Investment income from the state retirement system was reduced by the stock market fall and lower interest rates.
The state retirement fund will require increased contributions by the city and by employees.
Health insurance costs for Kingman's 291 employees could increase by 25 percent for the next year, according to Jackie Walker, city human resources director.
The council will discuss the property tax as a means of funding capital expenditures and infrastructure needs.