KINGMAN City staff directors presented a summary of the half-cent sales tax increase proposal before the Kingman City Council Monday night, indicating the measure was needed to fund capital improvement projects and maintain services.
Car dealership representatives and two residents voiced opposition.
City Finance Director Coral Loyd said that as a result of recommendations concluded from a study by a hired consultant during the last year, the increase was part of an affordable plan to fund long-needed capital improvement projects.
Loyd pointed to causes contributing to declining fund balances, such as the demand on services from the influx of new residents, higher costs of operations, new services such as KART and the construction of neighborhood parks, and the loss of state revenue-sharing funds, state grants, and declining Highway User Revenue Funds.
City Council will vote on Dec. 5 on raising the sales tax from 2 to 2.5 percent.
Loyd alluded to a tax rate chart of all Arizona cities, pointing to 12 other cities that have an identical tax rate structure as Kingman, cities with no fire district and a 2 percent or lower sales tax, and no property tax.
"Most are not having the tremendous growth we have," she said, adding that some are having financial problems.
Thirty-two Arizona cities have a sales tax greater than 2 percent.
The city has a capital improvements budget of $54 million from last year, a majority of the funds dedicated to street projects.
The General Fund scenario analysis from the Red Oak Consulting final report indicates an additional $1,364,500 for 2005/06 if the increase was implemented Dec. 1, revenue gradually increasing to $3,577,000 in revenue for the year 2009/10.
City Public Works Director Jack Kramer pointed to projects relating to the Airway Underpass among others that have committed city funds.
Eastern Avenue and Hualapai Mountain Road both will undergo improvements to accommodate increased traffic as a result of east city development relative to the underpass, as well as drainage projects to relieve flooding on Fairgrounds Boulevard and the Bull Mountain drainage project.
Bank Street construction will start in May, Kramer said, in addition to widening Gordon Drive to a minimum of three lanes. Kramer said the city also has $5 million committed for the Rattlesnake Wash Interchange slated to be on the list of projects for construction by the Arizona Department of Transportation in 2010.
The Mohave Drainage Channel and improving access to Topeka Street downtown were other projects Kramer mentioned.
Curtis Cutshaw of Findlay Auto Center said his business and employees would suffer from the sales tax increase.
"I'm in an industry that's fighting for its life right now," he said. Cutshaw said that car buyers would travel to save $100. "A lost sale is a lost employee," he added, comparing lower sales to layoffs.
"Be careful of running away commerce," said Martin Swanty of the Swanty dealerships, pointing out that Bullhead City and Lake Havasu City would have a half-percent lower sales tax. Swanty suggested raising the tax a quarter-percent or putting a sales tax cap on major purchases.
Resident Charley Hupp suggested that the city cut expenses and place impact fees on builders. "Don't burden present residents of Kingman with very large expenses because of growth," he said.
"If it's really necessary, let's put it on the ballot," said resident David Concher, suggesting a public vote.
Council is scheduled to vote on March 6 on other recommendations from the revenue and fee study, these addressing the "growth paying for growth" strategy, placing one-time investment fees on new development projects.
A public hearing on the proposed fees is scheduled for Feb. 6.
The fees would begin July 1.