KINGMAN - How can the City Council convince voters it would be in their best interest to approve a primary property tax when members themselves can't even agree on what needs to be done?
That's the question Mayor Richard Anderson and Council members struggled with answering during a special work session Jan. 7. While they all seem to agree the city's revenue stream is in desperate need of stability, they are miles apart on these two questions:
What should the levy amount be?
What should it be used for if voters approve it during a special election in May?
The Council tentatively determined the levy amount should be $3 million, which is roughly what a half-cent sales tax bump the Council approved in 2013 brings in each year. The Council has said it would allow that bump to expire at the end of the year if voters approve the first primary property tax in 35 years in May.
Councilwoman Jen Miles, to put it bluntly, thinks that's silly, since trading one for the other is a wash, at best, and gives citizens no reason to get behind a property tax. Miles also believes the Council should develop a strategic plan, one that would demonstrate to voters, especially property owners, how the tax would make their lives better.
"We haven't done anything to benefit the situation with $3 million," she said. "We'll increase our debt service, but there's nothing compelling about what we're doing. We can't sell it ... if we go through with a property tax it doesn't accomplish anything that benefits the public."
Councilman Larry Carver agreed, saying the Council should seek a $6 million levy - which translates to about $30 a month for a home with an assessed value of $100,000 - and that the money should be dedicated to roads.
Vice Mayor Carole Young also thinks $3 million "is a wash," but she clearly wants the money to fund emergency services, which has been the tentative target the Council has mentioned since the property tax issue came to the forefront last summer.
The base levy amount must be set when the Council meets Tuesday. If it isn't, there will not be an election, according to City Clerk Sydney Muhle.
Whether the Council comes to an agreement on the property tax or not, the city's finances look bleak. Finance Director Tina Moline, in a comprehensive overview of the city's budget forecast from now through 2019, provided a worst-case scenario that has the city's fund balance shrinking by roughly $9 million over the next few years at the same time expenditures increase by the same amount. The city's budget has shrunk by about $10 million since 2008.
Currently, the city's only local revenue source is through sales tax, which has become more than uncertain as Kingman residents turn to online shopping. There is no sales tax charged for online purchases. This, in turn, according to Council members, has caused local small businesses to close, further shrinking the local sales tax base.
"There's no indication we're going to get real good this year," said Anderson.
And while the "worst-case" scenario Moline provided indicates the city will be insolvent, or close to it, by 2019, City Manager John Dougherty pointed out it would never come to that as the city by law must have a balanced budget.
The only way to balance the budget is to cut staff and services.
"We can always cut things," said Dougherty. "That isn't the issue, but people depend on services. We can cut another (construction) inspector or two and it will take four times the time to get an inspection done."
Moline said her figures were "very conservative," but the city's budget shrank from $35 million in 2008 to $25 million in 2015.
While the Council might not agree on how to best convince the public of the need for a property tax, how much the base levy should be or what that influx of revenue would pay for, each member is adamant something needs to be done.
If voters shoot down the property tax - and nobody on the Council believes that isn't exactly what will happen in May if they don't convince them otherwise - the Council could retain the half-cent sales tax bump it established in 2013 and even add to it, despite fears that people will leave town altogether to do their shopping, especially for big-ticket items.
Councilman Mark Abram pointed out property owners support bumping up the sales tax, but the business community is solidly behind the property tax.
The Council could also place a tax on food, something none have an appetite for, and possibly add a one- or two-cent excise tax on fuel purchases, which seemed to be more palatable to Council members than a food tax.
Moline was directed to show what the impacts would be on homeowners if a $4.5 million and $6 million base levy amounts were established when the Council meets Tuesday.
At the end of the day, residents will decide if they need to pay the property tax or lose vital services.
"Unfortunately, it will take a catastrophe before folks see how bad it is," said Anderson.