KINGMAN – Hearing threats that people would drive to Bullhead City and Las Vegas to buy their automobiles and other expensive purchases, local car dealer Cody Swanty has launched a petition to squash an increase in the city’s sales tax.
He’s been joined in the effort by Tony Campbell, general manager of Mother Road Harley-Davidson dealer in Kingman.
They’re leading a group of “concerned citizens” who want to give voters the chance to weigh in on what they want to pay for on the city’s “wish list,” Campbell said.
“We are not a group of good old boys trying to stifle growth,” Campbell said. “We are a realistic group that see commitments being made, but not followed through on by another group, a group with lofty and unrealistic dreams, and who are trying to force citizens to pay for their big gamble.”
City Attorney Carl Cooper is reviewing the petition paperwork and formulating any implications from the petition. The city has the authority to adjust the Transaction Privilege Tax, or sales tax, without voter approval, he added.
“If successful, it would not be a repeal, as this is not a referendum, but the effect is the same as it would rewrite the city’s tax code,” he said.
The city earmarked a 0.5 percent tax for street preservation and to update emergency medical equipment with a four-year sunset clause, but decided to the make it permanent and add it to the general fund.
Council then approved a new tax of 1 percent, half of it designated for street preservation and the other half toward building I-40 interchanges. The vote on where the money would go was in closed session, which prompted a citizen’s complaint with the Arizona Attorney General.
Campbell said his group disagrees with the direction of the city on several fronts, and feels businesses are at a disadvantage competing against tax-free internet retailers and other businesses operating in a lower tax structure.
“We have already seen one motorcycle dealer’s plans to shutter its Kingman operation, and they specifically cited the tax increase as one of the contributing factors,” he said.
The sales tax in Kingman was supposed to drop to 7.85 percent after the tax sunset, but will now remain at 9.35 percent. Of that, only 3.5 cents goes to the city, with the rest going to the county and state.
Campbell said the petition will “force the council’s collective hand” to do what they said they would. It will keep the 0.5 percent in place for roads and repeal the general fund and interchange taxation.
City Councilman Travis Lingenfelter said killing the tax would have “widespread negative implications” on the city’s ability to pay for public services and infrastructure.
Local sales tax is a primary revenue source for cities around the state, and you’ll never get all the citizens to agree on where the money should be spent, he added. Without the increased TPT, there’ll be no funds to fix potholes or make capital improvements to parks, police and fire stations, transportation and water systems.
“Instead of this short-sighted initiative, let’s work together and adopt a single-item cap on local sales tax to help the car dealerships, and then still create the strongest Kingman we can through investing in these interchange infrastructure projects,” Lingenfelter said. “The best time to plant a tree was 20 years ago. The second-best time is now.”
The petition requires at least 2,498 signatures of registered voters by April 30, City Clerk Sydney Muhle said.
Petitions against tax increases have not been common in Muhle’s tenure with the City Clerk’s office, though she’s heard of quite a few other cities that have these provisions in their codes.
Regarding the TPT structure, voters approved implementation of the tax long ago, Muhle said.
“Council can vote to raise or lower this as they see fit,” she said. “This provision would require that our City Council take any TPT increases to the voters.”
Kingman’s tax rate already exceeds that of Bullhead City and Lake Havasu City, but Lingenfelter noted they have different tax structures, including a property tax in Havasu and fire district tax in Bullhead.
Of course, everyone’s opposed to a primary property tax in Kingman, which would provide a fairly stable source tax revenue.
“Does anyone honestly believe that voters would approve sales tax increases, a primary property tax or a fire district tax in Kingman?” Lingenfelter asks.
Kingman gets most of its revenue from local sales tax, along with state-shared revenue, fines, grants, licenses, permits and user fees.
Campbell said the tax increase becomes a factor at his Harley-Davidson dealership when customers can save $300 on a $30,000 motorcycle, for example, by going somewhere else.
“Yes, customers will drive to save that,” he said, “and they will often catch a meal or do some shopping at places that aren’t here in Kingman. Can we save those deals? Sometimes, but not always, and it ultimately does affect our profits, which in turn affects our ability to support local activities like community charities and event sponsorships.”