Council addresses possible revenue sources for Kingman
KINGMAN – While Council decides what the City’s five-year capital improvement project list will include, Kingman’s elected officials have another important task on their hands: finding a revenue source.
Finance Director Tina Moline recently presented Council with four potential revenue sources. A primary property tax, a transaction privilege tax, development investment fees and a stormwater fee. Those options could fund costs associated with pavement preservation, general government capital projects and employee compensation.
Moline started with the basics of a primary property tax, which would have to go to the voters. She said funds from a primary property tax could be used for general operating and capital purposes, and wouldn’t have to be dedicated for a specific purpose.
“When we go out and ask the voters for a levy, it’s called a base levy. That levy that’s established on the ballot becomes our base going forward,” Moline explained. “That base levy limit cannot be increased, other than what the statute allows for, a small increase.”
However, it could not be put back to the voters if the City needed more money. This “stable revenue source” for a $1 million levy would cost Kingman property owners with assessed values of $100,000 an additional $47 a year.
In addressing the possibility of adjusting the sales tax rate, the finance director noted the issue now has to go to the voters. The soonest that could happen would be November 2020. Moline focused on the possibility of implementing a food for home consumption tax. If the City were to impose a tax of 2.5 %, that would bring in $2.5 million a year.
She also pointed to a list of 12 Arizona cities without primary or secondary property taxes but that also provide police and fire services. Of the 12, Kingman is the only one without a food for home consumption tax.
“$2.5 million in our general fund is a pretty big infusion of money, but it certainly still doesn’t solve our road issues,” said City Manager Ron Foggin. “I don’t think that we can stop at just thinking ‘well all our problems go away if we’re taxing food for consumption at home.’ But it makes a pretty big difference.”
Vice Mayor Travis Lingenfelter asked about the possibility of creating a fire district that would be funded through a secondary property tax. He said that would take the fire budget out of the general fund and that those funds could then be used elsewhere.
Development Investment Fees are fees imposed on new development. This option would not need approval from the voters. The fees would be imposed on all new development including residential, commercial and industrial. Rates can vary based on the property category. Funds from DIFs could be used for things like water, wastewater, streets, fire and police, but not for administration, maintenance or operations.
The City actually utilized DIFs between 2007 and 2012, during which time it received nearly $3,000 for a single-family residence. Foggin said the City is going to move forward with DIFs, and hopes to have them in place by the end of next year.
“It is clear that the development investment fees we’ve been missing since 2012 would’ve built new parks, would have added larger playgrounds, would have helped us build, and will help us build, a new fire station on new property that we own,” he said.
Lastly, Moline talked about creating stormwater fees. That fee could be assessed to water customers within city limits, about 11,400 residential customers and 1,100 commercial. While a rate study would be required, the option would not need to go before the voters. Should the City charge residential customers $2 per month, it would generate $273,600 each month.