Arizona mayors oppose bill that would limit what cities can tax

Loss of contracting revenues would harm cities, they say
2013-02-19T00:00:00Z Arizona mayors oppose bill that would limit what cities can taxHoward Fischer Capitol Media Services Arizona Daily Star
February 19, 2013 12:00 am  • 

PHOENIX - A series of mayors told lawmakers Monday that proposed changes in sales-tax laws will mean financial ruin for their cities.

Sharon Wolcott of Surprise said HB 2657 would cut her city's revenues from contracting taxes from $4.4 million this past year to just $700,000.

"That is not sustainable," she told the House Ways and Means Committee. "We have only one place left to cut. That is police and fire."

Christian Price, mayor of Maricopa, told a similar story. "If you don't really want to see some of these towns becoming ghost towns, like the city of Maricopa, you really need to consider what we're saying here," he told lawmakers.

And Tom Schoaf of Litchfield Park said that, even with an amendment to redistribute some of the revenues to faster-growing communities, the legislation would make up only a fraction of what would be lost. "We're literally being asked to trade $80,000 for $1.3 million" now collected, he said.

The legislation would limit what cities can tax and aims to ensure that businesses don't face multiple audits from multiple cities.

Despite the objections, committee members unanimously approved the measure. But that is far from the last word. Democrats on the panel, including Rep. Bruce Wheeler of Tucson, warned the Republican majority that the cities' concerns must be addressed.

Several GOP lawmakers, having been contacted by mayors in their districts, already made it clear they will not go along with the measure without significant changes. That would leave the legislation without the necessary 31 votes needed to gain full House approval.

Rep. Debbie Lesko, R-Glendale, the sponsor of the legislation, promised to consider changes. Lesko disputed the horror stories the cities were telling. She said the change will mean less "leakage" in which contractors avoid taxes entirely. She also said there will be more state revenues shared with localities.

The fear surrounds a controversial change that would scrap existing laws that have contractors pay sales taxes for their projects in the community where the project is constructed. Instead, they would pay the regular state and local sales taxes on their building supplies at the time of purchase. The taxes would be paid where the items were bought.

"Lowe's and Home Depot simply don't exist in Maricopa," Price, mayor of Maricopa, said. That means all the supplies will be bought, and the taxes paid, elsewhere.

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