June 19, 2014
The Arizona Republic
Phoenix leaders voted Wednesday to create a new tax on city water bills and to hike some service fees — moves that will bring in about $11 million in revenue to help close a $37.7 million budget deficit.
City Council members voted 6-3 to approve the tax and fee increases.
The decision largely divided the council along ideological lines, with the body's fiscal conservatives arguing the city could have instead cut internal spending or sold excess properties.
Phoenix faced a deficit in the fiscal year that starts July 1 because its expenses are growing faster than revenues. Quickly rising employee costs, particularly pensions and health care, have created the largest strain on its budget.
The tax on city utility bills will affect hundreds of thousands of residents, costing an average homeowner an extra $1.50 per month. Phoenix would base the tax on meter size, not water usage.
City Manager Ed Zuercher and council members who support the tax and fee increases say the budget strikes the right balance to prevent cuts to city services. Zuercher's initial budget included steep cuts to popular programs, such as senior centers and pool, to balance the budget.
"I would politely suggest that it is a tax that is saving city services," Zuercher said of the new levy, which will be labeled the "city services tax" on residents' bills.
Councilman Jim Waring called the water-bill tax "nothing more than a revenue grab." He said the city is unfairly creating a financial burden for residents because it couldn't keep its belt tightened and has been unwilling to cut unneeded expenses and administrative costs.
Waring and Councilmen Bill Gates and Sal DiCiccio cast the dissenting votes against the tax and fee hikes. Recreation-fee changes were approved by the city's Parks and Recreation Board earlier this week and did not require another council vote. Among the increases:
- Add a tax to city utility customers' bills based on water-meter size, costing most residential users about $1.50 per month. Commercial users and others with larger meters would pay between $1.50 and $75 more per month, depending on the size. It would raise $9.5 million annually.
- Raise fees for city recreation passes from $10 per year to $20 for adult residents and from $20 per year to $40 for non-resident adults. The changes would generate up to $130,000.
- Raise fees for annual senior-center passes from $10 to $20 for residents and from $20 to $40 for non-residents. That would raise as much as $65,000.
- Create a new lighting fee for athletic fields of up to $5 per hour. This would generate about $290,000.
- Increase athletic-field usage fees from $15 per hour to $17 for adult residents and from $4 to $6 per hour for children. Fees would increase from $22.50 per hour to $25 for non-resident adults and from $6 to $10 per hour for non-resident children. The changes would raise up to $185,000.
- Change parking-meter rates from $1.50 per hour in every location to a range of 50 cents per hour to $4 per hour. The city could change rates based upon location, time and special events. The change would raise as much as $2 million annually, though some of that revenue would need to pay for extra enforcement efforts.
Some residents have complained that the new rates and hours will hurt businesses in the downtown core, an area that's grown rapidly in recent years with the addition of Arizona State University students and a burgeoning arts and dining scene.
City officials said they hope the new rates will increase parking turnover and reduce traffic by encouraging more people to ride mass transit, bike or walk.
Meter rates will be demand-based, meaning the city will charge more for parking near major events, such as sports games, concerts or other attractions at US Airways Center and Chase Field.
The city has upgraded many of its meters, allowing it to accept credit cards and more easily adjust rates.
Using that technology, several major cities across the country are implementing demand-based parking prices and extending hours.
Council members also voted 5-4 Wednesday to give final approval to Zuercher's budget for the fiscal year that starts July 1.
His budget plan relies on the utility tax and fee increases and a $16.5 million cut in employee pay and benefits to fix the deficit.
The budget was approved by Mayor Greg Stanton and council members Thelda Williams, Laura Pastor, Daniel Valenzuela and Kate Gallego.
Councilmen Waring, Gates, DiCiccio and Michael Nowakowski cast the dissenting votes.