The Letter

Editor, Wickenburg Sun

Ok, I’m relatively new here moving from New England about 5 years ago and I don’t really understand municipal finance in AZ but it seems to me that a “TRADE” of a portion of the sales tax for a portion of the property tax is just that. Wickenburg property owners will not be getting any tax relief, in fact all their property taxes will now go to the state, county and a school district increasingly focused on developing a new school system in Buckeye. In return, the Town of Wickenburg will get to keep a larger percentage of sales tax revenue generated within its boundaries. So there’s no local property “tax break” only the comfort that Wickenburg property taxpayers might feel knowing that all of their LOCAL property taxes are now going to a good cause to make up for declining collections in Phoenix, Buckeye, Peoria, Surprise, Glendale and other struggling valley communities in these hard times.

Why is total reliance on the sales tax a bad idea? Simple! It pits town government against residents virtually guaranteeing that the town will approve every proposed project that will increase sales tax revenue regardless of whether it will damage the local property tax base or quality of life. Why? Because the town will have no vested interest in the local property tax base and – in fact – under this system, there is no local property tax base – it all belongs to the state and county and any other tax jurisdictions.

In a system where local property taxes are the first source of local revenue, places like Wickenburg are true tax havens. With an average age of nearly 50 and a high percentage of nonresident second home owners, the level of services per resident is extraordinarily low compared to the value of the property tax base. That is, if Arizona communities relied on their own real estate tax base for revenue, Wickenburg would have one of the lowest tax rates in the state. As is, we are already subsidizing the rest of Maricopa County, and with this latest deal we are giving away the rest of farm. And the timing couldn’t have been worse! Assessments in Maricopa County properties decreased on average by over 22% between FY 2009 and the upcoming FY 2010 but Wickenburg’s assessments decreased by only about 4%. So, if tax rates adjust so as to be revenue neutral, the typical valley community will see no tax increase but Wickenburg would see a double digit increase in property taxes!

Our leaders have been drugged by the apparent success of valley communities which is unraveling as I write. Drive east on SR 74 and you see a sign that says “Phoenix – 37 miles” and just 2 miles later you see a sign that says “Entering Phoenix” — or take a ruler to the latest county map showing community annexations and find that Buckeye now measures 46 miles north to south! Is this efficient municipal management or a time bomb based on a self destructive rooftops and retail arms race fueled by the lure of the almighty sales tax?

Anything we can do to keep more of our local property tax dollars within this community should be done. To force the issue, a voter mandate to eliminate local sales taxes might just start the fire that brings some fiscal sanity to Wickenburg and maybe even the rest of Arizona.

The cost of the override will be shouldered by real estate taxes only, meaning that only homeowners will have their taxes increased, not those who live in a rental home or apartment.

Based on this statement, one of the following is likely true:

1. The tax falls only on owner occupied single family homes and all commercial and residential rental properties are exempt. I believe that this is very unlikely but if its really true the override should be rejected since such a tax would be patently unfair and even predatory given the demographics of this town.
2. Far more likely is that tax actually falls (as it should) on all taxable real estate including commercial and residential rental properties, in which case the Sun’s statement that renters will not have “their taxes increased” may just be an attempt to influence renters with children in the school system to vote for the override thinking they will get a free ride at homeowner expense. If so, this is deliberately misleading since the rental property owner will have to pay the increase, and it is more likely than not that the tenants’ rent will increase to at least cover the tax or even more given the natural entrepreneurial tendency to treat every justifiable cost increase as a profit enhancing opportunity.

Once we get a handle on the latter issue we will have to address the larger issue of just why we are being asked to approve a 7 year override when the biggest needs we now have are current — like fixing some leaks, buying a school bus, and miscellaneous local expenses. The Sun article goes on to say that the cost of the override will eventually decrease “as the amount is shared with the growing number of homeowners in the Wickenburg District.” This sounds good until you read the school district’s own projections.

A handout at the recent Chamber of Commerce sponsored economic summit shows the total number of school busses unchanged at 6 between 2000 and 2008, and enrollment in Wickenburg schools actually declining slightly from 1509 in the 2000/1 school year to the current 2006/7 school year. These are our kids whom we want to support with our tax dollars. But do we want even more of our tax dollars diverted to subsidize west valley growth? The same handout shows that by 2011/12, (the 5th year of the override), the school district population will more than triple to 7,476 and headed for over 20,000 by 2016 when the district will need 72 school busses. The vast majority of this growth will occur not here but in areas already incorporated into valley growth magnets like Buckeye.

It may be technically correct to assert that the cost of this override will be “shared” by those new homeowners in Buckeye. However, readers need to understand that to the extent that those new homeowners in Buckeye are younger and have more children in school than current Wickenburg taxpayers, it is a certainty that the benefit of this tax override in the next few years will shift disproportionately to them.

I’m all for supporting our local schools but is this 7 year override the way to do it? And should we sit idly by and feed the beast as the Wickenburg Unified School District dissolves into the Wickenburg Memorial School District of Greater Buckeye? Our local officials tell us that to get better schools we need more rooftops. I had to chuckle the other day when passing through Laveen, that sleepy little town with acre plus house lots, horses, and alfalfa fields where I almost bought a house 3 years ago. Those fields have been transformed into rooftops in the last 3 years thanks to Pulte Homes and the other usual suspects. Stuck in a 15 minute traffic jam, I had plenty of time to snap this picture. Is this what we want for our school children?