12.
Special City Council Meeting
- Meeting Date:
- 06/17/2020
- From:
- Stacy Saltzburg, City Clerk
Information
TITLE:
Consideration and Adoption of Resolution No. 2020-37: A resolution of the City Council of the City of Flagstaff, Arizona, calling a Special Election to be held on November 3, 2020, in conjunction with the City's General Election, to submit to the registered voters of Flagstaff a question to approve the continuation of a 1% City transaction privilege (sales) tax, excluding the tax on food, through June 30, 2035
STAFF RECOMMENDED ACTION:
1) Read Resolution No. 2020-37 by title only
2) City Clerk reads Resolution No. 2020-37 by title only (if approved above)
3) Adopt Resolution No. 2020-37
2) City Clerk reads Resolution No. 2020-37 by title only (if approved above)
3) Adopt Resolution No. 2020-37
Executive Summary:
The City currently has a combined Transaction Privilege (Sales) Tax rate of 2.281%, excluding a tax on food. The sales tax is imposed on the gross proceeds received from engaging in taxable business activities in the City, as set forth in the Model City Tax Code (Chapter 3-05 of the City Code) and state law. The combined sales tax rate includes a 1% sales tax rate that was first adopted in 1964. This tax has been renewed by the voters six times, and is currently set to expire in November 2024.
The City is dependent on revenue from the 1% sales tax as it represents 33% of all General Fund revenues. The sales tax revenues are used to fund the day-to-day operations of the City. Public Safety is the single largest user with the Fiscal Year 2019-20 budgeted expenditures accounting for 55.2% ($26.9 million) of the total General Fund expenditures. Flagstaff is the only City in the state whose privilege tax contains an expiration date. The City is not required to adopt sales tax rates with an expiration period, but has traditionally done so.
Staff is recommending a slightly longer expiration period to bring the expiration date in line with the City's fiscal year. Instead of an expiration date of November 2034, staff is recommending an expiration date of June 30, 2035. This will move the expiration to a non-election year which is similar to other city sales taxes.
Although the tax does not expire until 2024, staff is recommending that it be placed on the November 2020 ballot so that there will be an additional opportunity to bring it forward again should it not be passed by the voters in 2020. The City would have the opportunity to take this tax back to the voters in November 2022 if needed.
Revenues received from the balance of the combined sales tax rate (1.281% rate) must be used for specific purposes approved by the voters (such as roads, public transportation, and certain capital projects).
The City is dependent on revenue from the 1% sales tax as it represents 33% of all General Fund revenues. The sales tax revenues are used to fund the day-to-day operations of the City. Public Safety is the single largest user with the Fiscal Year 2019-20 budgeted expenditures accounting for 55.2% ($26.9 million) of the total General Fund expenditures. Flagstaff is the only City in the state whose privilege tax contains an expiration date. The City is not required to adopt sales tax rates with an expiration period, but has traditionally done so.
Staff is recommending a slightly longer expiration period to bring the expiration date in line with the City's fiscal year. Instead of an expiration date of November 2034, staff is recommending an expiration date of June 30, 2035. This will move the expiration to a non-election year which is similar to other city sales taxes.
Although the tax does not expire until 2024, staff is recommending that it be placed on the November 2020 ballot so that there will be an additional opportunity to bring it forward again should it not be passed by the voters in 2020. The City would have the opportunity to take this tax back to the voters in November 2022 if needed.
Revenues received from the balance of the combined sales tax rate (1.281% rate) must be used for specific purposes approved by the voters (such as roads, public transportation, and certain capital projects).
Financial Impact:
The sales tax represents 33% or $22.8 million of all General Fund revenues budgeted for FY2019-2020. It is imperative to continue the sales tax as there is no alternate revenue sources available to make up this resource.
Policy Impact:
None.
Connection to Council Goal, Regional Plan, CAAP, and/or Strategic Plan:
The City sales tax provides funding for numerous City operations and programs that further the goals of the City.
Has There Been Previous Council Decision on This:
None
Options and Alternatives:
Adopt resolution calling a special election for November 2020.
Not adopt resolution calling a special election for November 2020.
Not adopt resolution calling a special election for November 2020.