Scottsdale City Council eyes fiscal year 2016-17 budget parameters

The Scottsdale City Council will revisit the budget for fiscal year 2016-17 during the March 5 meeting. (photo by Terrance Thornton)

The Scottsdale City Council will revisit the budget for fiscal year 2016-17 during the March 1 meeting. Independent Newsmedia/Terrance Thornton

Eliminating a food tax in Scottsdale, hiking the property tax and adjusting the salaries of some city employees were among the topics highlighted during a recent Scottsdale City Council discussion about upcoming budget parameters for fiscal year 2016-17.

The preliminary discussion will be followed up during the March 1 city council meeting when the proposed capital budget program will be presented.

The discussion held Jan. 26 gave council members an opportunity to offer input as to what factors the city manager should consider when developing this year’s budget. The process of drafting a proposed budget is now in the hands of the city manager and his staff.

“We were talking about revenues, but we haven’t looked at expenses yet, so it was really only half of a conversation,” said Councilwoman Linda Milhaven in a Feb. 2 phone interview. “It’s difficult to make decisions without the whole thing.”

Council members offered a number of suggestions to be considered in this year’s budget process, including:

  • A change to local sales tax when residents purchase food from a grocery store that is intended to be eaten at home;
  • Increasing property tax by the allowed 2 percent;
  • Salary increases to city employees by 3 percent, and up to a 5 percent salary increase for qualifying police officers.

“The budget is the most important thing the city has,” said Councilwoman Milhaven. “How do we spend the citizen’s tax dollars to provide the best possible services?”

Linda Milhaven

Linda Milhaven

Councilwoman Milhaven says it’s important to take time to navigate through the complex budgeting process.

Local sales tax on food purchased at a grocery that is intended to be eaten at home, is a topic Vice Mayor David Smith considers crucial.

“The most significant direction we gave (the city manager), I think, was that for the purposes of budgeting he should exclude from the General Fund the potential revenue on sales tax on food,” said Vice Mayor Smith in a Feb. 3 phone interview. “The exclusion would be phased in over three years, so he should reduce the revenue by a third next year, two thirds the following year and then fully the third year.”

According to Budget Director Judy Doyle, the city staff will best estimate the amount of food for home consumption tax, and begin putting that amount into the General Fund budget.

Sales tax on grocery store food is a tax that only about half the cities in Arizona presently assess, according to Vice Mayor Smith.

“We were remiss in not taking this out years ago,” he said. “More than half the people in the state of Arizona live in cities that do not impose a tax on groceries. It’s not a good way to fund capital improvement projects. I think we should be embarrassed to use food tax as a resource for the CIP.”

The council also discussed the potential to raise the property tax by 2 percent. The state Legislature gives the city the right to raise property tax by 2 percent each fiscal year if desired.

David Smith

David Smith

“I think we should be increasing this tax each year by the amount allowed,” said Vice Mayor Smith. “And my reason isn’t just because I’m a liberal ‘tax them as much as you can’ type of person. That’s not my motivation.”

“If we take a pass on this, what would be the benefit for an average homeowner? The answer was about $3 per year. That’s a really small amount,” said Vice Mayor Smith. “I would much rather tell the city manager not to take it. It is just a way to pander to businesses, to out-of-state investors and to wealthy homeowners, and I can’t make sense of pandering to those three groups but not being willing on the other hand, to authorize a tax break on our low income citizens.”

Direction was also given to city staff to include a performance-based salary increase of 3 percent to city employees; and up to 5 percent increase for qualifying police officers.

On March 1 the council will continue the discussion with a capital budget program conversation, followed by release of the proposed budget on April 5. The final budget will be presented to council on April 19, with talks continuing through the June 7 meeting, when the council plans to adopt the final budget, according to Ms. Doyle.

Northeast Valley News Services Editor Melissa Rosequist can be e-mailed at mrosequist@newszap.com or can be followed on Twitter at twitter.com/mrosequist_.

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