The Flagstaff City Council adopted on Tuesday the finalized budget for the 2018 fiscal year, which includes an increase in primary property taxes.
The hike in the city’s property tax levy, which is the amount of revenue collected in property taxes, will amount to 8 percent, 7 percent of which comes from primary property taxes, and 1 percent of which comes from new construction. With the increase, the city would collect about $6.17 million in primary property taxes for the year.
At Tuesday’s “truth in taxation” hearing, which is required by law before a government body can increase tax collection, three members of the public spoke to the council, urging them to reconsider the increase.
“Just because you have the right as a city council to raise property taxes doesn’t mean you should,” community member Joy Staveley said to the council during the public comment period. “Just as the taxpayer must learn to live within his means, the city government should live within its means.”
Staveley said people can choose to buy a product to avoid sales tax, but property owners have no choice when it comes to the property tax -- they are forced to pay whatever amount the city requires.
John Conley, the owner of Salsa Brava and Fat Olives, said the increase in property taxes on commercial property will not be paid for by the property owner but instead added to the lease agreement and passed down to the business leasing the space.
The budget follows a plan that was originally proposed by City Manager Josh Copley, which raises the levy by 7 percent in the 2018 fiscal year, which begins in July 2017, and suggests a second addition of 7 percent in tax revenue for the 2019 fiscal year, which begins in July 2018.
That plan would mean a $17 tax hike on a home worth $300,000 in the first year, plus an additional $17 increase the second year, with a combining effect of a $34 increase.
On a commercial property worth $1 million, the change represents a $62 increase in the first year and another $62 in the second.
The city is allowed to increase the revenue the city collects in property taxes up to 2 percent per year. If the city forgoes an increase one year, it is eligible to collect it in a subsequent year. The city has so far forgone five years of increasing the levy amount, meaning the council could decide to increase the levy 12 percent this year by including the current year’s allowable amount and the five years with no change.
Copley’s plan would allow the city to increase the levy a total of 14 percent over the course of the two years, due to the additional 2 percent the city would be allowed to increase the levy next year.
At a previous city council meeting Councilman Charlie Odegaard asked if it would be possible to earmark the money collected from the tax levy increase for public safety funding, because Copley proposed the money be allotted for adding police and fire personnel.
At Tuesday’s meeting, Finance Director Brandi Suda said the city has not found a legal way to earmark general fund money.
The council unanimously approved the budget, which relies on the tax levy increases, but the levy increase passed separately by 6 to 1, with Councilman Scott Overton voting no. The council will have one more vote on the levy increase at its July 5 meeting.