County to collect in 4 tax districts

 

BY JONATHAN ATHENS
The Yuma Sun

March 27, 2005

As a result of a recent unilateral decision by the Yuma County Board of Supervisors, the county will collect revenue on four tax districts — more than any of the other 15 counties in the state, according to the Arizona Department of Revenue.

Coconino County has three tax districts; Maricopa, Yavapai, Pinal, LaPaz and Gila counties each have two tax districts; Apache, Mohave, Navajo, Cochise, Greenlee, Graham, and Santa Cruz each have one district; and Pima County has none, according to the Arizona Department of Revenue 2004 Annual Report.

Yuma County currently collects revenue on three tax districts — Jail District, General Fund, and Capital Projects Sales Tax, each levying a half-percent sales tax for a combined total of 1.5 percent. The state levies a 5.60 percent sales tax and each municipality levies their own sales tax.

Supervisors created the new district to partially fund the Yuma County Health Department which has been operating at a more than $600,000 deficit over the last three years.

Four years ago, state lawmakers passed a law giving municipalities the option of not paying for public health services. The deficit is a result of the city's decision three years ago to opt out.

Yuma County Administrator David Garcia said he is recommending next month supervisors approve the maximum increase, .112 percent, which amounts to $1.12 on a $1,000 purchase. Add that proposed increase to the county's 7.1 percent sales tax and the sales tax paid on a $1,000 purchase totals $72.10.

If they approve the .112 percent increase, that rate is projected to generate $2.6 million for the health department in the next fiscal year.

The pending sales tax increase will push San Luis' sales tax up from 10.6 to 10.7 percent.

San Luis currently has the highest sales tax of all municipalities in Arizona , 10.6 percent.

San Luis City Councilwoman Nieves Riedel said the sales tax is high because it is the only revenue generating mechanism for the city.

The pending sales tax hike means those going to bars and restaurants in Yuma will pay more as well.

The city of Yuma collects 8.8 percent sales tax and of that, 1.7 percent is levied by the city. That rate, however, does not include the 2 percent hospitality tax and the .5 percent gasoline tax.

By the end of 2006, however, the sales tax rate in the county could drop by as much as a half percent if the Capital Projects Sales Tax, approved by voters in the September 2000 primary election, raises the $57 million it was projected to raise and sunsets as a result.

Thus far, the county has raised $39.1 million to date and is expected to collect $57 million by the end of 2006, according to the Yuma County Finance Department.

The sunset of the Capital Project Sales tax would reduce the county sales tax from 7.1 percent to 6.6 percent. If supervisors approve the .112 percent hike, the total sales tax would be 6.71 percent.

Yuma County is the first county in Arizona to create a public health services tax district to partially fund their health department and some officials say other counties in the state may be watching to see what happens here.

"There are a number of counties, I believe, that are watching Yuma County because they are in the same situation as we are in their health departments (budget). They plan on pursuing the same route," said Kevin Tunnel, Yuma County director of public and legislative affairs.

Don't bet on the health district here fading into the sunset anytime soon or ever, said Kevin McCarthy, president of the Phoenix-based Arizona Tax Research Association, a nonprofit taxpayer advocacy and research group.

"Normally, when you create a new taxing jurisdiction like public health, it's not likely ever going to go away," McCarthy said.

McCarthy said state lawmakers four years ago slipped through a provision in an omnibus healthcare bill allowing counties to create health districts. That provision, McCarthy went on to say, gave county supervisors the power to create health districts on their own.

"If, given the opportunity, we would have opposed it," McCarthy said, adding, "If you are going to create a new taxing district, taxpayers ought to play a role in that."

McCarthy said he hopes other Arizona counties do not follow Yuma County 's lead.

Two county supervisors said they will push for a decrease in property taxes to offset the pending increase in the sales tax.

District 2 Supervisor Russell McCloud said: "I will be requesting that we tie the increased sales tax to a rebate on the property tax rate which will reduce the property tax bill to property tax owners."

McCloud said he voted to create the district because he saw it as an opportunity to get a property tax cut passed.

The property tax currently stands at $2.31 per $100 assessed valuation.

District 5 Supervisor Greg Ferguson said: "We can cut it by a dime and all the money we're saving can go right back to taxpayers. It doesn't sound like much but it's a start."

"I think the No. 1 priority is rebating that to taxpayers," Ferguson said.

Supervisors are slated to decide next month the sales tax percentage for the newly created district.