Taxes: Getting your money's worth

What you get depends on what kind of place your city has set out to be
Edythe Jensen
Sunday, April 4, 2010
Edythe Jensen

Everybody knows there's no avoiding taxes

But few people know - or seem to care - what happens to the taxes collected by their home cities so long as needed services are provided.

Even fewer can honestly say if they are getting good value for the money they hand over every month in property taxes, service fees and the "invisible" tax contributions they make every time they go shopping.

In a tough economy, as cities struggling with budgets blown out by the recession start to raise taxes and reduce services, it's a good time for residents to take stock of what they are getting for their tax money, says Kevin McCarthy, president of the non-profit Arizona Tax Research Association.

The average Valley household pays about $2,000 a year to city government.

Just as with the amount a person or family is taxed, what they get in return depends a lot on where they live in the Valley and also what they ask for.

Beyond basic services - police and fire departments, roads, water, sewer, and garbage collection - local governments are under pressure to provide extras that make their city stand out and be a more enjoyable place to live. People clamor for signature festivals, professional sports arenas, neighborhood revitalization projects, recreation centers, dog parks and hiking trails.

All of that costs money, and the more residents expect, the more revenue is needed to provide it. Valley cities that go the extra mile also need more to pay for the extra labor to run expanded departments.

Which is where the debate over taxes and city services gets loud.

No matter what a city provides, its greatest expense is the salaries and benefits it pays to its staff. And that, says McCarthy, a tax watchdog, is why people should be paying attention, because city governments are spending taxpayer money on the kind of compensation and generous pension benefits that are vanishing from the private sector.

Critics say it's unfair that taxpayers facing uncertain financial security in their own retirements have to pay increasingly expensive wages and perks for government employees.

But city officials say employee costs reflect their need to provide critical public safety and recruit skilled and educated workers to manage operations that are larger than many corporations.

One measure of municipal efficiency, and whether residents are getting value for their taxes, is the staffing ratio: the number of people a city employs for every 1,000 residents. A review of the Valley's eight largest municipalities shows Tempe has the highest estimated ratio with 10.7 staff per 1,000 residents and Gilbert the lowest at 5.5, with the average at 8.2.

According to 2009 comparisons, the eight largest cities employ about 30,000 - more than the population of Queen Creek.

Peoria has the fewest employees at 1,196.

Phoenix has the most employees, 16,205, and the third-highest staffing ratio after Tempe and Scottsdale.

The numbers include some unlikely government job titles.

Phoenix has a motion-picture assistant who helps filmmakers find locations, golf rangers who enforce rules at city courses and a full-time book mender who repairs damaged library books.

Scottsdale hires a wrangler to bathe and groom the Police Department's horses, and several cities hire "solid waste field specialists" who peek into garbage cans to make sure people are bagging trash and not throwing the wrong things into recycling barrels.

There is, however, no consistent reporting in municipal budgets about exactly how much of residents' taxes and fees goes toward paying municipal salaries and benefits.

And there are other variables.

Some cities report lower employee numbers because they use more contracted services. Chandler has no city garbage trucks or drivers or landfills; it contracts with outside haulers. Gilbert has no city attorneys; it uses a private law firm.

Dennis Strachota, Chandler's management-services director, said his city postpones or cancels building things like parks and museums if there isn't a secure source of constant tax revenue to staff and maintain them. And although it keeps costs down for taxpayers, the practice is not always popular with residents.

Tempe, spokeswoman Nikki Ripley said, "has the most extensive transit program in the East Valley, a large number of special events and the presence of Arizona State University . . . all are factors in the number of city employees."

As the Valley's largest municipality, Phoenix is saddled with costs tied to regional demands, said Jason Harris, deputy director of community and economic development. A big city is expected to have a convention center, which isn't a big revenue generator for the government that builds and runs it, he said. And Phoenix also is expected to provide roads and mass transit that connects surrounding cities and can't discontinue services that affect neighboring communities.

It's that extra tax burden, however, that can shape the future of a city: an investment in its future that determines how it grows, the kind of image it develops and the quality of life it brings.

For Phoenix, the cost of building the convention center went a long way to helping turn downtown from a dull business center to a lively commercial entertainment and arts district.

"We have a broad range of cultural activities, more live theater, more museums, universities and now a mass-transit system," Harris said. "There's a resurgence in the central city."

Planning ahead

Devising a long-term strategy for a city is an expensive process, and across the Valley, cities have met the challenges of providing services and planning future development in different ways.

Chandler fought for decades to protect expanses of vacant land around Price Road and the municipal airport from homebuilders' zoning pressures. Now, the city is reaping the reward as national corporations such as Intel, Rockefeller Group and Covance establish themselves in the city.

By setting aside hundreds of acres for future commercial development when homebuilders were eager to buy land but big businesses were not, Chandler set the stage for an influx of businesses and jobs that generate tax revenue, Strachota said.

Scottsdale also set aside land for its thriving Scottsdale Airpark but took a different approach to attract commerce and well-heeled residents. The city's prosperity - and moderate taxes - is a reflection of years of national image-building as a community for the prosperous, said Harold Stewart, the city's economic vitality director. "There is sense of success in Scottsdale's image, that if you come here, your likelihood of success is very good," he said.

"Residents are attracted to the city for all the normal reasons: parks, amenities. But they also like being identified with a community that is successful."

Glendale has put in a lot of tax money and promotion efforts into becoming a high-profile sports hub in recent years. The city built the $180 million Arena for the Phoenix Coyotes, snagged millions of dollars in Arizona Tourism and Sports Authority funds to build University of Phoenix Stadium for the Arizona Cardinals, and built baseball spring-training facilities.

The city's aggressive, visionary attempts to attract quality corporations with sports and entertainment have not been without their challenges and financial risks.

The Coyotes nearly moved after filing for bankruptcy last year, and Glendale continues to negotiate with the NHL to keep the team. The city's portion of the spring-training ballpark is supposed to be repaid with revenue from a yet-to-be-built commercial project that has not yet secured funding.

But the payoff for the city's boldness has been in hosting high-profile national events such as the 2008 Super Bowl and last weekend's WrestleMania and in being the top venue in the Valley for concerts, which draw thousands of fans whose spending boosts sales-tax revenues.

Missed opportunity

Without a clear understanding of the continual planning and expense it takes to keep a city vibrant, communities can decline, officials say.

It happened to Mesa, where Mayor Scott Smith wishes his city had got the football stadium that was built in Glendale. Mesa voters passed a referendum that took the city out of the running for the Cardinals stadium in 2002.

"People thought we didn't need a stadium, that we have a great community already," he said. "We missed out because they didn't understand that those kinds of things are essential for us to continue to be a great community."

Like other communities, Mesa is struggling with a budget deficit and plummeting sales-tax revenues. And there is extra pressure to revitalize aging, vacant retail centers, Smith said. His city got complacent when Fiesta Mall was new and Southern Avenue was a "happening place" 25 to 30 years ago. Today, much of the area is a retail ghost town where temporary chain-link fence keeps vandals out. Smith said Mesa must take aggressive action to turn things around.

Although the recession and commercial bankruptcies have left Tempe with some noticeable large vacancies, Mayor Hugh Hallman said he expects his community will bounce back from the recession faster than others partly because of its university population, central location and the commercial-entertainment district of Mill Avenue.

However, Hallman said he is frustrated by limitations in state law on how cities can spend their property-tax revenues - limitations that force cities to tear down "perfectly good" old buildings and erect new ones because some taxes can be used only for construction and not maintenance. He said cities would be able to give residents more for their money if cities could use property-tax revenues to repair and modernize older buildings and expand programs.

Quest for revenue

Other cities are still carving their identities, which can mean a mixture of preserving what they've got while trying to attract entities that boost the tax base.

Peoria has a natural attraction in Lake Pleasant and surrounding desert mountains. But the city is still trying to get the revenue-generating assets the other municipalities have: a hospital, college campus, higher-paying jobs, company headquarters and a signature festival, city spokesman Kelly Corsette said.

Kathy Knecht, a former teacher who grew up in west Phoenix, moved her family to Peoria because of the good schools, without consideration of tax rates. "We patronize the local theater, and my daughter is in the city's volleyball and swimming programs," she said.

Surprise built one of the region's largest tennis centers.

Avondale, which may be best known for NASCAR races, trumpets its Tres Rios Nature Festival and eco-tourism at the convergence of three rivers.

Gilbert built a Big League Dreams baseball complex that features eight scaled-down diamonds, indoor-soccer fields and sand-volleyball courts.

Glendale, Chandler and Gilbert constructed large indoor recreation centers that include gyms and classroom space.

For many people, though, it's not government services or amenities that make a city a good place to live. It's often the intangible elements.

For Allan Friedbauer, it's living near a bicycle trail and tennis courts and being able to walk to the library. The 55-year-old former Foreign Service employee said tennis facilities and greenbelt persuaded him to move to a central Scottsdale neighborhood. Now, he said he can't imagine not being in a place "where we can walk to the dentist, to church, to the library, downtown."

Craig Mandel, 49, said he doesn't even like many of the recreation amenities built in Surprise but loves the laid-back atmosphere of the city even though he has a long daily commute to his downtown Phoenix job.

"I don't play tennis. There's not a whole lot of exciting stuff going on here, but it's pretty clean, pretty safe, and I like it."