Arizona has high sales taxes. Back in 2010, Arizona voters overwhelmingly chose to increase their statewide sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. from 5.6 percent to 6.6 percent, a change that vaulted them from 9th to 3rd in our state and local sales tax ranking. Since then, California (which was 1st in the nation) has lowered their statewide rate and Arizona has moved into 2nd nationally.
In reaction to a projected $35 million budget shortfall, on April 13, Glendale city officials released a proposal to raise the city sales taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. an additional 0.8 percent, which would give Glendale the highest sales tax rate among major U.S. cities. Here’s how the new top 10 would look (note that four are Arizona cities):
|
Sales Taxes in Major US Cities (April 1, 2012) |
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|
City |
State |
State Rate |
Local Rate |
Total Rate |
Rank |
|
Glendale (proposed) |
Arizona |
6.60% |
3.70% |
10.30% |
1 |
|
Birmingham (a) |
Alabama |
4.00% |
6.00% |
10.00% |
2 |
|
Montgomery |
Alabama |
4.00% |
6.00% |
10.00% |
2 |
|
Chicago |
Illinois |
6.25% |
3.25% |
9.50% |
4 |
|
Seattle |
Washington |
6.50% |
3.00% |
9.50% |
4 |
|
Phoenix |
Arizona |
6.60% |
2.70% |
9.30% |
6 |
|
Memphis |
Tennessee |
7.00% |
2.25% |
9.25% |
7 |
|
Nashville |
Tennessee |
7.00% |
2.25% |
9.25% |
7 |
|
Tucson |
Arizona |
6.60% |
2.50% |
9.10% |
9 |
|
Mesa |
Arizona |
6.60% |
2.45% |
9.05% |
10 |
|
(a) Most of Birmingham is located within Jefferson County and is subject to a 10 percent sales tax. However, part of the city lies in Shelby County and is subject to a total rate of 9 percent. |
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The proposed budget also calls for a property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. hike that could take one of two forms. As the Arizona Republic reports:
One is a rate increase of 54 cents to $1.91 per $100 of assessed property valuation for five fiscal years.
The second option is an increase of 61 cents to $1.98 per $100 of assessed property valuation for five fiscal years. The 61-cent hike would be spread over two years with a 30.5-cent increase the first year and another 30.5 cent increase the second year.
Under either option, the additional collections would be used to cover existing bond debt, not new projects.
A smaller slice of city property-tax hauls goes toward operating expenses.
It’s the primary property-tax rate, and staff recommends increasing that too.
If the primary-tax rate of 23 cents per $100 of assessed valuation remains unchanged as property values drop, Glendale would lose about $361,000, down to an estimated $2.6 million next fiscal year from $2.9 million this fiscal year, according to staffers.
In the draft plan, staffers propose two options: an increase to 26 cents per $100 of assessed valuation, which would generate $2.9 million, or 44 cents per $100 of assessed valuation, which would bring in $5 million.
The council on Tuesday got its first look at the staff proposals, including the property-tax hike largely involving the capital-improvements budget and recommendations for shoring up the $35 million shortfall in the general-fund operating budget.
According to the Phoenix-based Goldwater Institute, a major component of this budget snafu is a result of the subsidization of the Phoenix Coyote’s hockey arena. They contend that a sales tax increase wouldn’t be necessary if the city looked into ways to cut arena operating costs. Given their national sales tax standing, that might be worth considering.
More on Arizona here.
Follow Scott Drenkard on Twitter @ScottDrenkard.
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