Groundhog Day Tax Increase

The movie Groundhog Day is cute.  Bill Murray’s character, weatherman Phil Connors, repeatedly gets stuck in the same day.  A film buff worked it out to be thirty-three years and 350 days. In the end, Bill/Phil gets the girl.  Maybe it was worth it for that?  For a tax increase, we would hope for a thirty-three-year waiting period.  Our hopes are dashed.

We have been here.  We have done that.  It is our Groundhog loop.   So, what has changed from 2017 to 2023?   The more things change, the more they stay the same….

Our initial court date went well enough.  We await direction from the court on the next steps.  We will update as we can.

As always, we can use your continued support.  It appears the TOP will be making the pending court case long and expensive.  You can donate here.  We suspect voters’ rights are a lot like teeth.  You will miss them when they are gone.

For those new to the area, in 2017, there was a one percent (1%) sales tax/TPT increase proposed.  It was ultimately compromised to 0.88% with a sunset in 2027.  Now, in 2023, there is another proposal for a one percent (1%) sales tax/TPT increase.  The stated reason in 2017?  Unfunded retirement liability of Fire and Police funds.  So, how is that tax increase and paydown going?  Just for police, in 2016, the unfunded liability was $11,977,909.00 ($11.9M).  In 2022, the police unfunded liability was $11,872,223.00 ($11.8M) or $12.1M, depending on Actuarial Value or Market Value method.  Add in the $7.2M for fire, and we are above the $17M owed in 2017.  It is beyond evident that the .88% has not been used to pay down the unfunded liability.

Let’s look at the minutes of May 4th, 2017, from Ordinance 888.

LaRon Garrett, Town Manager, explained the proposed change was to increase the sales tax by 1% percent to cover the shortfall of the Public Safety Personnel Retirement System (PSPRS) as well as additional fees the Town had to pay this year for PSPRS. It would be ongoing as part of the public safety personnel wages. It would make payments on the Water Department loan, get the reserve fund back to where it needed to be, build the contingency fund up, and do deferred maintenance.

Oh yes, “do deferred maintenance.”  Based on current maintenance, hopes are dashed, smashed against the rocks like a sinking ship.

Curiously, the tax increase Ordinance from 2017 was passed on an emergency basis.  There was discussion about letting people vote, but that discussion was quickly shut down.

Hector Figueroa, Town Attorney, noted the Council could not respond to any questions. The Council could respond if they were criticized. Mr. Figueroa explained the only options the Council could vote on were on the agenda.

Vice-Mayor Carpenter noted he preferred a vote, but it would put the budget in peril. Vice-Mayor Carpenter asked Mr. Figueroa to explain the issue of the referendum. Mr. Figueroa replied the Council was authorized to vote on this without the people. There was a petition process that could be done if somebody wanted to file a referendum. Mr. Figueroa explained this was not to discuss now, the Council’s role today was to decide to vote for the sales tax increase.

We have discussed before that the use of an emergency ordinance precludes the use of a referendum.  We suspect, or would think, as Town Legal, Mr. Figueroa knew that subtle detail when he advised a referendum could be used.  Details can be pesky things.

At the time of the passage, The Payson Roundup reported as follows:

Garrett recommended using the extra money to pay down a million-dollar water fund loan fund, make big increases in its reserve and contingency funds, provide raises, undertake various capital projects and buy new cars.

Mayor Craig Swartwood said it would also give the town funds to finally begin working toward projects it has discussed for decades and repair existing facilities and roads, which have fallen into disrepair since the recession forced the town to cut maintenance.

The extra money would provide fund to develop things like a plan for Main Street, water features in the American Gulch, covering the event center and more. However, the town would probably have to sell bonds and perhaps establish an improvement district to actually pay for those projects.

Part of the money from a tax increase is expected to go toward replacing the carpet in town hall.

Yes, more promises to address “disrepair.”  Like an indecisive squirrel on the road, hopes are dashed.  We do not know if the new carpet was installed in Town Hall.

The sales tax/TPT passage resulted in a new budget presentation.  There was a second Ordinance, number 892.  One Council member asked a great question during the passage of that Ordinance.

“Council Member Sterner asked if there was a sunset clause. Mr. Garrett replied yes. Council Member Sterner asked where it stated the Water Department loan would be paid. Mr. Garrett replied in the budget.”

Unfortunately, the funds were not “earmarked.”  They were “in the budget” to provide raises, undertake various capital projects, and buy new cars.  Maybe carpet for Town Hall?

Now, the CIPAC proposal is here. We had previously discussed the anticipated projects and budget/bond implications in this post.  We were not disappointed.  One kicker?  They want to fund some routine maintenance.  The bond issuance and values being presented were expected.   You can see there is a recommendation that the 0.88% current tax NOT BE sunsetted.  Like the Arizona Cardinal’s 2023 season, hopes are dashed.

RECOMMENDATION:

The CIPCAC members stressed a sense of urgency to act and that they want to see the priority projects expedited.  The current status of our facilities and Town’s assets is such because of past inabilities to fund deferred maintenance, and the Town’s current funding and budget do not allow us to take on these priority projects.  After reviewing all the projects and following good discussion, the committee recommends the following:

The projects’ priority in order are:

1. For TPT Sales Tax Funding and bonding Options

i. Police and Fire Deferred Maintenance projects ($3 million)
ii. Combined Aquatic and Recreation Center ($26-$29 million)
1. If Land acquisition is necessary ($10 million)
iii. Rumsey Park Drainage and Improvements ($ 5 – $7.5 million)
iv. Event Center Upgrades and Improvements ($6 million)
v. American Gulch Drainage and Main Street Improvements ($5 million)

A. The committee recommends a 1% increase in the TPT sales tax to fund all the above stated projects (with bonding capacity for $50 – $60 million) and necessary Operating and Maintenance Expenses of these projects.

2. For General Obligation Bonds:

i. New Police Station ($ 15 – 17 million)
ii. Streets and Roads Improvements ($5 million annually) ($15 – 20 million)
iii. New Combined Fire Station ($15 – 16 million)
iv. Green Valley Parkway Extension ($ 12 – 14 million)
v. Trails and Trail Heads ($.5 – 1 million)

A. The committee recommended that at least projects i and ii receive consideration for a future GO Bond Proposal ($ 30 – 40 million).

3. The committee recommended that the current .88% TPT sales tax not be sunset in 2027, indicating that should be extended for at least the length of these projects.

Oh, goody goody, more promises to address deferred maintenance.  The price keeps going up; three million and counting. Did the TOP address any issues as suggested in 2017?  Anything on Main Street, water features in the American Gulch, covering the event center, or more?  Not that we can see.   Why are they all here again in 2023?  Where did the money go?

We note the proposed spending spree is occurring against the backdrop of the Town of Payson Police Department asking for assistance locating affordable housing options for officers.  Paying officers a sufficient wage to live appears secondary to the long list of wants.

We suspect even former President George W. Bush would have difficulty believing the new and improved; we really promise this time, same stuff on a different day.

There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.
― George W. Bush

As always, all the documents and support are below in .pdf.

• Arizona PSPRS Consolidated Report, June 30th, 2016 (Link will download .pdf document.)
• Arizona PSPRS Consolidated Report, June 30th, 2022 (Link will download .pdf document.)
• Council Agenda, May 4th 2017. Prior Tax Rate Increase. (Link will download .pdf document.)

CIPCAC Recommendation, Payson Staff Report to Council.

CIPCAC Presentation to Council.

Council Agenda, September 27th, 2023.