By Councilmember Tom Durham
Would you like to see improvements in our Greenbelt parks, increased safety and security in parks and the Preserve, and maintenance of the Preserve to reduce the risk of fire—AND pay less sales taxes? You will have that opportunity on the November ballot.
On Tuesday, April 2nd, the Scottsdale City Council took action to protect and preserve two jewels of Scottsdale: the McDowell Mountain Sonoran Preserve and the Indian Bend Wash Greenbelt and its parks. Prior generations of Scottsdale voters had the vision to create these remarkable assets. Now it’s our turn to ensure that they remain for future generations.
The Preserve was created through two sales taxes, both approved by the voters, one in 1995 and one in 2004. The 1995 tax, set at 0.2%, is scheduled to expire in 2025. This tax can be used only for the acquisition of the Preserve land. The 2004 tax, set at 0.15%, can be used only for the acquisition of land and “improvements,” such as parking lots, trailheads, and restrooms. The 2004 tax will expire in 2034 unless it is terminated earlier by a citizen vote.
But neither of the Preserve taxes can be used for repairs, maintenance, or essential tasks such as removing invasive species, which present a fire hazard. Last year’s Diamond fire was a wake-up call to the dangers of fire in the Preserve.
The Greenbelt has a different history, but it is no less important to Scottsdale. Citizen action led to the creation of the Greenbelt, which turned problematic flooding into the beautiful string of parks we all enjoy today.
But some of the Greenbelt parks are approaching, or exceeding, their 50th anniversary, which means they are showing their age. This is particularly true of the older parks located in the south of Scottsdale. Playgrounds, community centers, sport courts, and trails and paths need some tender loving care to preserve them for future generations.
The expiration of the 1995 Preserve tax, scheduled for 2025, presents a unique opportunity to fund the needs of both the Preserve and the Greenbelt. The Council appointed the Protect and Preserve Scottsdale Task Force to consider how the City should address the challenges of maintaining the Preserve and our parks. After over a year of intensive study and community input, the Task Force proposed a ballot measure to extend the 1995 tax at a lower rate of 0.15% to fund the maintenance of the parks and Preserve.
The Council passed a proposal to put this ballot measure on the November ballot. If passed by the voters, the current 0.2% tax would be extended at a lower rate of 0.15% for 30 years. The proceeds of this tax would be distributed annually as follows:
- 48% for park improvements, with an emphasis on southern parks
- 13% for park and recreation maintenance
- 17% for maintenance in the Preserve
- 6% for rangers in parks and the Preserve
- 9% for fire mitigation and technical rescue
- 7% for WestWorld improvements
These allocations are the result of intensive study and unanimous agreement by the Task Force and are set forth in an Ordinance passed by the Council on April 2nd. The Ordinance and the ballot measure contain numerous safeguards to ensure that the funds from the tax will be spent as set forth above. These safeguards include separate fund accounting, oversight by the Parks and Recreation Commission and the McDowell Sonoran Preserve Commission, Council approval of budgets and contracts, and an annual audit by a CPA firm.
The Council’s action only puts this measure on the ballot—the voters will have the final say on whether they agree with this proposal.
Some questions have been raised concerning the tax, and these are discussed below:
The money from the tax cannot be diverted. The ballot language specifies that the money can be spent “solely” on the items specified in the ballot language, which are the six categories set forth above. This language is legally binding on the Council and the City. If the ballot measure is approved, this requirement could not be changed without another vote from the citizens. The funds from the tax cannot be spent on anything other than the six categories specified above.
A supermajority of the Council (5 of 7) could change the percentage allocations as between these six categories if circumstances warrant, but the City cannot spend the tax funds on anything outside the six categories.
The ballot measure will reduce taxes. The current rate of Scottsdale’s sales tax is 1.75% and the revised tax will be 1.7%. So, no matter how you slice it, everyone’s tax rate will be going down, not up. Scottsdale will continue to have one of the lowest sales tax rates in the Valley. The tax rate will be further reduced when the 2004 Preserve tax expires in 2034.
The tax is not being used for “hard assets” and therefore issuing bonds is not appropriate. Paying for these items with bonds doesn’t make sense for several reasons. First, as most people know, interest rates are currently very high. There is no reason to incur high interest costs when sales tax funds are available. And bond fundings require additional legal and transaction expenses. Second, most of the tax is going for repairs, maintenance, salaries, and miscellaneous renovations of smaller assets. Bonds are ordinarily used for large, multi-million-dollar assets such as new fire stations or the Civic Center renovation. By way of example, if your refrigerator needs repairs, most people wouldn’t take out a mortgage to fund the repair. Third, much of the tax isn’t being used for assets. For example, the Preserve needs to attack invasive species to mitigate fire risk. We can’t issue bonds for pulling up weeds, or salaries for park rangers, repairing irrigation lines, or technical rescue teams. Finally, paying for these items out of sales tax revenues means that tourists and our neighbors in Phoenix, Mesa, Gilbert, etc. will share a significant portion of the cost. This is appropriate since they enjoy these assets. If the costs were bonded, Scottsdale citizens would bear the entire burden.
A small portion of the tax is for one-time funding for critical improvements at Westworld. Since this project involves urgent repairs to an income-producing asset with a longer useful life, it will be paid for with debt, which will be serviced with proceeds from the tax.
The tax proposal adequately expresses the uses of the tax. As indicated above, the tax must be spent on the six categories listed; the tax can’t be spent on anything else. These categories will include thousands of minor and major repairs, renovations, maintenance, expenses, and salaries. Homeowners know they will run into maintenance expenses, but, by their nature, these expenses can’t be scheduled in advance. These routine expenses are different from bonds, which are directed to large, identifiable hard assets. The City Council quite literally can’t get “into the weeds” of deciding how to pluck weeds out of the Preserve. Within the stated categories, the tax will allow the City to perform maintenance and repairs as and when needed. The proposal has several layers of oversight to ensure that the funds will be spent as specified in the ballot language.
The tax will not create a surplus. The tax in the ballot measure will be used, as and when collected, for the specified purposes, so there will never be a large surplus. To the extent a surplus does arise in any year, the City ordinance provides the unused portion of the tax will be carried over to be spent in the same category as specified in the ordinance.
If the ballot measure is passed, the remaining portion of the tax (the 0.15% passed in 2004) will remain in place until 2034 or until terminated earlier by a citizen vote. But there is no surplus in this tax, since the current fund balance is less than the debt outstanding for the Preserve acquisition and improvements. Depending upon tax collections and interest rates, collections from this tax can be used for future capital improvements to the Preserve, but not maintenance. The tax could also be terminated by a citizen vote if no longer needed.
On major issues in Scottsdale regarding the use of their money, the voters always have the last word. The Task Forces recommendations were based on public input, and the e-mails I have received and the public statements on April 2nd indicate the voters are behind this ballot measure. The vision of previous generations has created these beautiful emblems of Scottsdale, and I am confident that the voters will come through again.