Cottonwood explores raising sales tax

Members of the public rally for .65 percent increase

In an unusual move for citizens, many attended Cottonwood’s work session Tuesday with signs advocating for a .65 percent sales tax increase. VVN/Kelcie Grega

In an unusual move for citizens, many attended Cottonwood’s work session Tuesday with signs advocating for a .65 percent sales tax increase. VVN/Kelcie Grega

COTTONWOOD -- As Cottonwood continues to look at options to resolve a more than $1.5 million deficit through a budget balancing process, scenarios of a potential sales tax increase are currently being discussed.

Sales tax comparisons:

Cottonwood: 3 percent

Camp Verde: 3.65 percent

Clarkdale: 3 percent

Jerome: 3.5 percent

Sedona 3.5 percent

Prescott: 2.75 percent

Prescott Valley: 2.83 percent

Cottonwood isn’t the only city in the Verde Valley to consider raising its sales tax. Last October, in order to help fund traffic mitigation projects, Sedona vote 6-1 to add a half-cent to its sales tax, bumping it up to 3.5 percent.

In an unusual move for citizens, many attended Cottonwood’s work session Tuesday with signs advocating for a .65 percent sales tax increase.

Council member Karen Pfeifer said that in all her years on council, she had never seen anything like it.

“It’s like being at a ball game,” she said.

During a call to the public, Cottonwood resident Terri Clements said she strongly supports a .65 percent sales tax increase as several members of the audience raised their signs.

“It has been a decade since the [economic] downturn,” she said. “A decade that we’ve had to tap into reserves that somebody in prior times was smart enough to set up so it would be there. There will be another downturn.”  

Clements continued, “As far as I’m concerned, we are overdue for an increase in the sales tax.

We need to build adequate reserves. We’re 10 years into a recovery so 10 years closer to an economic downturn.”

Right now, Cottonwood has a 3-percent sales tax. Combined with the state and county sales tax, it is around 9.35 percent. This rate hovers slightly below average for the region.

A full-service city, Cottonwood is one of the only municipalities in the region of its size that doesn’t have a property tax or a special district tax.

Cottonwood Budget Manager Kristen Lennon noted Tuesday that other cities don’t have all the same services that Cottonwood provides such as the fire department, recreation center, cemetery, etc.

“We provide a lot of services on a 3-percent sales tax,” she said.

Lennon added that because Cottonwood doesn’t have a property tax, much of the city revenue rests on the sales tax.

“The majority of [cities] who are the same size, who have the same or higher sales tax rate also have a property tax that funds certain projects,” she said.

Lennon presented several scenarios during the work session of potential sales tax increases between .25 and 1 percent, and what an increase would do to the overall budget. Another scenario included no sales tax increase but also meant potential cuts in city departments and programs.

Phil Terbell, who owns a business in Cottonwood said during a call to the public that we was concerned over how a potential sales tax increase would affect the price of food.

“That makes this a very regressive tax to the lowest income in our community,” he said. “I would consider that some consideration be put in there for removal of food tax.”

Cottonwood City Council will meet again tonight to discuss possible direction on the Fiscal Year 2019 budget. Council meets at their Chambers Building, located at 826 N. Main St.

For agendas and minutes, visit the City of Cottonwood website. Watch meetings online on the Verde Valley TV YouTube channel.

--Follow Kelcie Grega on Twitter @KelcieGrega

Comments

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MichaelMathews 4 months, 2 weeks ago

Now for the rest of the story. The handful of citizens who advocated for the tax hike were rec center pickle ball players who were concerned about the rec center being closed or privatized. Neither one of these options was ever really on the table. By putting it on as a possible cost cutting measure, this red herring had the desired effect of bringing in a small group of single issue demonstrators led by a self described "agitator" to beg for a tax increase so they could continue to play pickle ball. Whether by design or coincidence it could not have worked out better for those city officials pushing hard for tax increases. The rec center is safe and sound and is not going anywhere. Phil Terbell is right. To many of our residents can't afford to pay more for daily necessities. There are council members who are pushing for spending cuts but we need more citizen watchdogs on the dais, not more lap dogs.

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rona373 4 months, 2 weeks ago

if cottonwood does not have a property tax, then what the heck tax am i paying every year to the city?

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pinonbistro 4 months, 1 week ago

You are paying Yavapai County property tax. If you live in Jerome, Clarkdale, Sedona or Camp Verde you are also paying a city property tax--either general or special district. Cottonwood does not have a city property tax.

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pinonbistro 4 months, 1 week ago

Those of us who support an increase to the sales tax do so because we are concerned that Cottonwood has no savings in reserve, has a lot of deferred maintenance on roads/buildings and has increasing liabilities like unfunded pension liabilities foisted on cities by the state at the same time the state is reducing funds to cities. The first two issues are the result of a decade of belt tightening due to the recession of 2008. There will be another economic downturn and we must begin now to build adequate reserves, perform deferred maintenance and pay down liabilities. We support a .65% increase because it’s the same as Camp Verde’s and allows us to operate without instituting a general or special district city property tax which every other town in the valley has. I am a senior on a fixed income as are most of the others who support this measure. We don't support a tax increase because we like increasing taxes but because we see that an increase is the fiscally prudent thing to do.

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