City of Phoenix Fleeces Taxpayers Instead of Living Within Their Means

The Phoenix City Council just doesn’t know how to say ‘no.’ Not to a spend-happy budget, expensive union contracts, the latest and greatest technologies, insanely high pension rates, or new and expanded government programs.  And certainly they can’t say no to higher taxes on residents and businesses.  It would seem the only proposition Phoenix is comfortable denying is fiscal discipline; to that they are consistently and adamantly opposed.

May 17th the Phoenix Council by a vote of 6 – 3 passed a $1.22 billion budget that included a $37 million shortfall.  July 1st, the council is expected to approve a 26 percent property tax increase to cover the deficit.  For the average home owner, their bill will increase from $249 to $314.  This massive budget is a 5.7 percent increase in spending from 2015-16’s budget alone.  Baked into the deal is almost $50 million in “restoration” of employee compensation, $5.4 million for new police body cams, over $1 million in expanded social programs, and $320 million in pension liability payments.

The truth is Phoenix created their own budget crisis and wants the taxpayers to bail them out.  They did this by manipulating their combined fixed rate of 1.82 – decreasing the secondary tax rate used to service debt on capital outlays and infrastructure and shifting to the primary rate used for general fund expenses.  This allowed City Hall to run up the credit cards with spending while simultaneously neglecting to pay down previously incurred debts.  As a result, almost $295 million has been taken from debt payments over the last six years.

To add salt to the wound, city bureaucrats are trying to argue that this really isn’t a tax increase since the property tax change this year doesn’t take into account lower property tax bills following the housing crash in 2008.  In other words, as families were struggling through the great recession, watching the equity and value of their homes disappear, Phoenix leaders believe this “tax relief” justifies this year’s tax increase.

Additionally, the recently enacted budget shows that the city has generated record breaking revenue collections, has a $60 million surplus, and still has approximately $116 of their “general obligation reserve fund” on hand. This isn’t a revenue problem, it is a spending problem.

Currently only three council members—Jim Waring, Sal DiCiccio and Bill Gates—are demonstrating the political will to actively oppose this tax hike.  The rest of the council is either quietly supporting the increase or is avoiding the issue in the hopes that they can approve it without anyone noticing.

One would think Phoenix residents would have had enough.  Already this year they have seen an increase in their water rates and approved a sales tax increase for more expensive and inefficient light rail.   We will find out on July 1st if City Hall wants to tack on a property tax increase to their resume as well.