KINGMAN — On Tuesday, April 7, the Kingman City Council voted unanimously on a Motion of Intent, which begins the process of increasing the city’s sales tax from 2.5% to 3%. The council chose an option that also includes a special rate for big ticket items like homes and cars, which could be approved following a public hearing in June.
Deputy City Manager and Finance Director Tina Moline presented three options to the council regarding ways to approach a tax increase. The new Transaction Privilege Tax (TPT) rate is expected to increase city revenue by $5.99 million per year, according to Moline.
Included in this number is a Restaurant and Bar Tax increase from 2.5% to 3%, as well as a Hotel Tax increase from 4% to 5%. The annual revenues from these two taxes are estimated to be $180,000 and $390,000, respectively.
Out of the three options presented, the council chose the option that would create an exception for bigger purchases—something that a third of cities in Arizona have, according to Moline. The Big Ticket exception would only impose a 2.5% tax on all purchases over $10,000. Another version would have imposed a 3% tax for the first $10,000, but create the lower rate of 2.5% for any amount above that. The third version would have no Big Ticket exception at all.
While the board voted unanimously for the tax increase, there was considerable debate over whether to add a sunset clause to the motion. Councilmember Jamie Scott Stehly wanted to include one, arguing that sunset clauses promote transparency and give peace of mind to residents.
Councilmember Jim Dykens pointed out that any future council could vote on changes regardless of whether it had a sunset clause, making it a moot point. Others on the council agreed, including Vice Mayor Cherish Sammeli, who believed that a sunset clause could jeopardize road maintenance funding in the future.
“We as a council made the very difficult decision to set these monies aside for as long as we did and our roads are looking better,” she said at the meeting on Tuesday. “I’m not in favor of a sunset clause at all because that just gives everybody an opportunity to take it away.”
Only one citizen spoke during public comment and that was Tyler Angle, of Angle Homes. He agreed with the idea of finding a more stable revenue source for road maintenance but took issue with how the rate increase would affect the building and selling of homes.
“We’re on a pretty steady decrease on the new homes that we’re building in the city,” Angle said at the meeting. “It’s not because there’s not demand. We’re actually building more houses than we ever have, but most of them are in the county. Now, one of those reasons is because of the costs.”
Angle estimated that the new rate would cost an average of $900 per home, and that buyers would be encouraged to buy outside the city. Moline calculated that if they made an exemption for prime contracting (015) and speculative contracting (016), it would mean an estimated $400,000 to $500,000 in lost revenue.
However, Councilmember Stehly countered that most people looking to buy or build a home in Kingman would find that the extra cost is worth it. “I don’t think anybody would be upset about paying that premium when they can clearly see the value for it,” she said.
Stehly argued that living within the city limits offers a higher quality of life and that people want that. “I would say that it makes sense that it costs more to live in the city limits,” she said. “It is a premium because when you live in the city limits, you get better fire service, you get better police service, you get parks that are beautifully maintained, you get a lower rate at the golf course.”
The tax increase is part of an ongoing conversation about how to best fund road maintenance while also continuing with major capital improvement projects like Flying Fortress Parkway.
In January, the city held a work session to discuss a long-term strategy to pay for upcoming investments. The city considered two options to pay for the expected $22 million spend on the segment of Flying Fortress Parkway that connects Airway Avenue to the Airport Industrial Park. At the January meeting, City Manager Tim Walsh pointed out that the original estimate for the first part of Flying Fortress Parkway was $26 million, but it ended up costing around $56 million.
One option to pay for the upcoming leg of the project involved financing the project through debt, which would include the cost of interest. The other option involved using funds normally allocated for street maintenance. Both options would involve a general sales tax increase to either repay the loan or replenish the funds for road maintenance gradually.
The public hearing to decide on the tax rate increase will be held on June 16. If approved, the rates would become effective on September 1.
Alan Hayman
