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Sales tax revamp could cost cities millions

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Photo: Video by kgun9.com

Sales tax revamp could cost cities millions

CREATED Feb 11, 2013

Reporter: Craig Smith

MARANA, Ariz (KGUN9-TV) - Sales tax.

We all pay it- and now Governor Brewer wants state lawmakers to streamline the system.

But some cities complain the proposal could streamline them out of millions in sales tax on construction.

A house may be the biggest, big ticket item you'll ever buy, so the sales tax on it, is a big boost to whatever city it's in.  Now as Governor Brewer pushes reforms for the state sales tax system, she's proposing dropping the tax home builders pay.    
   
Even with the home market not nearly as hot as it used to be, the Town of Marana was expecting between five and seven million dollars in taxes on new construction.
    
Deputy Town Manager Del Post says that big a loss will be hard for Marana to swallow.

KGUN9 reporter Craig Smith asked him: "If that goes away are you going to have to look to make that up some other way?"

Post: "Yeah, we will.  It'll mean significant reductions probably in general fund expenditures and quite honestly we're not sure how we will account for that at this early point of the game."

Cities and towns normally use sales tax income from selling new homes to deal with the impact new homes put on city services so that money would generally go towards things like building new roads or building new sewers.

If the changes go through, Oro Valley estimates it's loss at about two million.
     
For Tucson it's between six and eight million, and Sahuarita pegs it's lost revenue at one-point-eight million.
     
Governor Brewer says critics can air their issues as the plan moves through the Legislature.

"I know the cities have some problems with it but we're gonna work with them, they've always been our friends.  We're all serving the same amount of people."
    
And while many lawmakers stood with the Governor to support the sales tax overhaul, others say the effect on the cities is a deal breaker.