In May, the Arnold City Council snuck in a 5% gross receipts tax on sewer bills in the wake of the sale of the system to American Water (perhaps illegally, as I reported here). Since this was done without any kind of advance notice, Arnold residents were likely surprised to see this on their bills (or maybe they saw my blog post). So Arnold apparently felt the need to explain/defend this tax in its “Arnold Update” newsletter in the August 27 Leader:
Note how they try to pass the blame to American Water: “It is their choice.” In reality, it was Arnold’s choice to assess the tax. Note also that city ordinances allow for the electric, gas, and cable taxes, but not the one for sewer services.
We now know what Arnold wants to do with this clandestinely-acquired revenue. The September 10 council packet reveals a sewer lateral grant program on page 17 that would provide 100% of the costs for residents to fix their damaged laterals. That’s a good deal for some residents, and a bad deal for others.
Sales Tax Hike
The city council unanimously (with one absence) passed a measure to put a 1/2 cent sales tax hike on the November ballot for stormwater and infrastructure improvement, reports the August 27 Leader. As Mayor Ron Counts admits in the article, stormwater issues are the biggest problem in the city. But the city government has done very little on the issue. despite pleas from residents, instead preferring to focus on pet projects like the Corridor 55 co-working center, subdivision beautification and street light programs, and an infrastructure-heavy, city-run farmers market (in an era where most of these are run independently from government bodies). But now, the city is saying “you want us to fix your stormwater problems? Gotta pass a tax first!” Councilman Phil Amato said:
“People will have to decide,” he said. “They come up to the mic with real stormwater issues and now they can decide (whether to pass a tax to fund improvements).”
And Counts says:
“People want services; they’re demanding services, but they’re going to have to pay for them,” he said.
Of course, the people of Arnold don’t get to decide if they want to keep shoveling money at the hemorrhaging rec center and golf course, if they want to grossly overpay a third-rate city attorney year after year, or if they wanted the aforementioned boondoggles. But the city won’t help real people with real problems without a new tax.
This is despite the fact that the city just pocketed $9 million from the sale of the sewer system. Yes, some of that money is going to fix water problems at Melody Lane and Farmcrest Drive. But that will only use up some of the money. Here’s what Counts said about that money in the May 28 Leader:
However, Counts said, much of the $9.2 million will be left after these project are complete.
“We need to be very careful in spending this money,” he said. “This is a one-time thing. Once it’s gone, it’s gone.”
“As conservative as I am, I will really be recommending that we invest the money that is left over. This is something we can use for the future.”
It doesn’t seem all that “conservative” to me to put that money away somewhere, and then raise taxes. Plus, can we really trust this council not to spend that money ASAP? Counts says in the article he wants to fix Arnold Park’s perennial flooding issues. That won’t be cheap. And I’m sure there are other pet projects festering in the minds of council members.
The city employs the old selling point for sales taxes: all those out-of-towners will be paying it. City Administrator Bryan Richison estimates that 40% of the revenue from the tax will come from non-residents. That estimate probably presumes that those non-residents won’t take a look at Arnold’s near-10% tax rates (admittedly, some of that is from fire and ambulance districts, etc.) and decide to shop elsewhere. But I think they just might do that.
Why not Property Taxes?
If you are going to pass a tax, it seems like the property tax would be much more appropriate here. Who is going to benefit most from this spending? Property owners. But instead, the poor, people who rent, and people who don’t even live in Arnold will have to shoulder the burden for this spending. All because it is easier to get a sales tax passed by voters.