The residents of Oro Valley may soon be paying yet another regressive tax due to the continued losses related to the purchase of the failing El Conquistador Country Club and golf courses. In a memo dated January 15, 2016 Town Manager Greg Caton proposed imposing a use tax as “as a possible additional revenue source for the Town.”
In his January 2016, Community and Recreation Center December Statistics report, Caton notes that “…the original budget projections are no longer accurate for the month of December 2015 due to the recent operational adjustments.” The Town revenue projections for the month of December were off by $109,910.35.
For the first 6 months of FY 15/16 the forecast revenue was: $1,225,243.91, however that actual revenue for the first 6 months of FY 15/16 was a mere $761,714.17.
According to Town Councilmember Mike Zinkin, the total forecast for the entire golf project (including salaries, utilities, equipment leases etc.) was to lose $1,118,358. Now the Town can add the additional $463,529.74 and it has lost $1,581,887.74. The revised forecast for total losses in entire fiscal year of 15/16 is $1,900,000. Zinkin notes that the Town’s losses are already over $1.5 million only 6 months into the fiscal year.
Zinkin, who has been fighting for transparency and accurate numbers with the Town Manager and Mayor, told constituents that at least the Community and Recreation Center December Statistics report finally included an “admission that the forecast was bogus.”
Even in golf-tourist destinations like those found in southern Arizona golf, course upkeep costs are increasing while income decreases. The failure of the sport to attract new players has hit many municipalities hard and Oro Valley is no exception. What does make Oro Valley exceptional is that the town is not dealing with the costs of courses that have been under its control for years. Oro Valley only recently bought the courses – long after the prospects for profit were a thing of the past.
The purchase of the courses, and old country club facilities were part of what has been described as a secretive process brokered by Mayor Satish Hiremath. At the time Hiremath was rushing the shadowy deal through, he promised that would be a boon – not a burden – to the community.
Contrary to his promises, Oro Valley residents have already been hit with an increase in sales taxes and with a proposed use tax rate of 2.5%, many residents including families and those on fixed incomes would certainly feel the burden.
According to the January 15, 2016 Use Tax Information report, examples of transactions that would trigger use tax remittance are:
Example 1:
New Car Sales from Outside the State of Arizona. A vehicle is purchased from an out-of-state car dealer and brought back to Arizona. The purchaser did not pay any local sales tax in the other state. The owner of the vehicle lives in Oro Valley and registers the car in Oro Valley. The owner is subject to Arizona and Oro Valley use tax.
Example 2:
A new chain restaurant is opened in Oro Valley. Fixtures and equipment are purchased from out of-state and delivered to Oro Valley. The purchaser did not pay any local sales tax in the other state. The new store’s fixtures and equipment are subject to Arizona and Oro Valley use tax.
Example 3:
A fitness facility in Oro Valley purchases equipment and fixtures from an out-of-state vendor. The purchaser did not pay any local sales tax in the other state. The fitness equipment and fixtures are subject to Arizona and Oro Valley use tax.
Exemptions
· New residents that move to Oro Valley and transfer their possessions from other areas are not subject to a use tax on such transfers
· Casual sales between individuals are not subject to a use tax
· Use tax does not apply to items specifically exempt from TPT, such as most food items purchased at a grocery store
· Purchases where an equivalent sales tax is paid are not subject to a use tax
In the memo, Caton advises the Councilmembers: “Since this issue consists of the adoption of a new tax or fee, state statute requires that the Town provide written notice of the proposed new tax on the home page of the Town’s website at least 60 days before the date the proposed new tax is approved or disapproved by the governing body of the municipality. Should the process be initiated this spring, the tax would likely take effect within two to three months following a Council decision.”
Caton’s proposal has not yet been considered by the Council, and is not currently on any Council agenda. The last time a new tax was introduced, Oro Valley residents called for a referendum. Had it not been for a minor clerical error, the issue would have been voted on by the public. Should a majority on the Town Council support the imposition of yet another tax, it is unlikely the residents would make the same mistake again.