Concerns of revenues lost paramount as Paradise Valley legislative agenda forms

Construction sales tax remits are a vital revenue stream for Arizona municipalities — the Town of Paradise Valley is no exception. (File photo)

Fears of revenues lost, public perceptions of photo radar and what can and cannot be used in municipal rights-of-way appear to dominate Paradise Valley concerns at the Arizona Legislature.

Paradise Valley Town Council received an update Thursday, Nov. 2, on legislative concerns relayed by Director of Administration & Government Affairs Dawn Marie Buckland and translated through the municipality’s hired hand at the Arizona Legislature: Highground Public Affairs Consultants.

“This is a great opportunity for us in advanced of the legislative session,” Ms. Buckland told members of town council at Town Hall, 6401 E. Lincoln Drive.

Dawn Marie Buckland

“We can start talking about items we want to continue moving forward on and any new items you would want us to support. It is kind of crazy there some of the time — well all of the time.”

According to Ms. Buckland, the new legislative session begins the second Monday of January at the Arizona capitol in downtown Phoenix.

“Some notable items we saw were really well-prepared for because of your efforts last year,” Ms. Buckland said of efforts at the council level. “We focused on keeping the construction sales tax on the site.”

According to Ms. Buckland, certain lawmakers provided a letter to Arizona Sen. Kate Brophy McGee, who represents District 28 at the Arizona Legislature, with assurances the Town of Paradise Valley construction sales tax remits will remain intact despite pending amendments to the statewide tax code that may or may not impact construction sales tax remits.

“What we found is that there are some nuances to that — what was meant to be a simplification turned into 166 pages of amendments — it was hard to call that a simplification,” she said of pending tax remit rule changes.

“We are trying to develop legislation that makes sense for everybody.”

While very little specifics were provided about legislation pursued — or what those bills may mature into — Ms. Buckland assured town council all construction sales tax remits for the Town of Paradise Valley would be rendered “harmless,” according to a letter in the possession of Sen. Brophy McGee.

The Independent was provided a copy of the letter — from Sen. Steven B. Yarbrough and Rep. J.D. Mesnard to Sen. Kate Brophy McGee — outlining what appears to be the Legislature’s position regarding construction sales tax remits.

“The conversation was that any changes to the existing law would need to mean that the revenues we are receiving would not change,” Ms. Buckland said. “That was very important. If they go to a point of sale on the materials and we don’t have that here in Paradise Valley … somehow those revenues would be held harmless.”

The word “harmless” was not used in the letter, but the nomenclature may suggest the municipality may be in line for payments or subsidies to make up for lost revenue.

“Revenue streams for some cities and town are very restricted, presenting unique challenges in providing necessary public services,” the letter reads.

“We acknowledge the critical nature of the construction sales tax revenues for municipalities with few other options. As we proceed with efforts to establish a reasonable and logical approach to construction sales tax, preservation of local revenues will be a prominent interest addressed by any legislative solutions.”

Courtney McKinstry of Highground confirms Ms. Buckland’s assertion on Paradise Valley being shielded from Legislature actions that could take construction sales tax remits away from the Town of Paradise Valley.

“It’s not just construction sales tax,” Ms. McKinstry told council. “There were a lot others that we weren’t at the table for — we have to get up and state our interests at the podium. We are hoping to not see too many surprises this session.”

Ms. McKinstry contends the voice of Paradise Valley is getting through at the Arizona Legislature.

“I think for us, we have done a really good job working toward positive solutions,” she said. “Speaking to other towns outside of the League who we think we can partner with — we have had some great meetings there.”

The interests of Paradise

The Town of Paradise Valley has the following interests at the Arizona Legislature:

  • Maintaining construction sales tax being assessed at the job site rather than the point of sale;
  • The preservation of quality of life efforts through zoning entitlements;
  • Continued Public Safety Pension Retirements System reforms;
  • The continued use of photo radar enforcement being allowed and other “smart technology” continue to develop and be implemented in local municipalities; and
  • The preservation of state-shared revenues remits for local municipalities.

Paradise Valley Town Manager Kevin Burke says construction sales tax remits means dollars and cents for the Town of Paradise Valley.

Kevin Burke

He contends close to $43 million worth of construction activity occurred within town limits over the last fiscal year and those dollars were left on the table due to certain provisions with the Arizona tax code.

“We had all of that and we didn’t get any of that sales tax,” he said during the work session discussion.

“That is where the commitment, and the letter, if there is going to be one will play a role,” he said. “That is where this letter is saying we will be held harmless. We lost $750,000 due to the MURA amendment.”

Paradise Valley Councilman Paul Dembow found the issue of construction sales tax remit changes perplexing.
“So, let me ask you this: let’s say you own a home worth $150,000 in Phoenix and you do some remodeling at $50,000 then you pay construction sales tax?” he pointed out.

“Let’s say you own a home in Paradise Valley at $5 million and you do $1 million you don’t pay any construction sales tax?”

Well, sort of, Vice Mayor Jerry Bien-Willner points out.

“You are paying construction sales tax, it’s just not coming to us, right?” he asked, with the proverbial headnod coming from town staff. “I understood it a little differently. You are still being taxed on the materials at the point of sale.”

Northeast Valley Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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