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Strike two on bed tax increase
Thelma Grimes/San Pedro ValleyNews-Sun
Will the third time be a charm?
It's back to the drawing board for the Benson City Council and efforts to pass a 2-percent bed-tax increase.
The increase, which would impact visitors staying at local RV parks, motels and hotels, was supposed to go into effect last week on Sept. 1.
The council originally approved the measure on June 14 with plans for it to go into effect a month later. But City Attorney Michael Massee revisited the issue, stating proper procedure was not followed in notifying the Arizona Department of Revenue (ADR).
Under the city's proposal, the tax would become effective 30 days after the original vote. But state law says ADR requires a 60 days notice.
In July, in a 4-3 vote, Council passed the increase a second time. Council members John Lodzinski, Jo Deen Boncquet, David Lambert and Lori McGoffin affirmed the increase, while Mayor Mark Fenn, Vice Mayor Toney King and Councilman Al Sacco voted against.
Questioned last week on steps followed to get the tax approved on the second vote, Massee discovered another mistake had been made, and the tax did not go into effect as planned Sept. 1.
Mayor Fenn said the city did not follow proper procedure in passing the increase, which now makes the approval void.
Massee discovered that Arizona statutes require the City Council to hold a public hearing before a tax increase can be approved. No hearings have been held to date.
Arizona Revised Statute 42-6054, Modifications to model city tax code; notice and hearing, states, "If a city or town adopts the model city tax code, the city or town shall not adopt any modification or amendment to the code unless the city or town holds a public hearing on the proposed action before the modification or amendment becomes effective."
City Manager Glenn Nichols said it was a matter of misreading the code.
"I'm ultimately responsible, so it's my fault," he said. "We are going to rescind this, and it will be up to the council how we proceed."
Massee also took responsibility.
"This was due to my oversight of the relevant statute. ARS 42-6053 allows rate changes to the model city tax code to be implemented without prior approval of the commission that oversees the code, and on that basis I had concluded that a simple rate change should alse be excluded from a public hearing requirement. However, upon further consideration and reflection, I now think this is incorrect," Massee stated in a written statement.
The proposed tax increase is on hold again, and if the council wishes to proceed, a third vote to increase the bed tax from 2 percent to 4 percent will have to be taken.
Before the initial vote in June, the city did not notify local business owners of the proposed increase and in July, Nichols proposed the increase via a hand delivered letter.
On Friday, Nichols notified business owners in person the increase did not go into effect.
Business owners like Dan Barrera, of the Quarter horse Motel, said the council passed the increase too quickly without communicating with local business owners about what it could do to Benson.
In the first two votes, the measure barely passed, and the leading opposition to the idea was Mayor Fenn.
Fenn was so adamantly against the tax, after it passed in July, he refused to sign it.
Vice Mayor King signed the bill into law.
While the city sorts out how to proceed, what has not changed is opposition to the proposed increase.
Art Bale, a local RV park owner, said he is working on an appeal.
"If we lose RVers, then Wal-Mart loses, restaurants lose and we lose population," he said. "I think the mayor took a major step by refusing to sign that bill. It took a lot of guts to stand up to it."
Mark Rogers, of the Desert Rose Inn, formerly the Holiday Inn Express, said while the tax increase may generate more revenue for the city, it's the businesses who lose.
"I believe this tax will give people enough pause to look elsewhere for better rates," he said. "This comes on top of the state sales-tax increase. To me it is a ridiculous proposition. The city knew (the businesses) were the ones that would have to eat the cost."
With the Arizona economy struggling, no business can afford to raise rates, Rogers said.
If the tax does become reality, Bale said his rates would increase 54 cents.
That kind of boost has many RV park owners, and motel managers worried because of what happened in Tucson when a bed-tax increase was implemented several years ago.
"RVers left Tucson for a 50 cent increase, we are going to have to charge more than that," Bale said. "This was not a good idea."
The city's intention with the added revenue also has business owners worried.
Rogers said the city promises the money will go toward tourism, but if people don't stay in Benson because of the tax increase, reasoned Rogers, it would defeat the purpose and hurt the town's economy.
Since the council will have to reconsider the measure, business owners now will be given a platform to argue against the proposal when the required public hearing is held.
Will the third time be a charm?
It's back to the drawing board for the Benson City Council and efforts to pass a 2-percent bed-tax increase.
The increase, which would impact visitors staying at local RV parks, motels and hotels, was supposed to go into effect last week on Sept. 1.
The council originally approved the measure on June 14 with plans for it to go into effect a month later. But City Attorney Michael Massee revisited the issue, stating proper procedure was not followed in notifying the Arizona Department of Revenue (ADR).
Under the city's proposal, the tax would become effective 30 days after the original vote. But state law says ADR requires a 60 days notice.
In July, in a 4-3 vote, Council passed the increase a second time. Council members John Lodzinski, Jo Deen Boncquet, David Lambert and Lori McGoffin affirmed the increase, while Mayor Mark Fenn, Vice Mayor Toney King and Councilman Al Sacco voted against.
Questioned last week on steps followed to get the tax approved on the second vote, Massee discovered another mistake had been made, and the tax did not go into effect as planned Sept. 1.
Mayor Fenn said the city did not follow proper procedure in passing the increase, which now makes the approval void.
Massee discovered that Arizona statutes require the City Council to hold a public hearing before a tax increase can be approved. No hearings have been held to date.
Arizona Revised Statute 42-6054, Modifications to model city tax code; notice and hearing, states, "If a city or town adopts the model city tax code, the city or town shall not adopt any modification or amendment to the code unless the city or town holds a public hearing on the proposed action before the modification or amendment becomes effective."
City Manager Glenn Nichols said it was a matter of misreading the code.
"I'm ultimately responsible, so it's my fault," he said. "We are going to rescind this, and it will be up to the council how we proceed."
Massee also took responsibility.
"This was due to my oversight of the relevant statute. ARS 42-6053 allows rate changes to the model city tax code to be implemented without prior approval of the commission that oversees the code, and on that basis I had concluded that a simple rate change should alse be excluded from a public hearing requirement. However, upon further consideration and reflection, I now think this is incorrect," Massee stated in a written statement.
The proposed tax increase is on hold again, and if the council wishes to proceed, a third vote to increase the bed tax from 2 percent to 4 percent will have to be taken.
Before the initial vote in June, the city did not notify local business owners of the proposed increase and in July, Nichols proposed the increase via a hand delivered letter.
On Friday, Nichols notified business owners in person the increase did not go into effect.
Business owners like Dan Barrera, of the Quarter horse Motel, said the council passed the increase too quickly without communicating with local business owners about what it could do to Benson.
In the first two votes, the measure barely passed, and the leading opposition to the idea was Mayor Fenn.
Fenn was so adamantly against the tax, after it passed in July, he refused to sign it.
Vice Mayor King signed the bill into law.
While the city sorts out how to proceed, what has not changed is opposition to the proposed increase.
Art Bale, a local RV park owner, said he is working on an appeal.
"If we lose RVers, then Wal-Mart loses, restaurants lose and we lose population," he said. "I think the mayor took a major step by refusing to sign that bill. It took a lot of guts to stand up to it."
Mark Rogers, of the Desert Rose Inn, formerly the Holiday Inn Express, said while the tax increase may generate more revenue for the city, it's the businesses who lose.
"I believe this tax will give people enough pause to look elsewhere for better rates," he said. "This comes on top of the state sales-tax increase. To me it is a ridiculous proposition. The city knew (the businesses) were the ones that would have to eat the cost."
With the Arizona economy struggling, no business can afford to raise rates, Rogers said.
If the tax does become reality, Bale said his rates would increase 54 cents.
That kind of boost has many RV park owners, and motel managers worried because of what happened in Tucson when a bed-tax increase was implemented several years ago.
"RVers left Tucson for a 50 cent increase, we are going to have to charge more than that," Bale said. "This was not a good idea."
The city's intention with the added revenue also has business owners worried.
Rogers said the city promises the money will go toward tourism, but if people don't stay in Benson because of the tax increase, reasoned Rogers, it would defeat the purpose and hurt the town's economy.
Since the council will have to reconsider the measure, business owners now will be given a platform to argue against the proposal when the required public hearing is held.
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watching wrote on Sep 8, 2010 8:31 AM: