Marchione: Kitchen table economics for Maricopa taxpayers

Whether or not Maricopa’s Question #5 is approved, it’s important for taxpayers to get the hard numbers to understand how this bond will affect their bottom line. It doesn’t take a degree in economics to understand the impact; it’s simply a matter of applying some basic truths. And, you don’t have to look any further than your checkbook or household budget.

As I’ve previously mentioned, if Question #5 is approved it could result in residential property owners paying as much as an additional 56 percent in property taxes to the City of Maricopa when the bonds are fully funded, regardless of your assessed value. This increase would appear on line item 04164 of your Pinal County Tax Statement and would represent the portion of taxes paid directly to the city. This line item does not include local school district taxes.

Trying to understand Arizona’s taxation process only serves to increase one’s need for headache medication. Someone tried to explain the process at a Council meeting not long ago, and those who weren’t shaking their heads or looking totally lost were close to snoring. There are more equations, variables and “if…then” parameters than you’d find in an advanced accounting textbook. To try and simplify things, let’s examine this proposal from the concept of my “circle of taxation.”

The circle begins once debt is incurred. Even though bonds are repaid by residential and commercial property taxes over time, a lot of the cold, hard cash that eventually ends up repaying these bonds will come from the pockets of consumers, many of whom live in Maricopa. Page seven of the Special Election Informational / Publicity Pamphlet states “the tax impact over the term of the Bonds on an owner-occupied residence valued by the County Assessor at $250,000 is estimated to be $327.53 per year for 25 years, or $8,188.34 total cost.” This is simple if you’re the owner-occupant with a home assessed at $250,000 and you can safely assume everything else stays the same for the next 25 years. Not likely.

Commercial property owners will see a significantly higher adjustment than residential owners. If you’re both, you get a “double whammy.” I am surprised to see a show of support from the Maricopa Chamber of Commerce because I feel it shows disconnect with many local business owners. The bond measure could result in higher rents charged by landlords needing more revenue to pay higher taxes. Costs get passed on to consumers in higher prices of goods and services. It might also mean a loss of goods and services because of declining business, financial strains on business owners and operators, bankruptcy, closings, no new development, etc. The circle is now in full motion, perhaps starting to wobble or even spin out of control. Quite frankly, in two years, this bond could be deal-breaker for new business, and it could kill existing businesses. How does this fit into the City’s goal of sustainability?

Mayor Smith recently offered the following quote with regard to a new City Hall, “With the way the economy is right now, I don’t know when we will begin construction on a permanent facility.” Gosh, our local economy is so bad that we need to hold off on building a facility to house essential services and departments, but it’s okay to go full steam ahead and create more financial burden on taxpayers with $65 million in bonds?

This definitely sends the message that the tail is wagging the dog. Do we now answer to City Hall? I know the view from “interim” City Hall is limited, but at some point our elected officials must drive through our neighborhoods and see all the “For Sale” or “Public Auction” signs, don’t they? Think about some of the ardent supporters pushing this measure, and ask yourself if they truly have your best interests in mind, or just their own profit margins. There are quite a few entities supporting this measure who are looking forward to cashing in on your tax dollars! In fact, proponents of Question #5 are even paying for published opinions, and many are counting on your ignorance or apathy at the polls.

Any or all of the components proposed in the bond measure would be great to have; that’s not the point. The point is what if we build them, and there’s no money to staff or maintain them? What’s next? Another tax raise? Where is the money going to come from? Will approving Question 5 put us in a classic “catch-22” scenario? Now, I know what you’re thinking. Why so negative? Why dwell on the worst-case scenario? The answer is simple; it’s because these outcomes are possible. No one can predict the future with any degree of certainty, and neither side can refute words like “could mean” or “might bring” because it’s all conjecture.

Kitchen table economics 101 – if expenses exceed income, that’s trouble. A recent local television news story reported that a significant portion of Arizona’s homeowners are upside-down on their mortgages. Many Maricopans fit prominently into that demographic. It doesn’t matter how many resources on financial management are on the shelves at the new $15 million library. It doesn’t matter how many laps you swim at the new $16.5 million aquatic complex or how many runs you hit at the new $20 million Regional Park / sports complex. Despite your willingness to invest in Maricopa’s future, when the money’s gone, it’s gone. No funds, no fun.

Guaranteeing ourselves higher taxes over the next several decades is a very real and significant issue. Voters will be looking at it from a ‘what does it mean to ME?’, but we have to consider all of Maricopa, its people, businesses, infrastructure, strengths and weaknesses. What about lost sales tax revenue if businesses fold and no new ones come? What about those on fixed incomes? How about families whose income is well below our average? Many of these people are / will be struggling to make ends meet, put food on the table and keep a roof over their heads. Will additional taxes be enough to push them out the door, and, if that happens, will there be a notice of foreclosure tacked to that door? That’s a possibility no one wants to imagine.

I’ve never heard of anyone moving to an area solely because of a recreation center or park and then looking for a nice house to go with it! That’s as ridiculous as someone wanting to live in a community primarily because of the nice pavers! One of the reasons people might choose to live in Maricopa is because they envision a city filled with potential and possibilities. They may end up leaving because they have no choice. Parks and recreation amenities alone do not bring new residents. Communities attract people; it’s a package deal.

So, the “bottom line” is we’re not just talking about additional property taxes. This “circle of taxation” could continue to eat away at your checkbook day after day, month after month, year after year, for as long as the next 40 years! (That’s how long these bonds could take to repay – info pamphlet, pg. 8). That’s a lot of time and a lot of changes at a lot of kitchen tables.

We can revisit this issue at the next local election. We can keep a close watch on the budget, giving our city planners and managers time for things to hopefully improve and stabilize. We can do this in smaller pieces, instead of the whole pie approach. Please don’t be fooled by the seemingly benign sales tactics. One from “column A,” one from “column B;” a combination plate works at a Chinese buffet, but most times, you end up taking more than you can finish. Let’s not take the same approach here. Please join me in voting NO on #5.

Respectfully, Alan Marchione

Alan is a self-taught professor of Kitchen Table Economics from the School of Hard Knocks, a former-U.S. Marine, father and active member of his community. He currently serves on the City of Maricopa Public Safety Advisory Committee, is Vice-President of the Villages at Rancho El Dorado Homeowners Association Board of Directors, and a graduate of the City’s first Citizen’s Leadership Academy.

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