The recent wild swings in property values in the city of Phoenix prompted Councilman Bill Gates to meet with major bank and local business leaders to evaluate our city's fiscal policies. Given the dramatic increase of property values between 2003 and 2007, the city of Phoenix built up a $330 million reserve for debt service on capital projects. However, the collapse of real estate values since 2007 created the possibility that Phoenix may not be able to pay its debt service in a few short years.
After analyzing the issue and considering the trends, Councilman Gates concludes that immediate tax relief is appropriate and fiscally responsible. "The city should maintain a nine-month contingency reserve; the rest of the money should be infused back into the community to stimulate new investment and provide Phoenix residents with much-needed financial relief. This plan is fiscally responsible and provides every property owner in the city of Phoenix more money in their pockets to use to spend for goods and services or to invest in their businesses."
Specifically, Councilman Gates made a motion that was approved by Phoenix City Council today to:
1. Maintain the property tax rate at $1.82 per $100 of assessed valuation, which means that a taxpayer who owns a $200,000 home will see his or her property tax bill for the city of Phoenix reduced by $146 or 40 percent from $364 to $218 over the next two fiscal years.
2. Restructure and refinance city debt to reduce the need to use money from the general fund or allow secondary property tax rates to float in fiscal year 2013.
3. Delay construction on certain city capital improvement projects, which were previously approved in the 2006 Bond Program, thereby saving millions of dollars.
4. Direct staff to update the City Council every six months on what steps are being taken to address this important issue.
In these difficult economic times, Councilman Gates believes it is essential to take responsible actions while providing relief to Phoenix taxpayers.