Water and tax hikes: The crisis myth - Ahwatukee Foothills News: Opinion

Water and tax hikes: The crisis myth

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Posted: Wednesday, February 9, 2011 10:00 am | Updated: 11:34 am, Tue Jun 28, 2011.

The debate over a city-proposed 7 percent water rate hike completes a trilogy of misinformation over tax and rate increases you have seen this past year and poses serious concerns over Phoenix's credibility with taxpayers.

Let me present three significant myths you have been told and what story the evidence truly supports:

Myth 1: Food tax to save police and fire or pay for raises and bonuses?

Phoenix declares a fiscal emergency and on Feb. 2 passed a $50 million per-year food tax with barely 24 hours notice. The claim was that without the tax, police and fire would be cut.

Fact: On June 23, 2010, the city granted $29.6 million per year to city staff in pay raises and bonuses (see the agenda item from the June 23 formal meeting regarding merit and longevity increases).

Myth 2: Property tax increase to save bond integrity or to pay staff?

Phoenix declares a fiscal emergency in June saying that the secondary debt (used to pay off citizen-approved debt) is in dire shape and will have a structural deficit if the City Council does not approve a huge property tax rate increase.

Fact: On July 7, 2010, the city shifted $18.9 million from this fund to pay employee and operational expenses, creating the crisis it sought to avoid. Eventually, it will come to you again for a property tax increase to stabilize the debt fund (see the transcripts from the July 7 property tax vote).

Myth 3: Water rate increase for health and safety or to pay staff?

Phoenix declares that the health and safety of your water is in jeopardy unless council raises your water rates $22.9 million per year, or 7 percent on top of 40 percent in the past five years.

Fact: On Dec. 14, 2010, the city reported that 303 people cut from other departments are being shifted to the Water Department at a cost of $19.3 million per year (see the memo from the acting water services director).

In all three of these above events, city management led you to believe that your hard-earned money, earned in this recession while shouldering cuts and hardships, was needed for health and safety. But most of it went to make sure no one at the city had to bear the similar burdens as your family. I don't think that is neither fair, nor worthy of an institution that calls itself America's best-run city. Best run for whom?

Two solutions:

1. Compensate public employees commensurate with what the area's private sector employees get. Even if we excluded police and fire, Phoenix would save more than $300 million per year. The current system is unsustainable with the average employee cost at $100,000 a year for more than 15,000 employees. Then use that saved money for youth, seniors, libraries, police, fire and other truly strategic services. This solution alone would solve our fiscal crisis.

2. Seek competitive bids for all non-strategic city government functions (excluding police, fire and judges). We should, at the very least, get bids to see what the market provides. For example, Phoenix has one of the largest auto repair shops in the state, spending $34 million per year in-house. We should see if anyone can provide better service at a lower cost, without the huge pension costs that are decimating government budgets everywhere.

Phoenix City Councilman Sal DiCiccio represents District 6, which includes Ahwatukee Foothills. Reach him at council.district.6@phoenix.gov or (602) 262-7491.

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