By Dianna M. NÃ¡Ã±ez for The Arizona Republic
The tax hike would equate to an increase of 35 cents per $100 of assessed valuation. The council had considered adopting a rate as high as $2.16.
The breakdown of the proposed tax rate includes the primary rate, which mostly funds operations costs, such as salaries, increasing to roughly 79 cents from 66 cents. The proposed secondary rate, which funds repayment of bond debt to maintain city infrastructure, is climbing roughly to $1.36 from $1.13.
Finance officials warned last year that Tempe would lack funds to pay debt on bonds issued for capital assets if the city’s tax rate was not increased. Under the new policy, the secondary rate floats according to the amount Tempe needs to collect to maintain a small debt-reserve fund and to pay debt on bonds issued for capital assets and basic capital improvements, such as street repairs.
[Mayor] Hallman reasoned that the tax policy actually benefits residents because it stabilizes the city’s tax levy and will prevent Tempe from collecting more property-tax revenue as home values increase. In prior years, although the rate stayed at roughly $1.40, the city collected significantly more tax revenue year over year because of the spike in property values during the real-estate boom.
Read more at AZCentral