Governor Ducey has proposed in his 2022 budget a massive cut to state income tax. His proposal is to move to a flat income tax rate. This tax cut will result in a $225 million reduction in state shared revenue to cities annually. The calculations show that this is a $1.2 million yearly loss to Kingman. This is a huge hit to a city that does not have property tax.
Kingman City manager Ron Foggin is asking all of you to reach out to our State Legislators and talk to them about the impact this proposal will have on the City of Kingman. If you are part of a state professional organization please share this information with them and make sure they are lobbying against this income tax change. Kingman City Manager is working closely with the Dorn Policy Group to get this information to any and all State Legislators and the Governor. The following are the talking points you will want to cover with the Legislators:
- Any income tax cut will impact cities and towns through our shared income tax system where municipalities receive 15% of income tax collections.
- Kingman does not have a primary property tax and thus shared income tax represents a substantial portion of the revenue they bring in On average, state shared income tax makes up about 13% of our General Fund Revenues.
- What is being proposed with the flat tax would be the largest tax cut to cities and towns since 1972.
- This proposal would cut each cities urban revenue sharing by 24.2%
- Upwards of 70% of our budgets are made up of police, fire, and emergency services costs, any cut to municipal budgets will have the effect of defunding public safety (KNOW YOUR NUMBERS; WHAT YOUR LOCAL BUDGET IMPACT WILL BE AND WHAT % OF YOUR BUDGET IS PUBLIC SAFETY) Without taking into consideration additional payments being made to fund our PSPRS liability, about 60% of our General Fund operating budget funds public safety. If we were to fund $3.0M towards our PSPRS liability annually, the percentage would increase to about 64%.
- Cuts in state shared revenue also hurts other general fund activities and projects. Over the past few years, we have used General Fund dollars towards the Rancho Santa Fe Pkwy TI project (close to $7M since FY2018), the Fire Station 2 remodel and training tower ($1.7M),and paying down our PSPRS unfunded liability ($3.1M). In the next 5 years, we plan to use approximately $4.8M in General Fund dollars for the purchase of fire equipment/apparatus replacement and for community livability projects such as improving playgrounds, adding landscaping and beautification throughout the city, and installing monument signage.
- (If the argument is made that cities and towns will receive ARP money) ARP money are one time funds used to help cities and towns address the costs incurred because of COVID as well as funds to help the community impacted by COVID, we should not be taking money from ARP allocations and using that as a mechanism for cutting local revenue. Additionally, ARP money is limited on what it can be spent on, and spending it on standard recurring operating costs is not a use identified. ARP money must also be used by 12/31/2024. If the tax cuts remain in place past FY25, we would have to implement yet another additional revenue stream to supplement the lost state shared income tax revenue.
- (If the argument is made that it will be a cut for a couple years but will then be made up through growth) First, that is an ambitious suggestion that it will be made up in growth and cities and towns do not have the luxury of making ambitious plans for growth, we have to run a structurally balanced budget today and these cuts will hurt. Second, any growth that cities and towns see require services are provided for that growth (new police and fire personnel/facilities/equipment, infrastructure, parks, additional services) so the plan for growth does not come without cost.
- Proposition 208 was passed but provides no direct benefit to cities and towns; however, it appears cities and towns will be the most negatively impacted by this approach.
Please find below the contact information for our LD5 State Representatives:
Regina Cobb – (602) 421-0773
Leo Biasiucci – (928) 486-8022
Sonny Borrelli – (928) 486-4831