Supporters and opponents debated the merits and pitfalls of Tempe's proposed tax increase, which appears on the ballot as Proposition 424.
The Arizona Republic hosted the debate in its newsroom between State Sen. Mitzi Epstein and Tempe Mayor Corey Woods. Republic reporter Taylor Seely moderated the cordial debate about Proposition 424, which would raise the sales tax by 0.5%.
The tax is projected to raise $50 million to backfill a $24 million hole in Tempe's $342 million operating budget left by the state Legislature. Those who support the tax have said it's a necessary step to prevent drastic cuts to such services as police, fire and Tempe's preschool program.
But opponents have called this tax "the wrong tax at the wrong time."
Epstein is chairing
a political action committee to oppose the increase. Woods has been involved in the Yes on Proposition 424 campaign and has been a vocal supporter of the increase.
Answers have been edited for clarity and conciseness.
Here's what voters should know before Election Day:
Why is Tempe proposing a sales tax increase?
The repeal of the rental tax in 2024 gutted city budgets across the state. It had an acute effect on Tempe, which sees a larger share of renters than other cities in metro Phoenix in part because of Arizona State University.
The repeal left a $24 million hole in Tempe's $342 million operating budget. City officials have said they have saved $19 million over the last few years by taking actions like freezing hires.
Woods: The goal was always to find ways to (make cuts) in ways where it wouldn't affect the residents in the city of Tempe. ... I was on the City Council, starting in 2008, when the Great Recession hit. When I first started, there was a $34.5 million budget shortfall, and everything was collapsing. We, at that point in time, on council, were scaling back a lot of services ... Our residents couldn't stand it. Their perspective was the services in the city are what sets it apart from other East Valley communities. This is a community of choice that people want to live in because of the high quality of services that our residents rank very highly every year. And so, I wouldn't want our residents to have to go through what we went through back on the council during the Great Recession.
Epstein: It's the words in the proposal that are problematic. The ideas that are being described, we want that. We want great pre-K for our kids, and we want to help families with low income. But that's not the words on this Prop. 424. And that's the problem. That's why it has to go back to the drawing board to make sure that the beautiful vision you're describing is what the words on the page will do.
How much money will the Proposition 424 sales tax raise?
One of the most contentious points regarding Proposition 424 is the fact that it's supposed to raise $50 million in tax revenue when the deficit is only $24 million, according to the city.
Epstein called the extra $25 million buying a "gold plated roof" when all you need is a standard one to fix a leak.
Epstein: I love the idea of doing more for housing, doing more for childcare, doing more for transit. All those things really help people with upward mobility. And I know that's what's at the hearts of our City Council members, upward mobility. But this is not. ... We're really tired of subsidies to big corporations, and that's what could happen. It is just not well defined. And so that's why I said, you know, we really want this to go back to the drawing board and come up with something better. Something that is much more defined, so the voters have assurances.
Woods: It's to make sure that we have stable, sustainable revenue moving forward to provide services that our residents can count on 365 days a year. ... We need to make sure that we're asking for enough money that we are thoughtfully preparing for the future.
Where is the money raised by Tempe's Proposition 424 going?
The money raised by the tax will fall into three pots of money: $30 million will go toward public safety, $10 million to transit and $10 million to Tempe PRE, the city-run preschool program.
These expenses are all part of the operating budget, though Tempe does have a specific transit tax that helps fund transit projects. The funds raised by the tax will not support the capital budget, which Woods said was "healthy."
Money in that budget goes toward infrastructure costs like roads — or the $2 million for the Mill Avenue sign. The capital budget was not affected by the repeal of the rental tax or other actions taken by the state and federal governments.
But the No on Prop. 424 campaign has repeatedly raised issues with the language of the proposition, saying that it is not specific enough. The Yes on Prop. 424 group said it's reasonably vague so that it doesn't tie the hands of the council.
Epstein: I think the language matters a lot. ... Voters want politicians to have their hands a little bit constrained. They shouldn't be able to just reach into pockets anywhere, hilly, willy, nilly. They should be able to have very serious definition. ... They want to know if I'm going to get an increase, how's the money going to be used? They don't want a $25 million slush fund.
Woods: I think that a lot of this talk about the language is really much to do about nothing, quite honestly. ... (City staff) are accountable to the voters, and they know exactly what (residents) voted for, and that's exactly what they plan on delivering. But I think this whole thing about the language being ambiguous, I think it's frankly a red herring.
Who does the sales tax affect?
The sales tax would increase to 2.3%, but groceries are exempt. It would hit the pocketbooks of anyone who shops in Tempe.
Woods: This is the equitable way to actually address this issue. ... Approximately two-thirds of it will be paid by people who don't even live in the city of Tempe. We have 194,000 people in the city, but our population doubles during the course of the day, which means that it's a lot of those people who aren't even Tempe residents who are coming into the community every day to work or to visit for whatever reason, and they're gonna be eating out at restaurants and spending money in shops.
Epstein: Prop. 424 will make the cost of everything worse. Sure, it won't affect the price of an eggplant, but it will affect the price of your laundry detergent, shampoo, salad from the deli, a sandwich, anything that's prepared food at the grocery store is still gonna be increased with this tax. ... Sales taxes are regressive. And so, most folks pay more out of each dollar that they earn than a zillionaire does. That's what regressive means. It means those making the least pay the most out of each paycheck.
What happens after Election Day?
Depending on what happens at the ballot box, Tempe leaders have choices.
If the tax passes, they don't have anything to worry about aside from what to fund with the new money. But if the tax doesn't pass, they will need to decide how to cut costs or figure out new ways to fund non-essential services, like using its rainy day fund.
Woods: I can't prejudge what people would do. ... When we ran a $34.5 million shortfall in year one, and a $33.7 million shortfall in year two ... there were staff reductions, there were programs cut and there were services that were greatly reduced. And our residents were the ones who felt the pain of that. ... You have to identify a sustainable revenue stream that will keep those programs and services alive.
Epstein: This is not the Great Recession. ... This is not a budget that says we're in a dire position. ... This budget does not have cuts in it. And this is the budget that if Prop. 424 does not pass, this will still be the budget. It does not have cuts.
Lauren De Young covers transportation and the cities of Tempe and Chandler for The Arizona Republic. Reach her at ldeyoung@azcentral.com.
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This article originally appeared on Arizona Republic: What voters learned from Republic's Tempe Prop. 424 debate | Exclusive
