No Property Tax in Sedona

(reprinted from July 27, 2011)

Sedona, AZ (October 7, 2011) – Almost everyone owning real estate in Sedona pays property tax (except for churches and some exempt non-profit groups) but few seem to know much about where that money goes. In short, it goes to schools, the fire district and county government. None goes to the city. Sedona does not have a city property tax.

Over the years, we have developed a city culture that makes anyone even remotely discussing a city property tax a social outcast. Some say that stems from promises made when the city was incorporated. Others say it grew from our high-priced real estate. Still others cannot remember where it came from – it’s just part of Sedona.

Since the notion of a city property tax is such a strong negative it’s often used as a club to bash opponents even when it’s not related. Anyone proposing a new project that someone else opposes can expect to be clubbed with it regardless of the topic – an indoor recreation site, city convention center or ownership of a highway. The cry of “That will lead to a city property tax,” is hurtled as a final desperate scare tactic.

But, laying culture and clubs aside, Sedona doesn’t have a city property tax, first because we don’t need one, and the second because one cannot be created unless Sedona residents vote one in – and that is highly unlikely.

Sedona doesn’t need a property tax with a 3% city sales tax paying many of our bills. Even during this major financial downturn, Sedona chalked up over $700,000 in budget surplus in the 2010 fiscal year and will be near a $1 million surplus in 2011. That, along with having a general fund reserve near 100% of our annual operations budget (30 to 50% reserve is considered adequate) puts Sedona in a solid financial position.

In addition, paying off city sewer bonds in 15 years will immediately add about $6 million annually to our general fund that currently goes to debt payments. Even with inflation that sudden windfall will create a huge annual surplus. Sedona’s financial worries will become what to do with embarrassingly large surpluses, not how to pay for things. City property tax? Who needs it!

The other simple fact is that no Sedona city property tax can happen – ever – unless city voters approve it in a public election. The City Council cannot enact one nor can city staff impose one. State law requires voter approval of any kind of general obligation tax (like a property tax) and nothing short of changing state law will alter that reality.

So next time you hear someone allege that some action by the city, “…will lead to a city property tax,” consider that he or she either does not understand the restrictions on creating a city property tax or are resorting to an old Sedona myth to sway your opinion.

The information and opinions in this article are my own and do not necessarily reflect those of the Sedona City Council or city staff.