For more than 25 years Cottonwood has boasted that the city does not have a property tax, however, that may soon change.
On Aug. 22, 1978, the Cottonwood City Council abolished a city property tax and replaced it with a sales tax, now at 2.2 percent.
The tide has turned once again and the City Council is thinking of initiating a property tax for owners within city limits.
At a Jan. 8 work session, the council directed the staff to prepare a resolution so the city can call for a special election Tuesday, May 20, to have voters decide whether the council could impose a property tax.
“We wanted to get this on the table because there’s a time limit to call for an election. We have until no less than 30 days before the election, which would be [Friday] April 18, roughly. The earliest would have been late December,” Finance Director Rudy Rodriguez said.
Rodriguez said his department is researching to find out where the city is going to be financially in the next five years, then bring any expected shortfalls back to the council.
“We’re researching what the minimal impact, or amount, is that we need — what we have to have to continue our services,” he said.
The question before voters will be two-fold, Rodriguez said. Voters will be asked permission to have a property tax and what levy the city is seeking.
“After that is established we’ll figure it into the rate based on valuation,” Rodriguez said.
Over the past nine years, Rodriguez said the needs of the city have changed, particularly through growth and the desires of residents. Combined with the downturn in the economy as a factor, fluctuating revenue from sales tax is a concern.
“A property tax is more stable,” Rodriguez said.
Money generated by a property tax is most likely slated for public safety, he said, but it could be spent on shortfalls in other areas. Public safety has needed expansion for several years, he said.
Rodriguez said that there are several options the city could use including to levy a property tax, increase the sales tax or even shift money.
“The property tax could not go [to the voters]. If it does and does not pass the vote, we’ll have to look at Plan B,” Rodriguez said. “It depends on what the research shows and what the voters think.”
Once a property tax is instituted, the issue will not return to the voters, according to Rodriguez.
Any increase or decrease in the levy amount is at the discretion of the City Council.
The council has jurisdiction over raising or lowering the city’s taxes once they are initiated.
“We will have public hearings before that may happen so the public can voice its opinion, but the council has the ultimate decision there. We are restricted by law to a percentage we can raise a levy each year,” Rodriguez said.