Linda Abbott vs the Taxpayers 2008: Kick ’em While They’re Down

It is now 2008. You and I and many families across the country, and in Gilbert, are taking 25% and 50% salary cuts, losing our jobs and businesses, and losing our homes. Our misfortunes are making it tough for the Town to balance its budget. We aren’t spending, so municipal tax revenues have plummeted. We aren’t building new homes, so the System Development Fee (SDF) fund is dragging bottom. The SDF fund provides the payments for bonds used to build new fire stations, police stations, roads, infrastructure, and Parks. Every permit to build a new home carries an approximate $20k impact fee that the builder must pay the Town. Obviously, the builder must pass this cost to the new home buyer.

Having set the union organizing wheels in motion in 2007, Linda Abbott, a tenured teacher and union member herself, has secured the union voting block, which includes employees of the Gilbert Schools as well as the Town of Gilbert. These are among the top 4 largest employers in Gilbert.

In 2008, the Town Council will hold 5 more Executive Sessions for the sole purpose of discussing the union representation of employees.

An unknown number of employee meetings will also take place with the various union representatives. The process began in 2007; it will take all of 2008 and part of 2009.

You, the taxpayer, picked up the tab.

Surely, Ms Abbott and the two other incumbents (Dave Crozier and Les Presmyk), up for re-election to the Town Council who promised to “protect the taxpayer,” will find other ways to protect us? Let’s look at some highlights from the Council Minutes.

2/02/08. Saturday meeting. Budgeting woes are presented by former Gilbert Town Manager George Pettit. He asked for Council direction on helping to solve the crisis, reminding them that many neighboring communities have: 1) higher sales taxes; 2) a primary property tax.

Employee lay-offs are a last resort.

2/05/08. Council approves spending $2.3 million for work on a Water Tower Park in downtown Gilbert.

2/27/08. Joint Meeting with Queen Creek. Gilbert Town Manager Pettit announces that he noticed 2-3 months ago a dramatic reduction in new home construction permits, from 300 to 50 permits a month. Queen Creek Manager Kross states he saw it coming in October/November 2006, and took a proactive approach reducing the General Fund by 20%.

4/09/08. “Economy May Put New Chandler Parks on Hold,” reads the headline of an article written by Edythe Jensen in the Arizona Republic. “All Valley cities are facing tough economic times, and we’re looking at ways not to add operation and maintenance costs,” said Mickey Ohland, parks development and operations manager.

5/03/08. Town Manager Pettit provides a Budget update, noting among other things that the SDF (System Development Fee) revenues are down, so CIP’s (Capital Improvement Projects) on hold. He notes that Queen Creek delayed building fire stations and are continuing to use temporary facilities.

5/27/08. The Council approves increasing SDF’s (System Development Fees) by 6%.

Despite citizen protests, including one from the president of the Gilbert Chamber of Commerce, the Council approves increasing water rates, reclaimed water rates, wastewater rate, and solid waste rates by 6%.

The Council discusses increasing various permit, inspection, plan review, and licensing fees on business across the board by 6%. John Sentz, a Gilbert business owner, and Kathy Langdon, president of the Gilbert Chamber of Commerce, speak out against this, stating that it will hurt business owners, and that retailers cannot raise prices to customers, because consumers cannot afford the price increases.

The Council votes to continue this item to 6/10/2008.

6/10/08. Council approves the 6% fee increases on businesses. (GW Note: I guess nobody showed up to protest.)

The Council approves a 2% cost of living increase, raising employee salaries. George Pettit lobbied for 3%, but Vice Mayor Krueger states concerns about the budget and debt. The Council will revisit the issue in 6 months regarding the additional 1% increase.

6/24/08. The Council approves awarding $547,131 to various non-profit outside agencies.

The Council directs staff to implement a change in the Code of Gilbert to implement a Use Tax and to allow for all residential rentals to pay tax excluding family members. (GW Note: At the time, residential rentals of less than 3 rentals were exempt from the rental tax.)

Council Member Steve Urie advises, “The granite ball for the water feature is on a ship from Germany.” (GW Note: This cost the taxpayers $150k, and is on display downtown in the $2.3 million Water Tower Park.)

7/22/08. Ms. Abbott made a motion, seconded by Council Member Skousen, to tax all rental properties, without exception. Motion failed.

8/05/08. Public Hearing to add a Use Tax. Town Manager Pettit makes a pitch stating that "46 communities in Arizona have a Use Tax, including Chandler, Mesa, and others." He also states that it will "level the playing field for local businesses who are required to collect sales tax."

Bill Norton, a local business man spoke out against it. Dow Rigler of the GSBA (Gilbert Small Business Alliance) and the Gilbert Chamber president advised concerns relating to how it would affect business.

Item continued for more discussion.

9/09/08 Use Tax Hearing. Town Manager Pettit makes another pitch for the Use Tax. Ms. Abbott gave examples of how the lack of a Use Tax affects Gilbert.

Ms. Amy Rigler, vice president of the GSBA, speaks out against it, stating that “in a free market there is no such thing as a level playing field because everyone starts with different levels of education, different amounts of capital, and different connections.”

Ms. Abbott asked Ms. Rigler how she feels about customers using local businesses as a visual aid in deciding what they want to purchase and then ordering from the internet. Ms. Rigler said it is a matter of principal and the free market benefits more from competitiveness, better service, and lower prices.

Council Member Skousen asked Ms Rigler how a Use Tax would negatively affect a small business. Ms Rigler said it would have an impact on a start-up business that needed to purchase supplies and equipment for that business, and an established business might need to upgrade computer systems or equipment.

Several others spoke out against the Use Tax, including the president of the Gilbert Chamber of Commerce, and members of the GSBA (Gilbert Small Business Alliance.)

Council Member Skousen stated, “Now is probably not the right time to levy a Use Tax, but it is coming some time in the future.” (GW Note: There is never a good time to levy a new or higher tax.)

Motion made by Vice Mayor Krueger, seconded by Linda Abbott, to complete the public hearing process, establishing 10/14/08 as the final. Motion fails.

Ms. Abbott makes a separate motion, seconded by Skousen, to do more research and continue the item to 10/14/2008. Motion fails.

You’ve got to admit, Linda Abbott fought hard for a Use Tax on Gilbert businesses in 2008. Since the rationalization “everybody else is doing it,” didn’t work, the incumbents will try a different approach in 2009 called “we pay it anyway, so we might as well rake in the dough.”

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