Thursday, August 18, 2011

A troubling trend in taxation.

Post by Mike
This could be a troubling trend. Each added dollar of taxation reduces the value of your property.

Ledger-Enquirer (Columbus, GA)

Phenix City approves new fee for rental properties
Council introduces plans to borrow millions for capital improvement

The Phenix City Council on Tuesday approved an ordinance to charge owners of rental property a 1.5 percent business license fee beginning this fall. The new law, which stirred controversy among some landlords, was the third measure of its kind intended to generate new revenue as the city embarks on a multimillion-dollar capital improvement project. The city in recent weeks also has increased its sales tax to 8.75 percent from 8 percent and hiked its lodging tax by 2 percent.

“Every other business in town has to buy a business license,” said Councilman Jimmy Wetzel, who has touted the city’s approach of asking a wide array of people to contribute a small amount to the projects.

Steve Smith, the city’s director of finance and public utilities, said officials expect the new fee to bring in about $418,000 a year. It is to be collected quarterly and will be based upon gross receipts, he said, adding the ordinance goes into effect Oct. 1.

“We think it’s as much a fairness issue as anything else, and it’s a very small fee,” Smith said. “We wanted to keep the number low but still generate enough revenue to provide additional services and do things.”

A number of rental property owners addressed council Monday evening during its regular work session. Many voiced opposition to what they consider a new tax, while lending their support to council’s plans for new projects.

“Mostly what they were saying was, ‘We like the projects and we agree with the projects, but put the tax on somebody else,’” Wetzel said.

The new ordinance passed by a vote of 3-1, with Mayor Sonny Coulter dissenting and Councilman Max Wilkes absent due to a health matter. Coulter couldn’t be reached Tuesday evening for comment.

Also on Tuesday, council introduced an ordinance to issue $21.5 million in warrants for the construction of a new municipal complex, public works and utilities facilities, a downtown parking garage to accommodate riverfront development and a community center, projects the city recently unveiled as part of a master plan. Two additional ordinances would authorize the city to issue general obligation warrants of up to $12.8 million in general obligation warrants, and up to $4.1 million in water and sewer revenue bonds, money Smith said will be used to improve water treatment and bring the city in line with new state standards.

Council passed a resolution creating a Public Building Authority through which it will pay for the capital improvement projects.

“The reason for doing that is that those projects, when they have a lease that’s guaranteeing the payment, they don’t count against the city’s borrowing limit,” Wetzel said.

Council is expected to hold a final vote on the borrowing of millions of dollars at its next meeting.

City leaders have said they intend to build the new municipal complex in the place of the abandoned Phenix Regional Hospital in an effort to shift government offices away from potentially valuable riverfront property.

“You can always say wait for a better time, and you can always have an excuse of some kind,” Smith said. “We feel like this will enhance the quality of life, and we feel like it will make Phenix City a better place to live.”

Wilkes said he has spoken with the city’s finance officials about the capital improvement projects, and he thinks the city is on solid ground.

“I think it’s exciting times,” he said in a phone interview. “I worked for the city about 30 years. We’ve done a lot of things, but not to this magnitude.”

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