The Greater Flagstaff Chamber of Commerce, the Flagstaff region’s most influential business community advocate, is pushing back strongly against a proposed fee increase by city government that the chamber says would result in a substantial economic burden on its members.
The city council is angling to raise the stormwater utility fee nearly 300% in an effort to raise $80 million over seven years for localized drainage improvements and maintenance needs resulting from the recent catastrophic Museum and Pipeline wildfires.
The city also has a $55 million water bond proposal on the local ballot for next Tuesday’s election. If that bond does not pass, the city indicated the proposed stormwater fee increase could be even higher.
Proponents of the rate hike say that recent storms and post-fire floods and the damage they’ve wreaked on the community require further investments in capital projects, which will be funded by the revenue generated from the rate hike.
The Flagstaff Chamber agrees that new capital investments need to be made, but disagrees with the council’s initial plan to implement an entirely new tax burden, impacting commercial entities the most, especially at a time when the business community faces an hourly local wage mandate increase to $16.80 that begins January 1, 2023, and more than 8% local inflation month over month.
Additionally, Congress’ 2021 Bipartisan Infrastructure Investment and Jobs Act set aside $300 million for four states, including Arizona, to help local communities recover after wildfires, and Coconino County recently implemented a new flood control district property tax in 2018, then raised the flood control property tax in 2020.
Joe Galli, the chamber’s senior public policy adviser, says there has to be an alternative. According to him, the impacts of the increase would hit consumers in several different places and come at the wrong time.
“The newly proposed fee schedule is very unsettling for the entire Flagstaff community,” Galli said. “Residents would not only pay hundreds more a year at home in the utility fee increase, they’d see much higher prices at every commercial entity around town.”
The stormwater fee is assessed on impervious surfaces, such as parking lots, sidewalks and rooftops, thus affecting larger retail entities including grocery stores, home goods and clothing sellers, restaurants and hotels, which combined would face millions of dollars in higher fees in the first year.
“The impact of higher fees on retail results in higher commercial rents, costs that are absolutely passed on to our local consumers,” Galli said.
Councilmembers, including the mayor and vice mayor, say that if they don’t raise the revenue to fund these capital projects through a fee hike, the money will have to be taken elsewhere from the city’s budget. “We don’t really have a choice,” Vice Mayor Miranda Sweet said.
The chamber argues that there are other options that would be less damaging to residents and business, and initial opposition to the proposed rate hike has led to a dialogue between city elected officials and chamber leaders.
“We are encouraged the city would take a second look at the damaging effects of the proposed rate hike, and reconsider the path forward,” Galli said. “We’re all taxed-out here.”
The chamber offered to work with the Council to secure federal funds from recently passed legislation and to lobby Congress further for additional emergency relief.