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Flagstaff opens public hearing to align city tax code with state model; new 2.486% sales/use rate proposed
Summary
City staff told council they will update the Flagstaff Tax Code to conform with the Model City Tax Code administered by the Arizona Department of Revenue and to reflect recent voter‑approved measures. Staff said the city’s combined sales tax rate will be 2.486% for most categories effective July 1, 2025, and recommended increasing the use tax to
City finance and legal staff presented proposed updates to the Flagstaff tax code on Tuesday, asking council to adopt amendments that will align local language with the state Model City Tax Code and reflect voter‑approved rate changes from recent elections.
Rick Tatter, management services director, said the package updates three components: incorporation of voter‑approved rate changes, an increase in the city use tax rate so it matches sales tax rates, and a broad set of conforming edits required because the Arizona Department of Revenue now administers municipal tax collections under the Model City Tax Code.
Staff noted recent voter actions: voters extended the city’s general 1% sales tax and extended the city’s BBB (bed, board and beverage) tax through June 30, 2043; voters also approved an increase to the public transit tax rate, which raised the city’s overall effective sales tax to 2.486 percent for most categories, staff said. To maintain fairness between purchases made inside Flagstaff and purchases made elsewhere and brought into the city, staff proposed increasing the use tax to 2.486 percent as well.
Assistant Senior Attorney Anya Bridal explained that the Model City Tax Code is a uniform municipal code used across Arizona and administered by the Arizona Department of Revenue; the city’s existing local ordinance has not been fully updated since 2019 and must be brought into conformance. The proposed package includes a suite of definitional clarifications, new and expiring exemptions that track state law, and updates to filing frequency thresholds for businesses.
Staff opened the public hearing and reported no in‑room public comment. Council read a resolution (2025‑25) and read an ordinance title for the record (ordinance number listed in the packet) and continued the public hearing until the May 20, 2025 council meeting to allow more review time.
What’s next: Staff will return on May 20 with the continued public hearing and proposed final ordinance language for council action. The administration must submit conforming language to the Arizona Department of Revenue once adopted to ensure correct tax administration.
