Payson council leans toward lowering property tax rate; staff to post notice if needed
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Summary
At a March 4 work session the Payson Common Council discussed the town's property tax levy and signaled direction to lower the tax rate to the maximum allowable without triggering a Truth-in-Taxation hearing; staff will publish required notices and return with formal hearing dates.
Payson town staff briefed the Common Council on March 4 on the municipal portion of property taxes and the choices the council must make while preparing next fiscal year's budget.
Why it matters: Town property tax revenue is a small share of total property taxes collected in Gila County; decisions on the levy affect available operating and capital funding for the town budget that council will finalize in May.
Dana (finance director) told the council how property tax dollars are distributed in Gila County: roughly 46% goes to the county, 40% to the school district, about 10% to the community college and roughly 4% to the town. She said the town currently receives about $720,000 annually from the primary property tax.
Dana reviewed rates and choices for the coming fiscal year: Payson's current primary tax rate is 0.2992. The maximum allowable rate without a Truth-in-Taxation (TNT) hearing is 0.2855; adopting that rate would produce about $717,000 in levy revenue at current valuations. The state's maximum levy cap (the ceiling that would require voter action to exceed) is 0.382, which would generate an estimated $964,000 and a $221,000 increase over the lower rate, Dana said. She provided sample tax impacts: on a house with a full cash value of $415,000 the town portion at the lower, TNT-exempt rate would be about $80.45; at the higher maximum it would be about $107.64.
Council discussion centered on whether to preserve the current rate, reduce it to the TNT-exempt level, or set a higher rate and hold the required taxpayer notice and public hearing process. Some council members said rising property values already increase the total tax levy without a rate change and favored leaving the rate unchanged or reducing it to mitigate taxpayer burden. One council member noted the town has lowered its rate several times in recent years and warned council members they might be criticized for "raising property taxes" even if the levy increases due to valuation changes.
Council direction: The majority of council signaled a preference to lower the municipal tax rate toward the maximum allowable without triggering the Truth-in-Taxation process (0.2855). Staff said it will post the required notice of a potential levy increase if the council later directs a higher rate and will schedule the statutorily required public hearing on the property tax levy (truth-in-taxation) if needed.
Next steps: Town finance staff will implement the council's direction to set the rate consistent with the TNT-exempt limit unless council changes course, post required notices, and return to council with formal hearing materials in accordance with state statute and the town's budget calendar. The council will vote on the final levy as part of May budget actions.
Ending note: The council's tentative approach reduces the municipal rate while acknowledging that total tax bills may still rise if property valuations increase; staff will follow statutory notice and hearing procedures if council later decides to propose a higher levy.
