Tourism Taxes Police


Town council and staff engaged in a lively but civil debate with representatives of the Payson hotel industry Thursday evening over raising the bed tax from 3 to 5 percent to fund a police academy.

Emphasizing her support of the academy and respect for the police department, Pauline Muggli, general manager of the Holiday Inn Express, suggested that placing the entire burden on the hotel industry was not only unfair, but not what the bed tax was intended to do.

"I know a lot of this town is based on tourism, and the bed tax was originally instituted to promote tourism and economic growth," Muggli said. "A byproduct (of the academy) is that if we have a safe town people will come, but (the new tax) doesn't directly do anything to get the people into town."

Bobby Patel, manager of the Days Inn, compared Payson's hotel tax rate with those of nearby towns that compete for tourist dollars.

"If you are trying to increase the tax, you have to look at the towns around you," he said. "Show Low is at 8.05 percent, Winslow is at 11.05 percent, Mesa is at 7.27 percent and Camp Verde is at 10.27 percent.

"Payson is at 11.72 right now and the 2 percent increase will put us at (nearly) 14 percent."

With the hotel industry in Payson currently running a 60 percent to 65 percent occupancy, the new tax could be a crippling blow, Patel told the council.

"This is a tourist town, and when they see the tax increase they might go to Flagstaff or some other destination," he said.

Mayor Barbara Brewer apologized for not informing the hotel industry of the proposed increase, and several members of the council expressed sympathy for their plight.

"We didn't do a very good job from a public relations standpoint of informing people who have reacted to this, and that disappoints me," Councilor Dick Reese said.

Police Chief Gordy Gartner opened the discussion by explaining the rationale behind a local academy. He noted that the police department anticipates hiring as many as 18 new officers during the next five years due to retirements, normal turnover and growth in the community.

"We typically want to add one officer for every 500 people we have move into the community," he said.

Training a police officer costs about $40,000, a number Gartner called "huge."

"I believe the reserve academy is going to be the best approach," he said. "The officers who come through the reserve academy tend to stay longer, and they're dedicated, local people who have deep roots in our community."

Gartner said the idea of funding the academy with an increase in the bed tax was his.

"What we do does relate directly to tourism," he said.

Chief Fiscal Officer Glenn Smith explained the logistics of the process. He said the council must pass an ordinance increasing the bed tax following a second reading at the Oct. 13 regular council meeting (the council does not meet again in September).

"If you pass it at the second reading it requires a 30-day waiting period, then it's filed with the state, which takes anywhere from 60 to 90 days," Smith said. "It would become effective Jan. 1 of 2006, and stay in effect until the program dies."

But Smith also noted that the bed tax increase falls far short of funding the entire cost of the academy.

"It is going to require a commitment out of the general fund, somewhere around $50,000 to $60,000 on top of the bed tax fund," he said. "It's a joint thing; maybe 50 percent or less is coming out of the bed tax revenue."

Toward the end of the discussion, Councilor Robert Henley suggested considering an alternative source of funding.

"I support the academy, but I'm not sure I support this way of funding it," he said. "I think we need to be a little more creative."

But it was Gartner who best reflected the tone of the discussion.

"Nobody likes taxes and nobody likes increases in taxes," he said. "We all pay them and they're never well accepted."

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