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Change to law would permit sales tax district

After concluding that incorporation isn't feasible for Tusayan, some local business owners are seeking to change existing law to allow for a local sales taxing district instead.

According to Clarinda Vail of Red Feather Lodge, which is leading the effort, legislation is pending in both houses of the Arizona State Legislature to permit communities with a population of 350 or more, and within 10 miles of a national park or monument, to form a Community Facilities District that can levy an excise tax.

The district's legislators - state representatives Andy Tobin and Lucy Mason and state Sen. Tom O'Halleran - are sponsoring the changes. The bills have cleared committees and will go for a vote in the next couple of weeks.

"We're doing this because we don't see incorporation as being viable," said Vail. "It would just cost too much."

Currently, under Arizona Revised Statute Title 48, 707-725, unincorporated communities may only establish special districts to collect property tax for local infrastructure and other needs. It requires signatures from all property owners within the proposed district.

Vail said that Tusayan's little tax base already pays some of the highest property taxes in the state. However, with a 5 percent sales tax the community could realize revenue of as much as $2.5 million annually, mostly on the strength of the 4.4 million people who visit each year.

The changes also lower the signature requirement to just 51 percent of property owners in a proposed district, rather than all of them. A community board would oversee the district. They would also be able to pursue financing through bonds payable by tax receipts.

The sales tax figures were calculated by NAU professor Dan Cothran as part of a four-year study into the pros and cons of incorporation. Costs were estimated at $1.6 million. Vail said that the price tag for police protection - about $640,000 - was the most prohibitive.

Business leaders were also concerned that with such a small pool of involved citizens, potential is high for municipal board members to encounter conflicts of interest.

Currently the community provides its own fire protection and sewage services through property taxes collected by special taxing districts. Property taxes are also collected to support the local school district. Businesses inside the park donot pay property tax but are assessed a special excise tax that is also the result of legislation developed by local business owners and passed in 2005.

The study followed a change in legislation in 2003 to allow incorporation for communities of 500 or more that are located in proximity to a national park or monument.

The study group dissolved late last year after delivering its final summary on Nov. 29.


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