Sales Tax


			QUESTION 1

			INCREASING THE CITY’S TRANSACTION PRIVILEGE TAX (SALES TAX) -- RESOLUTION NO. 8648

			Shall the City of Mesa be authorized to increase, effective July 1, 2006, the City’s transaction privilege tax (sales tax) from 1.25% to 1.75%, of which .30% will be used for street construction, street operations, street maintenance, and street capital equipment needs and .20% will be used for municipal services, such as police, fire, courts, parks and recreation, libraries, and other services authorized by the City of Mesa?

	Myth Over the past 20 years, Mesa's Sales Tax Revenue per Person has *declined* by nearly 20%. Fact The opposite is true; there's been a nearly a 40% increase!

Background

At the February District Town Meetings the City of Mesa presented a graph showing that over over the past 20 years there's been a 20% decrease in Retail Sales per Resident . While technically correct, it’s not a very meaningful measure.

Numerous statements in the Sample Ballot, the YesForMesa website, as well as the Financing the Future report, incorrectly interpret this as meaning Sales Tax Revenue per Resident.

So, while over the past 20 years, there has been a decline in Retails Sales per Resident; the money collected thru Sales Tax Revenue per Resident has actually increased--in large part due to the ½-cent Quality-of-Life Sales Tax that kicked-in in 1999.

Even neglecting the ¼-cent portion of the Quality-of-Life Sales Tax increase that went to Capital Projects (mainly the Mesa Arts Center), but including the remaining ¼-cent portion for Operations (Police, Fire, Library) gives not a 20-year, 20% decrease but rather an 8½% increase.

So, with either rate, the City of Mesa actually wound up collecting more in Sales Taxes from each resident. The higher Sales Tax Rate more than compensated for the overall decline in Retail Sales per Resident.

Simply put, the only way to get a 20% decline is to completely ignore the ½-cent Quality-of-Life Sales Tax increase. That’s a pretty hefty chunk of change.

Details

A more meaningful measure is Retail Sales Tax Revenues per Person. That's the money citizens actually pay, and that's the money the city runs on. Here's the real graph:

The RED data represents the 1% Sales Tax Revenue per Person rate. Sure enough, the trend is down: 18.4% in 20 years. But you didn't pay 1%, did you?

The GREEN data represents the true 1½% Sales Tax implemented in 1999. This is the Sales Tax you actually paid. Even with the later declines, the trend is up: 39% in 20 years.

The YELLOW data show the 1¼% Sales Tax rate that covered Operations (but not Capital Projects). Even at this rate the trend is still up: 8.6% in 20 years.

All these numbers are corrected for Inflation as per the City of Mesa data. Unfortunately, this has the further distorting effect of making $1 in 1983 to be valued at only 51-cents in 2005. Be assured, in 2005 dollars, the Sales Tax Revenue per Person was actually $251. The number shown is $251 x 0.51 = $128.

Details

A few people have asked about the Sales Tax Revenues per Person, both WITH and WITHOUT the Inflation Adjustment. Here's the graph. The upper "rake" are Actual Dollars, the lower "rake" are Inflation Adjusted. The lower data is the same as the previous graph.

Details

From the District Town Meetings presentation, on the slide titled "Budget Issues" (page 15), the following item is listed:

“Decreasing utility and sales tax revenues per capita”.

This is a mischaracterization of the data.

Page 16 provides the supporting graph:

But this is simply citywide Retail Sales divided by the Population. Not a very useful graph.

Details

Here's the simplified and misleading graph from YesForMesa:

While Mesa's population has nearly doubled over the past 20 years, Mesa sales tax revenue has DECLINED per resident more than 20%

Mesa Sales Tax vs. Population Growth

Details

Here's some miscellaneous charts that may be helpful:

Here's the SpreadSheet. The BLUE Section is the City of Mesa Data. The other sections are mine.

RETAIL SALES PER RESIDENT

FISCAL YEAR 84/85 to FISCAL YEAR 04/05

MESA - SALES TAX REVENUES AS RECEIVED 1%
Sales Tax Table 1 1/4%
Sales Tax Table 1 1/2%
Sales Tax Table 1/2%
Quality of Life
Sales Tax

Fiscal
Year
Ending Population U.S. CPI
Purchasing
Power of
the Dollar Sales Tax
Revenues Sales
Tax
Rate Retail Sales Retail
Sales
per
Resident Adjusted
Retail
Sales
per
Resident Retail Sales
(Adjusted) Sales Tax
Rate Retail
Sales Tax
Revenues Retail
Sale Tax
Revenues
(Adjusted) Retail
Sales Tax
Revenue
per Capita Retail
Sales Tax
Revenue
per Capita
(Adjusted) Sales Tax
Rate Retail
Sales Tax
Revenues Retail
Sale Tax
Revenues
(Adjusted) Retail
Sales Tax
Revenue
per Capita Retail
Sales Tax
Revenue
per Capita
(Adjusted) Sales Tax
Rate Retail
Sales Tax
Revenues Retail
Sale Tax
Revenues
(Adjusted) Retail
Sales Tax
Revenue
per Capita Retail
Sales Tax
Revenue
per Capita
(Adjusted) Sales Tax
Rate Retail
Sales Tax
Revenues
(Quality
of Life
Portion)

1985 222,050 $0.93 $26,208,215 1.00% $2,620,821,500 $11,803 $10,977 $2,437,363,995 1.00% $26,208,215 $24,373,640 $118 $110 1.00% $26,208,215 $24,373,640 $118 $110 1.00% $26,208,215 $24,373,640 $118 $110

1986 239,036 $0.91 $30,261,188 1.00% $3,026,118,800 $12,660 $11,521 $2,753,768,108 1.00% $30,261,188 $27,537,681 $127 $115 1.00% $30,261,188 $27,537,681 $127 $115 1.00% $30,261,188 $27,537,681 $127 $115

1987 248,750 $0.88 $33,071,286 1.00% $3,307,128,600 $13,295 $11,700 $2,910,273,168 1.00% $33,071,286 $29,102,732 $133 $117 1.00% $33,071,286 $29,102,732 $133 $117 1.00% $33,071,286 $29,102,732 $133 $117

1988 258,664 $0.85 $33,844,899 1.00% $3,384,489,900 $13,085 $11,122 $2,876,816,415 1.00% $33,844,899 $28,768,164 $131 $111 1.00% $33,844,899 $28,768,164 $131 $111 1.00% $33,844,899 $28,768,164 $131 $111

1989 267,664 $0.81 $35,175,584 1.00% $3,517,558,400 $13,142 $10,645 $2,849,222,304 1.00% $35,175,584 $28,492,223 $131 $106 1.00% $35,175,584 $28,492,223 $131 $106 1.00% $35,175,584 $28,492,223 $131 $106

1990 278,292 $0.77 $34,314,133 1.00% $3,431,413,300 $12,330 $9,494 $2,642,188,241 1.00% $34,314,133 $26,421,882 $123 $95 1.00% $34,314,133 $26,421,882 $123 $95 1.00% $34,314,133 $26,421,882 $123 $95

1991 288,730 $0.73 $36,127,063 1.00% $3,612,706,300 $12,512 $9,134 $2,637,275,599 1.00% $36,127,063 $26,372,756 $125 $91 1.00% $36,127,063 $26,372,756 $125 $91 1.00% $36,127,063 $26,372,756 $125 $91

1992 297,270 $0.71 $36,973,175 1.00% $3,697,317,500 $12,438 $8,831 $2,625,095,425 1.00% $36,973,175 $26,250,954 $124 $88 1.00% $36,973,175 $26,250,954 $124 $88 1.00% $36,973,175 $26,250,954 $124 $88

1993 304,350 $0.69 $40,056,942 1.00% $4,005,694,200 $13,161 $9,081 $2,763,928,998 1.00% $40,056,942 $27,639,290 $132 $91 1.00% $40,056,942 $27,639,290 $132 $91 1.00% $40,056,942 $27,639,290 $132 $91

1994 313,760 $0.67 $45,062,035 1.00% $4,506,203,500 $14,362 $9,623 $3,019,156,345 1.00% $45,062,035 $30,191,563 $144 $96 1.00% $45,062,035 $30,191,563 $144 $96 1.00% $45,062,035 $30,191,563 $144 $96

1995 325,775 $0.66 $49,725,691 1.00% $4,972,569,100 $15,264 $10,074 $3,281,895,606 1.00% $49,725,691 $32,818,956 $153 $101 1.00% $49,725,691 $32,818,956 $153 $101 1.00% $49,725,691 $32,818,956 $153 $101

1996 336,550 $0.64 $54,599,867 1.00% $5,459,986,700 $16,223 $10,383 $3,494,391,488 1.00% $54,599,867 $34,943,915 $162 $104 1.00% $54,599,867 $34,943,915 $162 $104 1.00% $54,599,867 $34,943,915 $162 $104

1997 345,580 $0.62 $58,290,598 1.00% $5,829,059,800 $16,867 $10,458 $3,614,017,076 1.00% $58,290,598 $36,140,171 $169 $105 1.00% $58,290,598 $36,140,171 $169 $105 1.00% $58,290,598 $36,140,171 $169 $105

1998 354,165 $0.61 $62,406,323 1.00% $6,240,632,300 $17,621 $10,749 $3,806,785,703 1.00% $62,406,323 $38,067,857 $176 $107 1.00% $62,406,323 $38,067,857 $176 $107 1.00% $62,406,323 $38,067,857 $176 $107

1999 366,825 $0.60 $93,925,852 1.50% $6,261,723,467 $17,070 $10,242 $3,757,034,080 1.00% $62,617,235 $37,570,341 $171 $102 1.25% $78,271,543 $46,962,926 $213 $128 1.50% $93,925,852 $56,355,511 $256 $154 0.50% $31,308,617

2000 379,250 $0.58 $105,742,329 1.50% $7,049,488,600 $18,588 $10,781 $4,088,703,388 1.00% $70,494,886 $40,887,034 $186 $108 1.25% $88,118,608 $51,108,792 $232 $135 1.50% $105,742,329 $61,330,551 $279 $162 0.50% $35,247,443

2001 401,180 $0.56 $102,331,304 1.50% $6,822,086,933 $17,005 $9,523 $3,820,368,683 1.00% $68,220,869 $38,203,687 $170 $95 1.25% $85,276,087 $47,754,609 $213 $119 1.50% $102,331,304 $57,305,530 $255 $143 0.50% $34,110,435

2002 414,075 $0.56 $102,654,158 1.50% $6,843,610,533 $16,527 $9,255 $3,832,421,899 1.00% $68,436,105 $38,324,219 $165 $93 1.25% $85,545,132 $47,905,274 $207 $116 1.50% $102,654,158 $57,486,328 $248 $139 0.50% $34,218,053

2003 427,550 $0.54 $98,965,814 1.50% $6,597,720,933 $15,431 $8,333 $3,562,769,304 1.00% $65,977,209 $35,627,693 $154 $83 1.25% $82,471,512 $44,534,616 $193 $104 1.50% $98,965,814 $53,441,540 $231 $125 0.50% $32,988,605

2004 434,215 $0.53 $105,505,475 1.50% $7,033,698,333 $16,199 $8,585 $3,727,860,117 1.00% $70,336,983 $37,278,601 $162 $86 1.25% $87,921,229 $46,598,251 $202 $107 1.50% $105,505,475 $55,917,902 $243 $129 0.50% $35,168,492

2005 447,000 $0.51 $112,103,984 1.50% $7,473,598,933 $16,719 $8,527 $3,811,535,456 1.00% $74,735,989 $38,115,355 $167 $85 1.25% $93,419,987 $47,644,193 $209 $107 1.50% $112,103,984 $57,173,032 $251 $128 0.50% $37,367,995

$240,409,639

99% -46% 666% 204% 47% -18% 60% 204% 60% 47% -18% 373% 122% 102% 8.6% 666% 202% 171% 39%