When two new members are seated on the South Tucson City Council early next year, they will have a difficult choice before them — raise taxes or a make a massive cut in the fiscal year budget.
The budget crisis is the result of a proposed increase in South Tucson’s rental tax that only existed on paper for a few weeks.
There was never a formal vote, as the members of the City Council were unwilling to refer the matter to voters after being confronted by an angry group of residents last month.
The proposed 4 percent increase in the renter tax is vital, South Tucson City Manager Veronica Moreno says, to keep the lights on at City Hall.
Rita Rogers, a failed write-in candidate for the council in last week’s vote, was at the center of a group fighting the increase.
Rogers has ties to the owner of the former Spanish Trail Motel, Dennis Luttrell.
Luttrell currently rents out the old hotel rooms in the Spanish Trail as apartments.
Rogers — who calls Luttrell a friend — says she has no financial ties to the property.
Rogers sat next to Luttrell and was part of the group of South Tucson landlords and renters coaxed into attending a recent council meeting in which several of them shouted questions and opinions throughout Moreno’s presentation about Proposition 442.
Rogers ran as a write-in candidate to defend the interests of struggling South Tucson residents. Rogers says residents cannot afford another tax increase.
About two years ago, the city changed the structure for its occupational fee. It went from charging landlords a $20 fee per property to a quarterly $25 per-unit tax.
The proposed increase in the city’s sales tax for rental properties is “a double tax,” Rogers said. She argues that bringing in new businesses can more than make-up for the lost revenue from the proposed tax increase.
She told the Star in May that Luttrell is not actively trying to unload the broken-down motel or existing rental apartments on his property. He did, however, try to sell the property a few years ago, she said.
Luttrell did not return phone calls seeking comment.
It’s unclear if South Tucson can afford to wait for new businesses to open in the square-mile city.
Facing dwindling sales tax revenue, Moreno tied the fee proposal directly to the city’s Police Department.
Without new revenue, she said, the council could be forced to defund the department and contract services with the Pima County Sheriff’s Department.
Over a chorus of boos and murmuring, Moreno told the council the current level of service would fall dramatically.
An entry-level police officer costs South Tucson about $76,000 per year, city records indicate. The department’s annual budget is slightly more than $1.7 million.
Last year, the South Tucson Police Department responded to 9,582 calls for service.
Another option, Moreno said, would be to defund two smaller city departments.
Projections from the city suggest that had the rental increase been backed by voters, it would have generated roughly $431,000 in new revenue annually.
Outgoing Mayor Miguel Rojas said he still believes the tax increase is needed as the city tries to right itself financially. He noted that the fee hasn’t changed in 20 years.
A landlord himself, Rojas said he continues to support the proposal.
Referring the issue to the November ballot, he said, puts the decision in the hands of South Tucson residents.
The city also has a projected budget deficit of more than $1 million in the next four years unless the city can increase revenues, officials say.
Some of the debt owed to Pima County is for unpaid bills related to the jail as well as the Pima Animal Care Center.
The city has already agreed to sell the Sam Lena Library, which is adjacent to City Hall.
