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HomeMy WebLinkAboutORD1418ORDINANCE NO. 1418 AN ORDINANCE OF THE MAYOR AND CITY COUNCIL OF THE CITY OF APACHE JUNCTION,ARIZONA,RELATING TO THE TRANSACTION PRIVILEGE LICENSE TAX (SALES TAX); AMENDING THE TAX CODE OF THE CITY OF APACHE JUNCTION BY CONTINUING THE RATE OF TAXATION BY TWO -TENTHS OF ONE PERCENT (.2%)AS ORIGINALLY ADOPTED BY ORDINANCE NO.1129 AND INITIALLY CONTINUED BY ORDINANCE NO. 1359;DESIGNATING THE PURPOSE;DESIGNATING AN EFFECTIVE DATE;DESIGNATING A TERMINATION DATE, COMMONLY KNOWN AS THE "SUNSET CLAUSE";PROVIDING FOR EXISTING CONTRACTS;PROVIDING FOR PENALTIES; REPEALING ANY CONFLICTING PROVISIONS;PROVIDING FOR SEVERABILITY; AND PROVIDING FOR NOTICE. WHEREAS,Arizona Revised Statutes §9-240(B)(26)conveys upon the Mayor and City Council the power to levy taxes including a transaction privilege license tax (also known as the "sales tax"); and WHEREAS,up until September 1,2000,the City had a sales tax rate of 2.0%; and WHEREAS,to build critical capital facilities including a new rodeo ground and events center,library expansion,skate park,swim center,court,city hall and multigenerational recreation center,the City Council on May 16,2000,passed Ordinance No.1129 which increased the sales tax rate from 2.0% to 2.2% with a sunset provision of September 1, 2010; and WHEREAS,to address financial challenges due to resulting effects of the 2008 recession,the City Council voted to continue the sales tax at this additional 0.2%rate until September 1,2016 by passing Ordinance No.1359 on March 1, 2010; and WHEREAS,on December 2,2014,the Mayor and City Council passed Ordinance No.1406 which increased the sales tax rate another 0.2% to address necessary city roadway improvement costs with a sunset date of March 1, 2025; and WHEREAS,the City of Apache Junction is still experiencing diminished revenues due to the 2008 recession; and ORDINANCE NO. 1418 PAGE 1 OF 7 WHEREAS,having no municipal property tax,the City of Apache Junction relies predominantly upon sales tax revenues to provide city services; and WHEREAS,the City of Apache Junction has a mandatory obligation to pay into the Public Safety Personnel Retirement System costs which have increased from $645,808 in Fiscal Year 2010-2011 to $1,720,540 in Fiscal Year 2015-2016 and projected to be $2,213,190 in Fiscal Year 2016-2017; and WHEREAS,the Mayor and City Council have determined that the continuation of the original two -tenths of one percent (.2%) transaction privilege license tax (sales tax)increase is necessary to sustain the quality of life for community residents and enhance the public health, safety and welfare; and WHEREAS,at their regular meetings of August 4,2015 and September 1,2015,a majority of the Mayor and City Council directed staff to prepare an ordinance for a continuation of the original .2% sales tax increase in compliance with State law and the Model City Tax Code; and WHEREAS, changes to the transaction privilege tax rate are affected by amending the Tax Code of the City of Apache Junction,and by appropriate notification to city taxpayers and to the Arizona Department of Revenue and the Municipal Tax Code Commission; and WHEREAS,pursuant to A.R.S.§ 9-499.15,the City provided sixty-day written notice of the proposed sales tax increase on the City's website (www.ajcity.net)before the date of the public hearing when this ordinance is to be considered. NOW THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF APACHE JUNCTION, ARIZONA, AS FOLLOWS: SECTION I IN GENERAL A.The tax rate in each of the following sections of the city tax code is continued at the rate of two and two -tenths percent (2.2%),in addition to 0.2%for road improvement projects already imposed under Ordinance No.1406 with a separate sunset date of March 1, 2025: Section 8A-405 Advertising ORDINANCE NO. 1418 PAGE 2 OF 7 Section 8A-410 Section 8A-415 Section 8A-416 Section 8A-417 Section Section Section Section Section Section Section Section 8A-420 8A-425 8A-427 8A-430 8A-435 8A-444 8A-447 8A-450 Section 8A-455 Section 8A-462 Section 8A-475 Amusement, exhibitions and activities Construction contracting: contractors Construction contracting: builders Construction contracting: similar construction speculative owner- builders who are not speculative builders Feed at wholesale Job printing Manufactured buildings Timbering and other extractions Publishing and periodicals distribution Hotels Additional tax upon transient lodging Rental, leasing and licensing for use of tangible personal property Restaurants and bars Food for home consumption Transporting for hire B.The tax rate in the following sections of the city tax code is continued at the rate of three and two -tenths percent (3.2%), plus another 0.2% as approved by the Mayor and City Council on December 2, 2014 under Ordinance No. 1406 with a separate sunset date of March 1, 2025: Section 8A-470 Telecommunications services Section 8A-480 Utility services C.Section 8A-460 of the city tax code is amended to read as follows: Section 8A-460.Retail sales:measure of tax; burden of proof; exclusions (a)The tax rate shall be at the amount equal to two and two -tenths percent (2.2%) of the gross income from the business activity upon every person engaging or continuing in the business of selling personal property at retail, plus another 0.2% as approved by the Mayor and City Council on December 2,2014 under Ordinance No. 1406 until March 1, 2025. ORDINANCE NO. 1418 PAGE 3 OF 7 (b)The burden of proving that a sale of tangible personal property is not a taxable retail sale shall be upon the person who made the sale. (c)Exclusions:For the purpose of this Chapter, sales of tangible personal property shall not include: (1)sales of stocks, bonds, options or other similar materials. (2)sales of lottery tickets or shares pursuant to Article 1,Chapter 5,Title 5,Arizona Revised Statutes. (3)sales of platinum, bullion or monetized bullion, except minted or manufactured coins transferred or acquired primarily for their numismatic value as prescribed by regulation. (4)gross income derived from the transfer of tangible personal property which is specifically included as the gross income of a business activity upon which another Section of this Article imposes a tax,shall be considered gross income of that business activity,and are not included as gross income subject to the tax imposed by this Section. (5)sales by professional or personal service occupations where such sales are inconsequential elements of the service problem. (d)Notwithstanding the provisions of subsection (a) above, when the gross income from the sale of a single item of tangible personal property exceeds two thousand dollars ($2,000),the extended two and two- tenths (2.2%)tax rate shall apply to the first $2,000.Above $2,000, the measure of tax shall be at a rate of one and two -tenths percent (1.2%). (e)When this city and another Arizona city or town with an equivalent excise tax could claim nexus for taxing a retail sale,the city or town where the permanent business location of the seller at which the order was received shall be deemed to have precedence,and for the purpose of this chapter such city or town has sole and exclusive rights to such tax. (f)The appropriate tax liability for any retail sale where the order is received at a permanent business ORDINANCE NO. 1418 PAGE 4 OF 7 location of the seller located in this city or in an Arizona city or town that levies an equivalent excise tax shall be at the tax rate of the city or town of such seller's location. (g)Retail sales of prepaid calling cards or prepaid authorization numbers for telecommunication services, including sales of reauthorization of a prepaid card or authorization number, are subject to tax under this section. SECTION II DESIGNATING THE PURPOSE For such period of time that the City of Apache Junction, Arizona,levies the tax as described in Section I above,the revenues collected from the two -tenths of one percent (.2%) continuation shall be used for mandatory payments to the Public Safety Personnel Retirement System and unfunded liability related to this system. SECTION III DESIGNATING AN EFFECTIVE DATE The provisions of this ordinance continuing the tax rate of .2% for the purpose set forth in Section II above shall become effective on September 2, 2016. SECTION IV DESIGNATING A TERMINATION DATE The provisions of this ordinance continuing the tax rate of .2% for the purpose set forth in Section II above shall terminate, or "sunset" on September 1,2026,at which time the increased tax rate as set forth in Section I of this ordinance shall automatically be reduced by two -tenths of one percent (.2%). The sunset date of March 1, 2025 for the additional .2% tax rate remains unaffected by this ordinance. SECTION V PROVIDING FOR EXISTING CONTRACTS The tax imposed pursuant to this ordinance shall not apply to contracts entered into prior to the effective date of the tax as set forth in Section III above. SECTION IV PROVIDING FOR PENALTIES Any person found guilty of violating any provision of these amendments to the tax code shall be guilty of a class one ORDINANCE NO. 1418 PAGE 5 OF 7 misdemeanor and shall be prosecuted pursuant to Article 1-8 of the Apache Junction City Code and Section 8A-580 of the Tax Code of the City of Apache Junction. SECTION VII REPEALING ANY CONFLICTING PROVISIONS All ordinances and parts of ordinances in conflict with the provisions of this ordinance or any part of the codes adopted herein by reference are hereby repealed. SECTION VIII PROVIDING FOR SEVERABILITY If any section,subsection,sentence,phrase,clause or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction,such decision shall not affect the validity of the remaining portions thereof. SECTION IX PROVIDING FOR NOTICE Pursuant to A.R.S.§42-6052(E),staff shall provide a fully executed copy of this ordinance to the Municipal Tax Code Commission and the Arizona Department of Revenue within ten days after the passage date of this ordinance. PASSED AND ADOPTED BY THE MAYOR JL\12,CITY COpy,CIL OF THE CITY OF APACHE JUNCTION, ARIZONA, THIS rr"rDAY OF _NevraroneSge,, 2015. -04--SIGNED AND ATTESTED TO THIS /i n/DAY OF /1/0V011/66711..4 2015. Cy7OHN S. INSALACO Mayor ATTEST: KATHLEEN CONNELLY City Clerk ORDINANCE NO. 1418 PAGE 6 OF 7 APPROVED AS TO FORM: RICHARD JOEL STERN City Attorney ORDINANCE NO. 1418 PAGE 7 OF 7