As Town Manager of Patagonia, the common comment I receive is, “I pay my taxes so this issue needs to be taken care of.” There is an assumption by the citizens that they are responsible for funding Town Hall. However, that is not entirely accurate.
The utilities the Town provides are water, garbage and sewer. Our citizens pay the fees for these services and those fees fund the labor, equipment replacement and daily activities, so the operation is about breakeven. The Town of Patagonia does not participate in the collection of property taxes by the County. The only tax the Town has is the sales tax.
The Town also receives a portion of the collected Town Sales taxes, 3% sales tax and 3% bed tax via Hotel or BnB and the Town has a Business License charge if you operate a business inside Town Limits. Other revenue comes from Building Permits and Franchise Fees (SSVEC) and the Court collects revenues on citations to offset the Court costs.
The Town has four sources of State revenue: Urban Revenue Sharing (URS), Highway User Revenue Fund (HURF), State Sales Tax and Vehicle License Tax.
Urban Revenue Sharing is the collection of state income taxes paid by citizens across the state. The legislature set aside 15% of all income tax collections to distribute to the 91 cities and Towns in Arizona. There is a two-year lag of time in the distribution, so in 2021 we are receiving revenues from 2019.
All revenue is based on current population except URS. Former Town Manager Heiss helped lobby to have the eight towns in the State of Arizona that have less than 1500 population receive revenues based on a minimum of 1500 population base.
HURF is a collection of road use tax by truckers and the gasoline tax collected at the pump. Our population, based on the 2019 average population of 874, is what our distribution is based on.
Our portion of the State Sales tax is also based on the Town’s population, as is the Town’s share of the Vehicle License tax, what you pay to renew your license plate or when you buy a new car.
The other source of money to get large projects accomplished is grants. We work to apply for grants that are available for different types of infrastructure projects.
So, when you buy or sell in the Town of Patagonia, you contribute to the taxes paid on items purchased or sold. The four state revenue streams fund over 50% of the Town’s budget and the local sales tax and enterprise funds fund the balance.