Council to adopt tax rates

The Lake Havasu City Council could move forward Tuesday with adopting the 2009-10 fiscal year Irrigation & Drainage District property tax levy rates, despite the threat of a class action lawsuit for doing so.

Last month, the council approved returning the IDD property tax back to the levels held in 1997 by the Singer Initiative. Currently, the IDD tax is below the 1997 level.

A lawsuit filing could ultimately delay the implementation of the IDD levy rates for this fiscal year, forcing the council to explore alternate means of revenue in the city’s budget.

The council voted to raise the IDD tax rates instead of implementing a 29 percent increase in water rates. If approved Tuesday, the IDD rate would increase to $156.78 per acre this year.

One alternative the council could face is raising the water rates.

“The quickest solution would be to raise the water rates,” Councilman Don Callahan said.

Mayor Mark Nexsen said the best way to avert raising the water rates would be to put the rate increase to a vote of the people. Nexsen was one of two council members who initially voted against the IDD tax increase without voter approval. Councilwoman Margaret Nyberg was the other.

Callahan said if the measure goes on the ballot, residents would need to be educated about the two options and what impact the IDD could have on their tax returns.

“Some realistic numbers would have to be put on both ends,” he said.

Council members and the Lake Havasu City Chamber of Commerce have already polled residents. Almost 85 percent said they would be in favor of the IDD tax increase instead of a water rate increase.

“My position on going to a vote of the people has not changed,” Nexsen said. “I honestly believe from all the polls I saw people would be in favor of an IDD increase.”

The IDD rate increase would likely have a larger effect on business owners in the area, who could see a larger tax increase than the average citizen. But Callahan says the people have indicated they would rather take that chance. The IDD tax would be incurred by everyone, instead just a faction of the city’s population with the water rate increase.

“The water rate increase doesn’t look like it effects everyone,” Callahan said. “I don’t think it (IDD tax increase) would have the same impact as the water rates would. Some preliminary numbers I’ve heard show it may not be that drastic.”

Former Lake Havasu City Councilman Sam Scarmardo says the council’s vote could be in violation of a city ordinance that calls for any tax increase to be approved by two-thirds of voters.

Scarmardo, former Lake Havasu City Mayor Harvey Jackson and financial manager Bob Singer have joined together to file the lawsuit, which could come as early as the beginning of next week.

Whatever impact a possible lawsuit could have on the council’s decision, Callahan says they would always have a fallback measure in raising water rates, if the IDD increase legally needed to go before the voters.

The city has until the third Monday of August to file a certified copy of the resolution to the County Board of Supervisors office to set the tax rate.

A call to Scarmardo was not returned Thursday.

The City Council meeting will be held at 3 p.m. Tuesday, July 7, in the council chambers at the Police Facility.

The special meeting is being held to set the fiscal year 2009-10 citywide property tax levy and for the tax levies of improvement districts numbers 1, 2 and 4. It is open to the public.

You may contact the reporter at twaggoner@havasunews.com.

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