City farms out sales-tax collection
 Private firm will take over for state agency
 
By NEIL YOUNG
Mohave Daily News
 
BULLHEAD CITY - During its Tuesday meeting, the Bullhead City Council voted 5-1 to approve a five-year agreement with Revenue Discovery Systems (RDS), a national private firm, to collect the city's sales taxes. The city has been using the Arizona Department of Revenue (ADOR), but there is a 60-day delay in the city receiving figures on sales-tax collections, making it difficult to make timely budget reductions during the economic downturn.

City Manager Tim Ernster cited "inconsistencies in reporting from month to month" by ADOR and "a continuing deterioration in the quality of information received" from ADOR.

He said it's very likely the city is losing revenue by having ADOR collect its sales tax.

The city has ruled out collecting sales tax in-house due to "significant costs," Ernster said.

The issue has been under discussion for several years and it was more of a question of when - not if - the city would eventually drop ADOR in favor of self-collection.

Council Member Leslie Blaydes wanted to delay the vote, saying she didn't believe local businesses had ample opportunities to weigh in. Her colleagues didn't agree.

"Let's do it now," said Council Member Jan Ward.

The measure had in effect been tabled for the past three years, said Vice Mayor Sam Medrano. "Circumstances have only gotten worse," and there was no point "in putting off the inevitable," he said.

RDS will offer the city a discounted rate for all five years. Normally charging 1.30 percent of collected revenues, RDS will charge 1.05 percent for the first 90 days, and 1.20 percent thereafter, said Rudy Vera, Bullhead City finance director. It's projected the city will see a 4 to 10 percent increase in sales tax revenue by switching from ADOR to RDS.

The city will initiate a program to educate the business community on the change, which will take effect in March.

The council approved some construction contracts Tuesday. An upside of the down economy: The city is saving money with bids coming in lower than expected.

Council members approved a contract with Tonto Supply Inc. of Colorado City to complete the Old Bullhead sewer project on the east side of Highway 95 for $886,000.

The original estimated cost was $1.5 million, according to Pawan Agrawal, Bullhead City public works director. There was some concern expressed by council members that the Tonto bid was too good to be true, but Agrawal assured them that there were other higher bids in the same price range as Tonto's.

A radio upgrade and 911 call-center expansion project had been re-bid due to concerns about a legal challenge. The council approved a contract between the city and the low bidder, Hardy Construction of Las Vegas, at $459,000. That's $119,000 less than the original low bidder.

The funding for the project comes from the Alternative Expenditure Limitation (AEL) Option approved by Bullhead City voters in March 2007.

Mayor Jack Hakim expressed regret that bids from local contractors came in higher than bids from firms outside the area.

"It breaks my heart," he said.

A Tonto representative told the council his company would hire locally.

In other business, council members appointed Thomas Thate to serve an additional four-year term on the city's Employees Benefit Trust Board.
 
MohaveDailyNews.com
Originally published Wednesday, January 7, 2009
 
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