Around the nation, municipalities take different approaches to maintaining sufficient revenue levels to support their residents and improve their city’s quality of life. Today, however, many cities are facing a similar challenge of diminished sales tax revenues due to increased and untaxed online shopping, also known as the “Amazon effect.” In Arizona, municipalities are also battling with keeping retirement funds manageable—ApacheJunction has even earmarked some sales tax revenue to meet this obligation. In rapidly growing areas, such as the Phoenix metropolitan area, newly incorporated cities can also divert revenues from abutting established municipalities and reduce their shares of state revenue, thus magnifying other effects. These are all challenges Apache Junction faces today. Since its incorporation in 1978, the city has taken a conservative approach to generating revenue. It does not impose a property tax, maintains a low level of bonded debt, and relies on sales tax and state shared revenue. The doubling of its population in the winter with residents from other states helps to maintain its municipal tax revenues. Additionally, services provided to residents such as water, fire, and solid waste are run by private companies, which means that they are not currently the financial responsibility of the city but are also not vessels for revenue generation. While this approach has worked in the past, Apache Junction is now facing a potential for reduced revenue and looking for new ways to generate funds that will help the city thrive.
Students from the PAF 509 Public Affairs capstone course dedicated their independent master’s degree capstone reports to Apache Junction’s search for a path to increase revenue. Each performed two case studies of the nearby peer municipalities of Avondale, Chandler, Mesa, Maricopa, Oro Valley, and Queen Creek. They investigated revenue challenges these municipalities were facing and approaches they have taken to generating funds. Then the students produced findings, and recommendations that included the following: 1) reevaluating fees, such as introducing higher fees for non-residents and commercial businesses; 2) expanding local economic opportunities, such as building a boutique retail sector; and3) reconsidering a property tax, such as introducing a secondary property tax to retire debts.