Rebuttal to Rick Southey's Letter-
September 10, 2007

    Editor:

This is in response to the letter written by Mr. Southey which is being published in newspapers throughout the state. Everyone should know that Mr. Southey is the Bullhead City fire chief AND President of the Statewide Fire Chief’s Assoc. that lobbies for the various fire departments many of which have also increased their property tax levy by double digits for the last several years. During this period many taxpayers have seen little if any personal income growth and are in danger of losing their property due to property taxes that have nearly doubled in a few short years.

What Mr. Southey really cares about is the Property Tax Levy Rollback measure which the Arizona Federation of Taxpayer’s is referring to as the “golden bullet” meaning that it would rollback and limit future property tax increases to 2% per year, forcing government to live on this 2% increase plus the tax paid by new growth. The levy rollback measure has only one computation, the average of the taxing entities last four levies. Mr. Southey is claiming that both property tax rollback measures are overly complex. He quotes an east valley tribune editorial which incidentally did not quote me, but which for self serving reasons used the phrase “arcane” and which failed to even list the name of the reporter which had written the piece. The tribune like the LA Times in California are just espousing the view of big government, that any sort of tax limitation is a bad thing. We can not be fooled as many among us heard the same claims from bureaucrats like Mr. Southey when Proposition 13 was being considered by California’s voters in 1978. In California, post Prop 13 many budgets were cut some by more than 50%. Services were provided and the threatened cuts in services, longer response times and layoffs didn’t materialize.

The bureaucrats in California following the California Tax Revolt (Prop 13) did what Mr. Southey will do, they earned their generous salaries and benefits by cutting the waste and inefficiency endemic in all bureaucracies. Of course Mr. Southey has a comeback for this as well. He wants the Tax Revolt to specify each wasteful item within his department and we presume the other 960 statewide taxing entities. But that after all is what we taxpayers pay him the big bucks for. If he is not capable then rest assured that his governing board will hire someone with the necessary capabilities. Some have suggested that Mr. Southey’s fire department on average extinguishes only a handful of structure fires per month and that costs to the taxpayer could be cut significantly if for instance paramedic services which consume so much of the budget were privatized. I personally don’t believe this would be necessary, if rather than fighting the Tax Revolt the department instead made some changes to assure compliance with the provisions of the levy rollback measure to avoid the very real possibility of a budgetary rollback in 2009 to the departments 2005 levy. The choice is theirs.

The valuation rollback has the following computations involving nothing more complicated than addition, subtraction, multiplication and division. Perhaps Mr. Southey is confused by the use of a “ratio” which as we learned in 5th grade is noting more than a fraction. Remember that when we were in school they taught mathematics, and we never even heard of “political spin.”

First we define the two valuations used to establish your share of the “tax pie”. UPV is a new term we define as the Uniform Property Value. It replaces the Limited Property Value in use today. FCV is unchanged and remains the Full Cash Value or market value of your property. Since FCV reflects both inflation and speculation in the real estate market we no longer permit the FCV to be used in the computation of your property taxes. All taxes will be computed from the UPV which is a mere fraction of the FCV and does not increase due to real estate price inflation or speculation, protecting all present and future property owners from the sort of huge valuation increases that have been causing property taxes to double for some in just one year. Next year it could be your turn, could you pay twice as much property tax?

Next we define the so called arcane formulas.
Subsection 3b
Effectivity: Applies in tax year 2010 only.
2010 UPV = 2003 FCV this is the direct rollback to the 2003 FCV for all qualified parcels.

Subsection 3c
Effectivity: Applies beginning in tax year 2011.
We define “A” = sum of the FCV of all parcels in the county from prior year
We define “B” = sum of the UPV of all parcels in the county from prior year
Note that the ratio of B/A, is the ratio of the UPV to the FCV of all parcels in the prior year. In other words it is the discounted valuation ratio. Since UPV can never exceed FCV this ratio will never exceed one and generally will be significantly less than one.
Now for the formula that Mr. Southey considers to be overly complex and nearly impossible to understand:

UPV in current year = UPV from prior year + [(Parcel’s FCV in current year – Parcel’s FCV in prior year) * B/A]

In other words the UPV is based on the prior years UPV increased only by the discounted FCV increase. If the ratio of B/A were equal to 0.70 your UPV would increase by 70% of the FCV increase which is a lot better than 100%.

Next we limit the UPV computed in the foregoing formula to no more than 2%/year increase, plus improvements which are also discounted by multiplying by the ratio of B/A.

Finally we permit the assessor to reduce the UPV of any parcel to improve uniformity of taxation. This allows the assessor to reduce the taxable value to account for appeals and other changes to value.

Subsection 3d
Parcels not valued by (b) or (c) shall be valued based on comparable properties. By example if your home has a FCV of $300,000 your UPV would be equal to the discounted UPV perhaps $200,000 of other similar properties having the same $300,000 FCV. If you buy a home even though you may have paid much more than the previous owner had years earlier, your taxes would be about the same as that paid by the prior owner. We leave the computational method to the Legislature suggesting the use of statistical methods already used by the Assessors in determining the accuracy of their valuations. In the event that there are no comparable properties, for instance a hospital in a rural county having only one hospital, the UPV is discounted to the 2003 valuation baseline established in the current year as prescribed by the Legislature.

Subsection 5b
To avoid a tax shift and hidden taxes on consumers/homeowners all centrally assessed property is valued to the 2003 valuation baseline which increases by 2%/year plus improvements valued to the 2003 valuation baseline in the current year. This means that our electric costs will not be increased because of property tax increases on the utilities. These computational procedures were developed by a team of volunteers and tax professionals working with Arizona Tax Revolt over the last 1 ½ years on behalf of Arizona property owners to assure a uniform (fair) distribution of the tax burden between all property owners while minimizing any unforeseen consequences that could cause a shift of the tax burden between property owners. Our goal was to take back a portion of the windfall tax increases seen in the last several years, to establish limits on future property tax increases and to assure that the voters have the last say on any increased tax above permitted levy limits and even a means to lower levies.

While collecting signatures several taxpayers have asked whether the Property Tax Rollback measures would cut school funding. The short answer is NO, but a little explanation is necessary… The voters passed Prop 301 in 2000 which among other things requires the Legislature to provide funding to the K-12 schools in the event of a property tax revenue shortfall. Our initiatives will lower their property tax revenue and the Legislature will have to raise funds from other sources. We have no problem with this as property tax is the most unfair form of taxation as it is not based on ones ability to pay. Other sources of revenue are highly visible to the taxpayers which will put pressure on the schools to make long overdue efficiency improvements. If this makes sense, then the time is now to volunteer your time and or dollars to be a part of the solution. To take the first step to lower property taxes please visit our WEB site at www.ArizonaTaxRevolt.ORG and become part of the solution.

Your Humble Tax Fighter,
Marc Goldstone, Chair.
Arizona Tax Revolt
PO Box 83
Bullhead City, AZ 86430-0083
(928) 754-8305