Property tax debate heats up as measure heads to committee votes

Arizona Tax Revolt commentary:

The usual pundits are at it again. Those that secretly support even higher property taxes occasionally slip up and show their true colors. What the news media fails to discuss is that our Tax Revolt initiatives will do away with the state equalization property tax rate altogether. How? Simple, reinstating the levy in 2009 will require a 2/3 favorable vote in a Nov. election in each and every county. A virtual impossibility!

Ask yourself… Is this why the Phoenix Business Journal has failed to report on the many benefits of our measures for taxpayer’s. they along with the rest of the corporate mainstream media that support higher taxes and bigger government know that to discuss the Tax Revolt is to assure its success. I for one believe Tim Lawless of NAIOP said it best. It is refreshing when business and homeowners can not be divided by the “more tax lobby.”

Marc Goldstone, Chair.
Arizona Tax Revolt

Published: January 16, 2008
The Business Journal of Phoenix
by Mike Sunnucks

A $225 million property tax cut backed by business groups and Republican lawmakers is headed for committee votes as critics charge it would benefit the private sector and wealthy property holders more than middle and working class home owners.

A host of business interests -- including the Arizona Chamber of Commerce & Industry and National Association of Industrial & Office Properties -- want to permanently repeal the state equalization rate property tax.

That tax is on hiatus until 2009 and will come back without state action. Advocates of the repeal say its return would amount to a major property tax hike on businesses and home owners and hurt the already perilous economy.

An Arizona Tax Research Association analysis of the tax cut shows its benefits are regressive, offering a bigger discount to businesses and wealthy homeowners with more expensive property.

A home worth $250,000 gets a $97 break without the equalization rate, according to the ATRA. A $2.5 million mansion gets a $965 break.

Commercial property valued at $1 million gets a $927 break, according to ATRA. A commercial property worth $10 million gets a $9,264 annual reduction.

Another ATRA analysis shows that in 2007 the equalization rate's total monetary benefit was evening split among homeowners and commercial property holders.

John Loredo, a Democratic political consultant said big businesses and commercial property owners with high tax bills such as utilities, manufacturers, defense and electronics firms stand to gain the most from the equalization rate repeal.

Backers of the permanent cut counter that businesses pay a 24 percent property tax rate versus 10 percent for residential owners and that the bills for more expensive holdings are higher and therefore show larger reductions.

Tim Lawless, state president of NAIOP, said it would be mistake for the state let the temporary repeal expire causing increased property taxes for homeowners and small businesses.

"Homeowners are suffering now and we need to prevent the reinstitution of the largest single property tax increase in history coming back at a time when we are trying to rebound from a possible recession and on the heels of historic valuation increases," said Lawless.

Business and real estate groups also say allowing the tax to return could embolden advocates of rigid property tax caps and limitations similar to California's Proposition 13. NAIOP, the state chamber and other groups list a permanent repeal of the equalization rate as their top goal for 2008.

Money from the equalization rate had been allocated to local schools, but after the temporary repeal in 2006 the school money was replaced from the state's general pool of cash.

Republican leaders -- including House Speaker Jim Weiers and Senate President Tim Bee -- are moving the equalization repeal through the legislature. Democrats and teachers unions tend to oppose the permanent cut saying it takes away from education and other spending programs.

They also question the move while the state is facing a $1 billion budget deficit.

The tax cut amounted to $225 million in lost revenue in 2007, according to ATRA.