Initiatives to cut property taxes would hobble the state

Arizona Tax Revolt commentary:

The Arizona Tax Revolt Property Tax Levy and Valuation Rollback measures will bring modest reductions in each property owners tax bill.

Under our measures your 2009 tax bill will be about the average of your 2005-2008 bills. And you can expect your 2008 bill to increase by only 2% as taxing entities that exceed this amount would by our initiative be punished with an even greater reduction in their 2009 levy.

The legislature is considering SCR1024 and SCR1026 which at this time are identical to the tax revolt measures. Though it is unlikely the bills will pass in a form that would provide all the taxpayer protections afforded by the initiatives it is nevertheless another possible pathway to the ballot.

I agree with one thing ATRA said and that is that levy limits like have been in place for 26 years and were just reaffirmed by he voters with Prop 101 are the key to controlling the property tax levy of the secondary taxing entities like the Fire Districts and schools. Not to worry the schools will not see any reduction in revenue as the Legislature will repeat what we voters approved in 2000 with Prop 301 and that is a shift to a sales tax. A sales tax never taxed anyone out of their homes like property taxes have been!

Local taxing entities are accustomed to taxing us in many cases without limit, and we can expect them to put up a fierce fight against the taxpayers and the Arizona Tax Revolt initiatives. Keep in mind that the present budget woes are not the fault of the Tax Revolt but instead due to the fiscal policies, and of course boom or bust cycles in the real estate market, of those who will tell you that our carefully architected solutions will cause the sky to fall… Look up the sky is already falling!

So if you believe that everything is fine and that the double digit increases in your property tax bills in the last several years are some sort of an anomaly then do nothing. If you like I have realized that our property taxation system is faulty by design and want to be a part of the solution, then visit the Arizona Tax Revolt WEB site at http://www.ArizonaTaxRevolt... and fill out the volunteer form to help us gather the 300,047 valid signatures needed on each of our two initiatives.

Marc Goldstone, Chair.
Arizona Tax Revolt

Published: February 12, 2008
Arizona Republic

Dramatic fluctuations in the real-estate market in recent years have caused considerable unrest among property taxpayers across Arizona.

Beginning in 2005, the Arizona real-estate market skyrocketed, particularly in the residential-housing market. As they are constitutionally required, county assessors responded to the market by increasing property valuations for property-tax purposes. In Maricopa County, residential properties increased 60 percent in most cases.

When those increases from county assessors hit taxpayers' mailboxes in early 2006, they created shockwaves across the state. The unprecedented valuation increases prompted my organization, the Arizona Tax Research Association (ATRA), to recommend to state lawmakers a series of reforms that focused on reducing property-tax rates to offset the valuation growth.

To their credit, state policymakers adopted most of those recommendations by reducing state tax rates and referring Proposition 101 to the general-election ballot in 2006. Proposition 101 ensured that the constitutional limitations on the primary levies (levies for operating budgets) of counties, community colleges and cities were updated and forced those entities to reduce tax rates this year.

The success of those measures is reflected in the reduction in the state's average property-tax rate from tax years 2006 and 2007. That rate has fallen from $11.56 in 2005 to $10.04 in 2007, a 13 percent decrease.

Despite these positive steps on the part of state policymakers to respond to the property-tax crisis, two groups are circulating major property-tax initiatives for the November 2008 general-election ballot. Before lending support to these initiatives, Arizona citizens should know how significantly they would affect not just our property-tax system but our entire public-finance system in the state.

The first measure, dubbed Proposition 13 Arizona, would roll back property valuations on existing property and cap future growth at 2 percent. More importantly, it would also cap taxes on residential property at one-half of 1 percent of value and business property taxes at 1 percent. New properties would be brought on the tax roll at their sale price.

The second initiative, called Arizona Tax Revolt, would also roll back values to 2003 and cap annual growth at 2 percent. This effort would also roll back 2009 property taxes (excluding levies for bonds) of most jurisdictions to 2005 levels and apply levy limits beginning in 2010.

In addition to fundamentally changing our property-tax system, these initiatives would force dramatic reductions in current property taxes. Proposition 13 Arizona is estimated to reduce state and local property collections by almost 50 percent or $2.6 billion statewide. Faced with prior initiatives mandating increased funding for K-12 schools and health care, lawmakers would be forced into significant tax increases in other areas.

ATRA's opposition to both of these initiatives is not evidence that we think the property-tax system is perfect. In fact, we continue our efforts at the state Capitol to pass a series of reforms to secondary property taxes (mostly voter-approved bonds, overrides and special districts) that will protect taxpayers against major increases when property values rise.

If you are concerned about your property taxes, I encourage you to communicate that message to your state legislators and to Gov. Janet Napolitano. Responsible leadership at the state level will not only solve this problem, it could convince Arizonans not to pull the trigger on initiatives that could do more harm than good.

The writer is president of the Arizona Tax Research Association.