By Guest Opinion
Published: February 13, 2012 at 9:06 am
Arizona certainly needs property tax reform. We have the most complicated and complex property tax system in the nation, one that produces unpredictable and inexplicable property tax bills for homeowners and businesses. With a "share of the pie" system driven not by what your property is worth, but rather how much money the taxing districts want to spend, you are always one tax bill away from an unaffordable property tax problem.
Arizona Tax Research Association's (ATRA) proposal to limit property valuation increases to 5 percent per year does nothing to limit your annual tax bill increase or improve our cumbersome property tax system. You have to control both valuation increase and tax rate in order to affect any real change on taxes. The 5 percent valuation increase would just about guarantee your property tax bill would go up at least 7 percent to 10 percent per year, maybe more depending on your share of that ever-growing pie.
It took Howard Jarvis 15 years of hard work to pass his citizens' initiative limiting property taxes known as California Proposition 13. The government spenders used various methods to try to defeat Jarvis. ATRA's proposal is right out of the anti-Prop 13 playbook from the 1970s - nothing new there. The opponents would make sweeping statements about capping this or that but never actually do anything to hold down tax bill increases. In the end, their machinations stirred voters to pass Prop 13 in 1978 with a 64 percent majority.
In Article 9, Section 18 of the Arizona Constitution, primary property taxes do have a stated maximum tax of 1 percent of full cash value but then it is followed by exceptions that are analogous to "There's a 1 percent limit except if the sun comes up tomorrow then the limit is removed." Printing the 1 percent limit statement is pretty much wasted ink.
In Article 9, Section 19 on secondary property taxes, there's a limit on taxing districts levy increases followed again by exceptions that make the limit another waste of ink. The bottom line is there's no limit on increases to your secondary taxes. This is where a lot of the damage is done. My school district, Paradise Valley Unified School District (PVUSD), is carrying almost $500 million of long term debt, with our secondary property taxes servicing the debt. Gov. Jan Brewer recently proposed doubling school districts allowable debt load. Does anyone think it's a good idea for PVUSD to carry $1 billion in bond debt? Am I the only one aware of what is going on in Greece and Spain? Sometimes I wonder.
The education spending lobby has been making noises about wanting all their funding to come from property taxes so they never again have to take a cut when the economy slows to a crawl. Whether you're employed, whether you have income to pay taxes, you will surely get a property tax bill every year and you have to find a way to pay it if you don't want to be homeless. The education spending lobby may put an initiative on the 2012 ballot to put all their funding on your property tax bill. No unpredictable general fund for them!
Are you starting to see how limiting valuation increases to 5 percent per year isn't going to cut it?
We're about to be buried in property taxes. And Proposition 13 Arizona is coming to the rescue.
Prop. 13 Arizona is not a big tax cut. Rather, it's an insurance policy against future unaffordable tax increases.
Prop. 13 Arizona, a citizens' initiative modeled on California's very successful and popular Prop. 13, is a solid limit on property taxes. The tax formula is one that everyone can understand. It transitions us to an Acquisition Value System using purchase price as the basis for taxation and includes Decline-In-Value provisions like California's Proposition 8 for properties where values have fallen below purchase price.
The total tax rate cannot exceed half a percent for all residential properties including rental homes, second homes and apartment buildings, or exceed 1 percent for all other real property including commercial property. The tax caps apply to both ad valorem and non-ad valorem taxes making it a solid cap. It eliminates all exceptions to the tax caps including parcel taxes and overrides. The Legislature can set the tax rate lower for everyone or groups of their choice. They just can't exceed the tax rate caps.
You can read more about the initiative and how it works at www.Prop13Arizona.com.
After California passed Prop. 13 in 1978, the state enjoyed 10 years of government fiscal responsibility and 12 years of unprecedented economic growth. Elected officials voluntarily cut $1 billion from their budgets between the June passage of Prop. 13 and the November elections. Spending cuts were finally in vogue.
We cannot get Arizona's economy growing again until we get our housing market off its back. To accomplish that, we need buyers. Prop. 13 Arizona will bring national attention to our real estate market and attract those much needed buyers to our state. We'll have more people paying fair and predictable property taxes rather than fewer paying higher rates.
Businesses want predictability. Our unpredictable commercial property taxes and high tax rates make us uncompetitive with other Western states and keeps businesses from locating in Arizona. Prop. 13 Arizona will make these taxes predictable and with competitive tax rates.
If you want businesses with good jobs to come to Arizona, if you want the value of your home to increase because buyers have come into the market, if you want to sell our current inventory of homes and businesses so we can get our construction industry going again and our construction workers back on the job, then you're for Prop. 13 Arizona. If you want to generate more tax revenue through economic growth, not oppressive tax hikes, then you're for Prop 13 Arizona.
- Lynne Weaver is chairman of Proposition 13 Arizona.
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