Wednesday, July 25, 2007

Property Taxpayers: Help is Coming!

The Golden Bullet for Property Tax Reform

Given the structure of the Arizona property tax system, a levy limitation initiative is a “golden bullet” for property tax reform. Although taxpayers have naturally fixated on the huge growth in their assessed values, the determining factor in the Arizona property tax equation is the amount of money levied by local taxing districts:

Levy = Assessed Value x Rate

If an effective limit is placed on levies, assessed values can increase without doing great harm to taxpayers, because rates will have to fall to compensate. The problem in Arizona has been the absence of effective limits on levies. Prop 101, which was referred to the November 2006 ballot by the Arizona Legislature and approved by the voters, did a good job of limiting the primary property tax levies for counties, cities/towns, and community colleges. Under Prop 101, the tax levies for those taxing districts will increase by only two percent per year going forward. But there may be a dozen taxing districts on a typical taxpayer’s property tax bill—and most of those districts are not subject to Prop 101’s two percent levy limit.

Two weeks ago, the Mohave County-based Arizona Tax Revolt committee filed its levy limitation initiative with the Arizona Secretary of State. The Arizona Tax Revolt initiative would broaden the two percent limit for levy increases to include all taxing districts. It would also roll many levies back to 2005 levels, and require a two-thirds majority for voter approval to raise future levies higher than the two percent cap.

If the ATR levy limit initiative reaches the ballot, and if it is approved by Arizona voters, its features would result in significant tax relief for all Arizona home and business property owners. By limiting yearly property tax levy increases to reasonable amounts, the initiative would help to restrain the kind of outrageous overspending seen around the state in recent years.

To get involved with the Arizona Tax Revolt committee, contact Marc Goldstone at or (602) 388-8833.

Silver Bullet(s) Coming Soon

In Arizona, limits on assessed valuation are of secondary importance to the objective of reducing overall tax burdens on home and business property owners. Without an effective levy limitation, taxing districts can compensate for low assessed values by raising rates to get the levies they want (there are some hurdles to raising rates, but they have proven to be of limited effectiveness).

That said, a limit on assessed valuation is important because it would affect the distribution of tax relief within the tax base for a given district. Property tax activists in Maricopa County are exploring the possibility of sending to the ballot an assessed valuation limit that includes a rollback in assessed values to 2003 levels, and a two percent limit on future increases in assessed value for all taxing districts and all classes of property. The two percent limit is based on SCR 1025, a legislative referendum bill introduced in the 2006 and 2007 sessions by Sen. Ron Gould (R-Lake Havasu City). Gould’s referendum passed the Senate in 2006, but was stifled in the House by the former chairman of the Ways and Means Committee.

A valuation rollback would serve as a backup measure for the Arizona Tax Revolt levy rollback, ensuring relief for property owners who have suffered from large increases in assessed valuation in recent years. Going forward, the two percent limit on value increases would provide protections for all property taxpayers, but greater protection for home and business owners located in areas subject to rapid increases in market value.

To get involved with the valuation rollback and increase cap, contact Tom Jenney at

Local Taxing Districts Out-of-Control

The failure of taxing district officials in recent years to restrain budget growth and to reduce property tax levies has fueled the outrage of Arizona home and business owners. If voters end up passing serious property tax reform measures in November 2008, the fiscal irresponsibility of Arizona’s local governments will have been a major contributing factor.

In response to populist property tax reform initiatives, local taxing district officials and their beneficiaries have begun to send out cries of alarm about supposed cuts in vital services. But voters have become accustomed to the cries of “wolf” on the part of taxing district officials, and will likely discount them. For many taxing districts, property tax revenue is already a minor component. In a typical Arizona city, property taxes account for less than ten percent of city revenues, and the net effect of the levy and assessed valuation limits would be slight reductions in their dependence on property tax revenues. (Some jurisdictions—such as the City of Mesa—manage to spend a great deal of money without any property tax revenue at all.)

Support tax cuts by contributing to the Arizona Federation of Taxpayers and Americans for Prosperity. You can make a PayPal donation here: Or email for a mail-in membership form.

1 comment:

Anonymous said...

The article stated: "For many taxing districts, property tax revenue is already a minor component. In a typical Arizona city, property taxes account for less than ten percent of city revenues, and the net effect of the levy and assessed valuation limits would be slight reductions in their dependence on property tax revenues."

Now for the rest of the story.....

For cities and towns that have other sources of revenue, the impact might be minimal. However, fire districts serving 154 communities in Arizona have no other source of revenue. I suppose if you never need the services of a local fire district, will not be an issue for you. For those of you who live where fire districts are the fire protection and emergency medical response for you, I suggest you attend a board meeting and ask them how they will adjust to these severe limitations. Budgets are tight, people and equipment are expensive. Two percent will not be sufficient to continue the service you are use to.

This is not "crying wolf", the impact is real and will be devastating. This is especially true for small volunteer fire districts that have recently been able to improve to a staffed or partially staffed service.

On the surface, a major tax reduction sounds good. However,
be aware of the law of unintended of consequences. Do your homework before you vote.