Wolf at tax door already on a leash

The Arizona Republic
Sunday, March 12, 2006
Editorial Board

Wolf! Wolf!

There's a campaign to terrify Arizonans with a phony danger: Property taxes will eat you alive.

Homeowners are easy prey for fear right now.

Property valuations in many places have taken eye-popping jumps. In Maricopa County, the median increase was nearly 52 percent.

Some homeowners may be too rattled to remember: Property values don't dictate tax bills. Taxes are determined by local spending needs.

But just like the fable, a real wolf is lurking, threatening Arizona's future. This wolf is the Legislature's effort to kill or maim local control of property taxes. And that would cripple local services over time.

Three bills in the Legislature would require cities, counties, town and community college districts to put virtually any increase in property taxes to a vote.

Two of them make no provision at all for inflation.

In a place with explosive population growth, this isn't just foolhardy. It's dangerous.

The complexity of property taxes makes it easy to raise the alarm.

But Arizona's property tax system is far from a ravenous, out-of-control beast.

Residential property taxes are below the national average. And there's no state property tax. Legislators got rid of it years ago.

At the local level, we have two types of property tax: primary, used by cities, towns, counties and community colleges, and secondary, which includes schools, bond issues for various specific needs and taxing districts, such as flood control.

Arizona has a lot of leashes on property tax.

For instance, the annual increase in total primary property tax revenues, excluding new construction, is limited to 2 percent. In addition, the "truth in taxation" law requires public hearings whenever a city, county, town or community college district intends to raise more in property taxes than the previous year, excluding revenues from new construction.

Similar rules apply to school districts.

Low-income seniors and the disabled are eligible for certain property tax breaks and exemptions.

And voters have a strong voice on property taxes.

They decide whether to approve bond issues. If they're unhappy with property tax levels, they can oust elected officials.

"Local control" is a rallying cry for Republicans. Yet prominent GOP lawmakers, including Senate Majority Leader Tim Bee of Tucson, Sen. Dean Martin of Phoenix and Rep. Steve Huffman of Tucson, have sponsored bills that would straitjacket local authority over property taxes.

The measures, HB 2685, SB 1289 and SB 1478, differ in their details. But they would require voter approval for most or all increases in the primary property tax, except for changes because of construction.

While HB 2685 takes inflation into account, it uses an index that runs on the low side. Yet many basic government expenses are rising rapidly.

The state requires counties to pay a large share of the cost for providing long-term care for the indigent, a bill that increased an average of 15 percent statewide last year.

The criminal justice system accounts for a third of Maricopa County's budget. The number of felony cases is rising about 10 percent a year.

Supporters of a property-tax straitjacket argue that the rise in valuations will fuel a revolt.

The Legislature must adopt severe restrictions, they contend, to head off an even stronger measure, similar to Proposition 13 in California. But the situation is completely different. California had a high property tax burden. It lacked the sorts of checks that Arizona has.

The way to head off a terrible proposal is not to adopt a bad one that would slowly strangle local services.