PHOENIX – Voters on Tuesday approved a ballot measure to limit increases in property valuations that determine how much property taxes people pay.
Unofficial returns showed Proposition 117 winning by a wide margin.
The measure, which will take effect in 2015, will place a 5 percent annual limit on how much the assessed value of property can rise. That will shield owners from the kinds of spikes seen during the real estate bubble of the last decade, supporters said.
Kevin McCarthy, president of the Arizona Tax Research Association, which led the campaign for Proposition 117, said the ballot measure also will bring “dramatic simplification” to the current system.
“It’s going to make the tax system simpler for taxpayers to understand and stabler for local governments to manage,” McCarthy said.
Opponents had argued that the change would add uncertainty to the current property tax system and could lead to unfair and inequitable taxation.
“There’s a lot of concern about whether this proposition will lower property taxes, which impacts our cities and our counties,” said Lea Marquez Peterson, president and CEO of the Tucson Hispanic Chamber of Commerce. “In the long term, it’ll result in less money for cities and counties to spend on core services.”
Supporters said Arizona’s property tax valuation system is one of the most complicated in the nation. Since 1980, property owners have been assessed on two taxable values: the full cash value – or market value – and limited property value – or secondary value.
Full cash value is used to compute secondary taxes ranging from bonds to special districts for services such as fire and flood control. Limited property value is used to compute taxes for maintenance and operation of school districts, cities and counties.
The limited property value currently can grow by 10 percent each year and, during a real estate boom, can grow every three years by 25 percent of the difference between the two values.
A group called “Yes on 117” registered with the Arizona Secretary of State’s Office had received $128,500 in contributions through Oct. 25. The largest amount, $55,000, came from the Arizona Tax Research Association, a watchdog group of which McCarthy is president.
A group called “Truth & Concerns on Prop. 117” reported receiving $39,400 through Oct. 25, of which $32,500 came from Sage Tax Group, an Arizona company that consults on property tax appeals.