House panel in favor to repeal state property tax, against Napolitano

By Howard Fischer
Capitol Media Services
Published/Last Modified on Friday, January 18, 2008 3:05 PM MST


PHOENIX — Ignoring the governor’s hint of a veto, a House panel voted Thursday to permanently repeal the state property tax.


 The party-line vote in the Republican-controlled Ways and Means Committee came over objections from some Democrats that while the levy is not currently being collected, the state should not now forego money it may need in the future.

 Rep. Steve Farley, D-Tucson, specifically pointed to the projections of economists that Arizona’s financial condition is getting worse, not better. He said undermining state revenues will leave the state unable to meet its obligations.

 It also comes a week after Gov. Janet Napolitano labeled the measure “irresponsible.’’

 But House Speaker Jim Weiers who is shepherding the plan through the Legislature, said it is in line with a goal of the governor to help keep the state’s economy growing.

 “This is making this state the very best place that you can in order to foster and promote business,’’ Weiers said. He said repealing the tax now — even though its collection is now suspended until late 2009 — would provide that stimulus.

 In fact, he pointed out that U.S. House Speaker Nancy Pelosi, a California Democrat, is working on plans in Washington to stimulate the national economy, at least in part with a tax cut.

 Lawmakers suspended the tax for three years as part of the 2006 budget deal when Arizona had more revenues than expenses, suspended collection of the tax for three years. That agreement is structured so it returns automatically unless lawmakers repeal it.

 Legislative staffers figure if the tax comes back it would add about $76 a year to the property tax bill of a $200,000 home. For a $1 million business, the figure is $874.

 Weiers acknowledged that could be seen as a relatively small amount of money. But he said that doesn’t mean it’s irrelevant, especially to those in danger of losing their homes. “People are hanging on by fingernails now,’’ he said. “And I don’t think that we should be giving them the obliging kick ove the cliff.’’

 Hanging over the debate is the state’s current deficit which some peg at $970 million. And both the governor and legislative leaders acknowledge things will get worse, at least in the short term, with projections of the gap between revenues and expenses for next fiscal year between $1.2 billion and $1.7 billion.

 Weiers said that problem can be solved not by the state taking more money from taxpayers but by spending what is collected more wisely.

 But Farley said that ignores the fact people form governments — and tax themselves — to perform the services they can’t do for themselves, like police, court systems and roads. And he said the soft economy also has resulted in more needy people who qualif for state-paid health care so they can stay healthy and participate in the economy. “That takes a little bit of money from all of us in order to benefit the entire society,’’ he said. And Farley called the cost of the levy on each homeowner “a relatively small amount of money in exchange for the types of things the government can provide for our citizens so we can maximize our ability to produce.’’

 Republican legislative leaders intend to push the measure quickly to the governor’s desk: An identical bill was approved earlier this week by the Senate Finance Committee.

 More than a dozen lobbyists for both business groups and individual companies came to the Capitol to support the repeal. Only representatives of the Arizona Education Association and the Arizona School Boards Association were opposed.

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