Arizona Legislature
Business owners want property tax repealed

By Howard Fischer
Capitol Media Services
Published/Last Modified on Tuesday, April 15, 2008 3:06 PM MDT


 PHOENIX — Business owners came to the Capitol Monday to urge Gov. Janet Napolitano to sign legislation permanently repealing the state’s property tax.


 The press conference, organized by House Republican leadership, was designed to put pressure on the governor. Most of those who spoke said allowing the levy to return as scheduled late next year would have a devastating effect on the economy.

 Tim Jeffries, a consultant who works on strategic planning with small firms, said the $125 million of the tax that would be taken from businesses — about half the total the levy would raise — could be better spent on creating thousands of new jobs.

 But Jeffries, questioned after the press conference, said he could not say how many jobs were created, if any, when the levy went away in 2006. Instead, he responded that state government “expanded exorbitantly, perhaps irresponsibly’’ every time it has received more money.

 Randy Johnson, whose firm manages 18 mobile home parks in Arizona, said if the tax comes back it will be passed along to park residents and make that type of housing less affordable.

 That theme was echoed by Neal Haney, a broker for another group of mobile homes. He said property taxes make up anywhere between 3 and 5 percent of total rents.

 Haney, however, balked at questions about how much park rents went down when the tax disappeared in 2006. “There are a lot of things that go into what rents are,’’ he said, ranging from routine maintenance to keeping the roads paved.

 HB 2220, the measure to permanently repeal the levy, gained final Senate approval a week ago .

 But House Speaker Jim Weiers waited until late Monday to send the bill to the governor.

 In the interim, business groups have embarked on a full-scale lobbying effort to get Napolitano to change her mind. That includes efforts by various chambers of commerce to deluge

 Napolitano’s office with phone calls.

 That, however, has not produced the desired results: Gubernatorial press aide Jeanine L’Ecuyer said the latest count as of Monday morning showed 356 people urging her to sign the repeal and 1,059 wanting her to veto the legislation.

 Also Monday, three Republican members of the U.S. House of Representatives also sent a letter to Napolitano urging her to approve the permanent repeal. Part of the fight comes down to putting a spin on what is a stake.

 In 2006, when the state had more money than it needed, lawmakers permanently cut individual income tax rates by 10 percent.

 The GOP majority also sought permanent repeal of the property tax. But Napolitano insisted instead on a temporary suspension.

 That legislation is worded so that, absent legislative action, the levy returns late next year.

 Republicans have said that action will result in “the largest ta increase in state history.’’ Napolitano, for her part, has instead portrayed what would happen in 2009 as simply the state recouping the revenues it already was collecting before the suspension.

 Weiers also poked fun at Napolitano’s effort to minimize the impact of the return of the levy when she said last month it amounted to “two lattes (a month) for education.’’

 If the tax were being levied today it would cost the owner of a $250,000 home about $93 a year, or about $7.75 a month. Weiers said that is the attitude of “elitists’’ who are “out of touch with what is going on in today’s economy.’’

 Weiers also pointed out, correctly, that suspension of the tax, technically an “education equalization’’ levy, did not reduce state aid to education. What was not collected from the property tax was made up from other sources.

 Complicating the discussion is the state’s deficit, pegged a $1.2 billion for this year — which would not be affected either way — and approaching $2 billion next budget year if nothing changes on either the income or spending side.

 Sen. Tom O’Halleran, R-Sedona, one Republican who voted against immediate permanent repeal, said it makes no sense to forego future revenues while the state’s future fiscal means and needs are not yet known.

 He said it makes more sense to wait until next year before deciding what to do. At that time, O’Halleran said, legislators could vote for repeal or, at least, extend the suspension if the funds are still needed.

 Weiers, however, said the amount of state spending has nearly doubled since the beginning of 2003 when Napolitano took office.

 And he said the soft state and national economy are already putting pressure on both homeowners and business owned.

 He said the only realistic answer to the state’s budget woes is fiscal restraint.

 “Now is the time for spending discipline to take place, not to balance the budget on the backs of small businesses and property owners,’’ Weiers said.

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