County installs cap on levy increases for tax districts

Move by Maricopa supervisors eases property-tax hikes as values increase
The Arizona Republic
Thursday, January 5, 2006
Matthew Benson

Call it a finger in the dike, or one small step, but Maricopa County officials took action Wednesday to ward off sticker shock when residents pay their 2006-07 property taxes.

The county Board of Supervisors voted unanimously to impose a 2 percent cap on the levy increase for a pair of special districts governing library and flood-control services. The move comes against the backdrop of residential property valuations that are expected to increase by an average of 43 percent when assessments are released next month.

"It is the right thing to do for the taxpayer," Supervisor Andrew Kunasek said. He likened the looming increase in property values, and property taxes that could accompany it, to "a shakedown of the taxpayer."

The county measure mirrors a state regulation that allows the primary property tax levy on existing properties to increase no more than 2 percent annually. The primary property tax funds most government services, such as criminal justice and public health. Secondary taxes fund special districts, including flood control and libraries.

So the county rule, which will be re-evaluated after one year, applies only to the property taxes for flood control and libraries.

It also applies only to existing properties. New construction is exempt from the cap.

That's a significant revenue stream for county coffers. Kevin McCarthy, executive director of the Arizona Tax Research Association, said new construction in Maricopa County accounted for $1.5 billion in net assessed value in 2005.

Plus, secondary property taxes for flood control and library services account for just a fraction of your overall property-tax bill. With existing rates, the owner of a $200,000 home would have paid $42 for flood control this year and $10.42 for libraries.

So, what of the county's 2 percent levy cap?

"I think the point could be made that's the least they could do and hardly something to pat themselves on the back for," McCarthy said.

Still, he called the step "a move in the right direction."

It also reflects a growing trend as politicians and citizen advocate groups search for ways to hold down property taxes as property values grow.

"We've sort of sounded the alarm on the state level," McCarthy said. "Measures need to be taken to ensure levies don't increase along with (property values)."

One measure being pitched, in part, by his group would save money for owners of business and residential properties and shift about $200 million of school funding onto the state General Fund.

The proposal would save $43 in 2007 for the owner of a home valued at $100,000.