Gilbert Councilman Dave Crozier wants the Town Council to reconsider the town’s recently approved property tax rate — in light of proposed statewide initiatives that would retroactively force governments to decrease tax hikes.
“We should at least try to do something to mitigate some of this tax burden, or people are going to overreact and do it with initiative, and our hands will be tied,” he said. “We would be mandated to limit tax increases to cost-of-living and population increases.”
The council recently decided to maintain the town’s secondary property tax rate — despite a 60 percent increase in property values. The rate increases taxes from total annual collections of about $16 million to about $26 million, which would allow the town to approve $103 million more in bond-issue projects.
A state ballot measure might not be necessary if communities changed their minds and cut tax bills, said Jeff Greenspan, chairman of the Phoenix-based Prop13Arizona political committee.
The committee is planning an initiative to restrict governments from enjoying the benefit of value increases at the cost of taxpayers. Another group called Arizona Tax Revolt, based out of Mohave County, also is working on an initiative.
“What’s been going on in the past couple of years is that the cities have gone on spending sprees,” Greenspan said. “They need to capture the full amount of the revenues coming from the revenue increases.”
Advocates have until next summer to formalize an initiative plan and get it approved for the November 2008 ballot. A variety of ideas is being discussed, including capping assessed home values, capping tax rates or capping the total revenue collected from homeowners.
The initiatives could mirror portions of California law known as Proposition 13, which was approved after homeowners felt the brunt of about 20 percent increases in home values. Under the California law, when a homeowner purchases a house, that value is locked in, and only 2 percent levy increases are allowed, regardless of how quick the home value climbs. If the value increases 8 percent, the rate must be cut 6 percent, for instance.
Kevin McCarthy, president of the Arizona Tax Research Association and a Gilbert resident, said the California law is unfair in that it locks in higher rates for younger families who purchase their homes later, when prices are higher.
He urges local municipalities to change their minds if they voted against tax cuts.
“The medicine that some angry taxpayers will feed them will be much tougher on them than what would otherwise be a small reduction in the tax rate,” McCarthy said.
In Gilbert, some officials argue the town’s portion is only 10 percent of the entire tax bill, and cutting that rate would hardly make a dent in the total increase.
Councilman Don Skousen said that while he originally supported a small rate cut, he doubted that Gilbert’s actions alone could have any effect on the threats for an initiative. Other government agencies also would have to cut their costs, he said, and school property taxes, which make up the most significant portions of tax bills, would need to dip to truly escape the burden of the higher values. And, he added, Gilbert voters may be even more up in arms if the town determines to cut taxes instead of moving forward with plans to approve more bond funding to speed road construction. “People would revolt if we did that,” he said.