PHOENIX — A business-backed Republican bill to permanently repeal a suspended state property tax has squeaked through the Arizona House with one vote to spare.
The House approved the repeal bill Tuesday on a 32-28 vote largely along party lines. It takes a minimum of 31 votes for the 60-member House to pass a bill.
The bill now goes to the Senate. The chief sponsor of that chamber’s version has acknowledged a Senate vote also would be a cliffhanger.
Supporters say the so-called state equalization property tax must be repealed to avoid having it automatically take effect again, effectively causing a tax increase a year from now.
“We don’t have a revenue problem. We have a spending problem. It’s time we recognize where that money came from,” said Rep. Russell Pearce, R-Mesa.
Gov. Janet Napolitano and other opponents call the move ill-advised and ill-timed when the state has big budget problems.
“I don’t have the conscience to turn our back on the fundamental needs in this state,” said Rep. Tom Chabin, D-Flagstaff.
Republican Reps. Jennifer Burns and Pete Hershberger, both of Tucson, voted against the repeal. Democratic Rep. Mark DeSimone of Phoenix voted for it.
Allowing the levy to take effect again would produce an estimated $250 million annually for the state but raise the property tax on a $250,000 home by about $100 a year.
Passage of the measure would put the GOP-led Legislature on a course toward a collision on the issue with Napolitano.
“To me that (repeal) is the last thing that should be discussed in this situation that we find ourselves,” Napolitano said March 5, referring to the state’s current budget woes.
“Think how nice it would be if we redeploy that money into education when it comes back as opposed to two lattes for every family,” she told teachers attending an Arizona Education Association gathering at the Capitol.
The property tax was suspended in 2006 for three years as part of a budget agreement hammered out before the current economic slowdown touched off a fiscal slide.
The state faces a projected revenue shortfall of $1.2 billion in the current fiscal year’s $10.6 billion budget and an even larger deficit in the next fiscal year.
When the tax was suspended in 2006, Republicans had wanted to repeal it outright. However, they settled for a three-year suspension as a budget compromise with Napolitano and legislative Democrats.
Permanent repeal of the tax is a priority of business lobbies and tax-cut advocates who argue that allowing the tax to take effect again would hurt business recruitment and retention.
The Arizona Education Association and other opponents argue that repeal would sacrifice tax dollars needed for public schools while providing big savings for business property owners.
The business-backed Arizona Tax Research Association on Tuesday released figures showing roughly a 50-50 split between savings for owner-occupied homes and all other types of property.
Majority Republicans had proclaimed the repeal a priority as they began the 2008 regular session. House and Senate committees endorsed repeal bills during the session’s first week.
However, the vote by the full House was delayed for more than a month, mostly because leaders who supported the measure waited for enough supporters to be present at the same time.