Arizona 's business community has long complained that the state's property tax system places a disproportionate and unfair burden on commercial establishments, but its calls for change have brought no relief from the Legislature. Now the Arizona Tax Research Association, which represents the interests of many of the state's large employers, wants to ask voters for reform through a state constitutional amendment.
It's a long shot, but still worth a try. Businesses have a legitimate complaint because their property assessment rates are two-and-a-half times those for homeowners.
The skewed rates are justified on the supposition that businesses can more easily afford to pay taxes than homeowners. But ultimately, every tax bill is borne by individuals: Businesses pass their tax burden along to consumers in the form of higher prices, to workers in the form of fewer jobs and lower wages and benefits, and to shareholders (many of whom are workers with IRA or 401(k) retirement plans) in the form of lower dividends and stock prices.
So each one of us has a real, vested interest in seeing that our tax laws are even-handed. And with Arizona 's property-tax laws, there is room for improvement.
In the past, ATRA has tried to persuade the Legislature to ratchet down the high assessment rates on businesses — say, to twice or one-and-a-half times those for homeowners, from the current two-and-a-half.
Defenders of the present system have accused proponents of favoring a tax increase on homeowners. But that wouldn't necessarily be true, if governments restrained spending and voters were more cautious about approving bond issues and budget overrides. In any case, changing the assessment rate has gone nowhere in the Legislature.
Now, as the Tribune's Le Templar reported on Saturday, ATRA is proposing a state constitutional amendment requiring a two-thirds supermajority of voters to approve bond issues and budget overrides. That would hold voters to the same supermajority requirement as applies to the Legislature on tax issues.
That seems fair, but officials of the state's cities and school districts can be expected to oppose the measure tooth and nail. Joel Wirth, assistant superintendent of Chandler schools for business services, told Templar such a requirement would be a nightmare. “I think it's time for me to retire if they ever get something like that through. It's that crazy,” Wirth said.
Bob Flach, chief financial officer for the Scottsdale school district, said a supermajority requirement for school bond issues could violate court requirements that funding be equitable among rich and poor districts. But the Legislature satisfied that requirement in the 1990s by agreeing to pay for basic school construction and repairs from the state General Fund.
Proponents of supermajorities for bond issues point out most measures already pass by large margins. Indeed, a search of election records over the past four years by Templar found that 60 percent of bond issues and budget overrides were approved by more than 66 percent of voters. Moreover, several other states, including California and Oregon , have supermajority requirements — with no adverse effects that we've heard of.
If the Legislature won't cut the business property-tax assessment to a more reasonable level, the least it could do is put the supermajority proposal on the ballot and let the state's voters decide.