Ideally, taxpayers should be able to weigh the costs of a school district property tax question against the benefits of the proposed spending. In Arizona, taxpayers soon discover that information on the taxation side of the equation is often difficult to understand.
When they cast their votes on three ballot questions from the Tucson Unified School District, taxpayers will have to decide for themselves whether the property tax increases are worth the spending proposed by the district. But make no mistake: Property taxes are already quite high in Tucson, especially on the business sector.
According to the election publicity pamphlet, the rate increase for the maintenance and operations override, or Proposition 401 on the Pima County ballot, would be 98 cents per $100 of assessed value. The proposed rate for the capital override, Proposition 402, is 28 cents. Finally, the proposed rate for the $235 million bond question, Proposition 400, is 47 cents, on average, to pay the $395 million debt (principal and interest) over a period not to exceed 20 years.
The short answer, then, on the impact of the three questions is a secondary tax rate increase of $1.73 per $1,000 in property value. In other words, for every $100,000 in property value, the annual residential tax will be $173. The commercial tax is 2 1/2 times what homeowners pay, so the figure here would be $433.
These are secondary property taxes that require voter approval and are used to pay for debt service on bonds or to fund budget overrides. All three of TUSD's ballot questions are proposing increases in secondary tax rates that will affect all property taxpayers in the district.
Taxpayers in TUSD are burdened with some of the highest tax rates in the state. In fact, the majority of Tucson's taxpayers are saddled with combined primary tax rates in excess of the 1 percent constitutional cap for homeowners. In other words, while typical Tucson homeowners will experience higher taxes as their property values increase, they are insulated from higher primary tax rates as long as all rates combined exceed the 1 percent cap. Commercial taxpayers, however, have no such protection and feel the full effect of both valuation growth and increases in primary tax rates, which do not require voter approval.
TUSD's governing board has for decades adopted highly burdensome primary property tax levies. According to data from the Arizona Department of Education for fiscal year 2003, TUSD's per-pupil expenditure figure for maintenance and operations is 46 percent higher than the state average. The district's primary tax rate this year is 80 percent higher than the rate used by the state to determine what the property tax contribution should be in relation to dollars from the state.
It is also important to look at the long-term impact of these questions. The average taxpayer with a home valued at $109,840, assuming a modest 4 percent annual growth in value, will pay $2,947 over the life of the bond debt and override authority if all three of the ballot questions prevail. Meanwhile, the typical commercial taxpayer with property valued at $454,872, again assuming 4 percent annual growth, will be hit with $30,492 over the same period.
Of course, none of this includes TUSD's current secondary tax rate, $1.50 this year, to make the debt service payments on an existing $385 million principal and interest obligation that will endure until 2014.
This much is not complicated: If a "yes" vote prevails, property taxes will be even higher.