Property tax levied by TUSD a shocker

Arizona Daily Star
September 21, 2011
Rhonda Bodfield

Tucsonan Linda Felter opened her tax bill Tuesday morning to discover every one of the jurisdictions she pays taxes to went down - save one. Even though the Pima County assessor dropped the value of her home by $75,000, her tax obligation to the Tucson Unified School District went up $52, a number that left her "absolutely perplexed."

All across the state's second-largest school district, homeowners are finding a similar surprise in their mailboxes. Most will pay more in school taxes. Some face bills that are hundreds of dollars higher - increases district officials blamed largely on changes in how the state funds education.

"I don't understand it. I read that enrollment is going down, that they're closing the schools, and yet they need more money from the taxpayers," said Felter, an accountant, who plans to call the district with her questions.

Since Pima County mailed tax bills to 451,000 property owners about 10 days ago, the county has been fielding an average of 59 calls every day to its taxpayer hotline. The bulk of them are questions about what's going on with their education bill.

District Superintendent John Pedicone said it would be a mistake to look at the bump as a windfall to the district, which is seeing its overall budget drop from $426 million to $409 million.

He said the district has forgone employee raises for four years and has closed nine schools in an attempt to cut costs.

But there are a number of factors he identified that are driving up the cost to taxpayers. Other districts were affected by the same changes, but since TUSD is one of fewer than 20 districts in the state affected by desegregation costs, TUSD was the hardest hit locally by the change in state law.

The district's combined primary and secondary tax rate increased, going from about 6 percent in fiscal year 2010 to 6.3 percent for 2011 and 6.9 percent for 2012. Pedicone said the rate had to be increased to help compensate for the bottoming out of property values.

In part, Pedicone noted, the increase is because of a legislative change from the 2010 session that took effect this year shifting more expenses from the state to local taxpayers. The change to what's known as the homeowners rebate essentially limited some of the cushion the state had given to homeowners in districts, such as those with desegregation orders or that are particularly small or rural, that have educational costs higher than the basic state aid threshold that all districts get.

Pedicone said that when lawmakers rolled over the education payment from one fiscal year to the next, it reduced the amount of cash the district had on hand.

While Pedicone said some taxpayers think the district has control over the tax changes, "we're really at the mercy of these kinds of things."

The change at the legislative level saved the state $70 million.

County Administrator Chuck Huckelberry, who has had his own complaints about how the Legislature went about protecting its general fund, characterized the shift as a "hidden state cost shift" to homeowners.

But some taxpayer advocates, such as Kevin McCarthy of the Arizona Tax Research Association, say it's a matter of fairness - particularly for districts that are collecting additional resources to handle long-standing desegregation issues, such as TUSD. Last year, the district raised about $61 million in desegregation funding, over and above its standard operating budget.

"The policy question is, if we're broke and the state is cutting spending and raising taxes, to what extent does it make sense to continue subsidizing something the state has no voice in and no control over?" McCarthy asked. He said the school board can opt out of spending the additional resources. "But if they want it, it's got to come from somewhere, and it just doesn't seem the state should have to subsidize that in difficult budget environments."

State Sen. Frank Antenori, R-Vail, said the blame doesn't fall with the Legislature but with the TUSD board, which he said was "too lazy and pathetic" to adopt deeper spending cuts.

But Chuck Essigs, an education finance expert who testified against the legislative move, said it's not fair to stick Tucson taxpayers with a bigger burden.

"Tucson got stuck with a court order many years ago and was told it had to do certain things," Essigs said. "It's easy enough to say just don't spend it anymore, but if the district took that position, it would probably end up back in court. It's not like the district just tried to come up with a way to spend more money."