Scottsdale Property Tax

Property tax plan riles Scottsdale


Anne Ryman
The Arizona Republic
Feb. 17, 2003


Opposition is growing to Gov. Janet Napolitano's proposal that would increase property taxes in at least four school districts to help balance next year's state budget.

The governor is proposing to change how the qualifying tax rate is allocated, meaning school districts with a lot of property wealth could end up with less state aid and would have to boost property taxes to make up for the loss.

Hardest hit would be Scottsdale, Dysart, Fountain Hills and Prescott unified school districts. The plan, if approved by the Legislature, would shift $13 million from state aid to property taxes.

The bulk of the burden would fall on the Scottsdale Unified School District, where an estimated $12.7 million in state funding could get transferred to property taxes.

"I am concerned," Scottsdale parent Molly Holzer said. "It seems like they're picking out the more affluent suburbs to fund this tax hike."

Scottsdale property owners could see their taxes go up $58 a year for every $200,000 of assessed home value, according to an analysis by the Arizona Tax Research Association. Business owners could see their taxes jump $559 a year for every $500,000 of assessment.

"This is a targeted tax increase on Scottsdale," said Michael Hunter, vice president of the Arizona Tax Research Association.

The Governor's Office says it is an equity issue. Scottsdale has one of the lowest school tax rates among school districts in Maricopa County, at $5.30 per $100 assessed value. Even with the increase, the rate would still be low compared with many other school districts, said George Cunningham, the governor's deputy chief of staff for finance and budget.

"Any tax increase is a burden they don't want to bear," he said. "But this is not going to force anyone to mortgage their home."

A similar proposal surfaced last year but was discarded by the Legislature.

A Republican budget proposal released Jan. 28 does not include Napolitano's proposal to change the qualifying tax rate. She will need the support of the Legislature for it to pass.

Some lawmakers say they intend to fight the idea.

Sen. Carolyn Allen, R-Scottsdale, said she would not vote on a budget that includes changing the qualifying tax rate.

"I will be loud and I will be vocal and I will throw a fit," she said.

The possibility of higher taxes worries Alice Suldol, who owns two small businesses in Fountain Hills. She operates a home couture shop and an art design shop out of the same building to save on rent. The increase would come at a bad time, she said, because of the struggling economy.

"Retail is a tough place to be right now," she said. "Everybody is watching their money."

When the economy is soft, paying higher taxes is not going to stimulate growth, said Rick Kidder, director of public policy for the Scottsdale Area Chamber.

"That would be a substantial burden when small businesses are already suffering," he said.

People who live in Fountain Hills could see their rates increase more than Scottsdale under the proposal.
Here's the possible impact on other communities:
• In a January 2002 legislative analysis of tax rates, people living in the Fountain Hills School District would see an extra $74 in taxes for every $200,000 of assessed home value. Fountain Hills businesses would get hit with $716 more in taxes, according to the Arizona Tax Research Association.
• The same analysis predicted homeowners in the Dysart Unified School District could pay an additional $73 a year while the owner of a half-million-dollar business would shell out an extra $702.
• School districts such as Paradise Valley, Mesa, Gilbert and Deer Valley would be affected if the tax change occurs, but the effect would be far less, according to the Arizona Tax Research Association. For instance, a Mesa home assessed at $200,000 would see less than a penny increase. A $500,000 business in Mesa would pay about $11 extra a year.