The Arizona Republic
Jun. 1, 2006
Gov. Janet
Napolitano and nine influential business groups
are having their first public disagreement of
her term over cutting a key state property tax.
Business leaders are pushing for a cut of the county education tax, citing state surpluses and rising property-tax valuations.
The governor's priority is to spend some of the state's surplus on programs such as education and transportation.
The tug of war comes as the state faces a June 30 deadline to complete a budget.
Negotiations between the Democratic governor and Republican lawmakers broke off last week, but legislators continue to push ahead with their budget plans.
Business groups, fearing that a state budget would be approved without any property-tax cuts, banded to press the governor to help out homeowners and developers.
Led by National Association of Industrial and Office Properties, they even deployed a phone campaign this week asking moderate Republican and Democratic voters to call Napolitano's office urging her to back "meaningful property-tax reform."
The campaign asked more than 100,000 residents to call the Governor's Office and urge Napolitano to support a property-tax cut.
Napolitano summoned the business leaders to a closed-door meeting Wednesday. Both sides characterized the meeting as cordial and productive, but neither was budging.
"If there's one unmistakable take-away, it's that all groups are in favor of total elimination of the county education tax," said Tim Lawless, president of the Arizona branch of the Industrial and Office Properties group.
"Whether that's in one year or two years or three years, that's for other people to decide."
For her part, Napolitano said she doesn't oppose tax cuts but is worried about the size of them. Lawmakers approved competing $500 million packages of cuts last week.
Napolitano noted that she proposed property-tax relief of her own, such as a plan to freeze property values for older taxpayers with incomes of less than $60,000 a year. That didn't get anywhere in budget talks.
Past alliances
Two groups are circulating petitions to do just that, although they are not expected to make it to the November statewide ballot.
But given the rising property values seen over the past year, business backers are confident that there will be a backlash to higher property-tax bills.
Jeanine L'Ecuyer, Napolitano's press aide, said the governor is open to tax cuts but not of the magnitude contemplated by lawmakers.
"This is a one-time excess of revenue that won't be here forever," L'Ecuyer said.
"We have to pay back our debts and invest in things like all-day kindergarten and salaries for corrections officers. We need tax cuts within the framework of the budget."
Business leaders are pushing for a cut of the county education tax, citing state surpluses and rising property-tax valuations.
The governor's priority is to spend some of the state's surplus on programs such as education and transportation.
The tug of war comes as the state faces a June 30 deadline to complete a budget.
Negotiations between the Democratic governor and Republican lawmakers broke off last week, but legislators continue to push ahead with their budget plans.
Business groups, fearing that a state budget would be approved without any property-tax cuts, banded to press the governor to help out homeowners and developers.
Led by National Association of Industrial and Office Properties, they even deployed a phone campaign this week asking moderate Republican and Democratic voters to call Napolitano's office urging her to back "meaningful property-tax reform."
The campaign asked more than 100,000 residents to call the Governor's Office and urge Napolitano to support a property-tax cut.
Napolitano summoned the business leaders to a closed-door meeting Wednesday. Both sides characterized the meeting as cordial and productive, but neither was budging.
"If there's one unmistakable take-away, it's that all groups are in favor of total elimination of the county education tax," said Tim Lawless, president of the Arizona branch of the Industrial and Office Properties group.
"Whether that's in one year or two years or three years, that's for other people to decide."
For her part, Napolitano said she doesn't oppose tax cuts but is worried about the size of them. Lawmakers approved competing $500 million packages of cuts last week.
Napolitano noted that she proposed property-tax relief of her own, such as a plan to freeze property values for older taxpayers with incomes of less than $60,000 a year. That didn't get anywhere in budget talks.
Past alliances
In previous years, Napolitano has built
successful alliances with certain segments of
the business community by focusing on
initiatives, such as full-day kindergarten and
military base preservation.
She has leaned heavily on business groups to
help her pass a full-day kindergarten program.
And she pleased business groups last year when
she signed into law a bill that starts to reduce
the rate at which corporate properties are
taxed.
Napolitano has been lukewarm about property-tax
cuts, which have been a priority for groups such
as the property owners association and the
Arizona Tax Research Association.
Last week, those two groups rounded up seven
other business groups and sent a letter urging
the governor and lawmakers to include
property-tax cuts in their budget plans.
The House and Senate responded with competing
plans, but each included a property-tax cut
along with an income-tax reduction.
Napolitano signaled her support for a
more-modest income-tax cut, leaving some
business leaders concerned that property-tax
cuts were not a priority with the governor.
"We were worried that that particular piece of
the budget was slipping away," said Gretchen
Kitchel, chairman of the Arizona Tax Research
Association.
Kurt Rosene of the Alter Group, a commercial
real estate developer, said property- tax relief
is key for Arizona's future.
"We develop in multiple states," he said.
"We see companies who sometimes choose not to
invest in states because of the high cost."
Steve Voeller, a business lobbyist whose group
supports both income- and property-tax cuts,
said, "There is so much money to go around that
the Legislature can craft a package that both
increases spending on everything and still cuts
taxes for all taxpayers."
In addition to making Arizona more competitive,
a property-tax cut would benefit homeowners.
Proposition 13 fears
It could also stave off a growing movement to enact a property-valuation freeze in this state like California voters did with the controversial Proposition 13.Two groups are circulating petitions to do just that, although they are not expected to make it to the November statewide ballot.
But given the rising property values seen over the past year, business backers are confident that there will be a backlash to higher property-tax bills.
Jeanine L'Ecuyer, Napolitano's press aide, said the governor is open to tax cuts but not of the magnitude contemplated by lawmakers.
"This is a one-time excess of revenue that won't be here forever," L'Ecuyer said.
"We have to pay back our debts and invest in things like all-day kindergarten and salaries for corrections officers. We need tax cuts within the framework of the budget."