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.

Arizona business property taxes are high and lowering them would be economically productive.


But it seems that lawmakers are mostly looking at bad ways to do a good thing.

The problem is Arizona's complicated property tax system. All property is appraised at its market value. Property tax rates, however, are applied to 25 percent of that value for businesses, but only 10 percent for homeowners.

As a result, Arizona has relatively low residential property taxes, but among the highest in the country for business.

Construction and skyrocketing property values could translate into millions of dollars in extra funds for cities, schools and Maricopa County agencies this year.


That boost could spell some relief for cash-strapped government agencies.

"The county attorneys in three different counties, as well as a Flagstaff law firm, have been looking at this issue, and they’ve all come to different conclusions," said Deputy County Attorney Lance Payette regarding a request by the Northeastern Arizona Technological Institute of Vocational Education (NATIVE) to raise its tax levy from five cents to $1.25 per $100 of assessed valuation in the Kayenta and Piñon school districts.

Central Arizona Valley Institute of Technology Governing Board members reported Wednesday that their meeting Sept. 26 with the Coolidge City Council looked promising.


Three CAVIT board members and the superintendent met with the council to see if Coolidge would donate or sell 30 to 50 acres for a permanent CAVIT campus.

CAVIT has been holding its career and technology education classes in Central Arizona College classrooms and a shopping center but has run out of space and would like to offer more programs.

Property values have gone up dramatically.


That means tax bills will go up.

That is why several lawmakers propose that a key property tax should come down, noting that the state has a $750 million budget surplus that makes it affordable to cut taxes.

A property-tax cut would save money for owners of business and residential properties and shift about $200 million of school funding onto the state General Fund.

For years, Arizona politicians have played a con game about property taxes.


They would hold the line on property-tax rates and claim not to be raising taxes. They would then pocket and spend the additional revenue brought in when those rates were applied to increasing property values.

That gig may be on its way to being over. The shock of the huge increases in property valuations being handed out by county assessors across the state has focused public attention on the true relationship between property values and taxes.

Fed up with rising property valuations that it fears will lead to sky-high taxes, a group has started a petition drive to bring California-style limits on property taxes to Arizona.


The measure, if it gets on the November ballot, would use 2003 property valuations as the basis for future tax bills, negating any potential effect from this year's higher levels. Taxes would be limited to 1 percent of the property's assessed valuation.

Escalating property values across Arizona appear destined to push property taxes to new heights.


The question is: How high? That depends on whom you ask.

The precise answer won't be known until 18 or so months from now after local governments and taxing entities have set their budgets and tax rates. But many homeowners aren't waiting.

State senators approved their own version of a property tax revolt Monday. Without a word of dissent, the Senate gave preliminary approval to a measure to cap the year-over-year increase in the taxable value of homes and businesses to no more than 2 percent.


The voice vote comes within days of homeowners getting their latest notices from county assessors showing their new valuations. In some cases, hikes have been in the 50 percent range.