Last month, the Arizona Supreme Court denied Pima County’s request for a Special Action (expedited court decision) in its challenge to the state of Arizona shifting tax burdens onto counties so that the state legislature could falsely claim that it had “balanced” the state budget. AZ Supreme Court denies special action for Pima County v. Arizona Legislature.
The Court’s action meant that: (1) Pima County has to sue in Superior Court in the regular course of litigation which will take a lot more time, County, Ajo resident sue tate over taxshift, and (2) Pima County taxpayers will have to pay higher taxes this year that the state legislature shifted onto Pima County. Thanks for that Arizona Supreme Court!
The Arizona Daily Star reports, New county tax statements highlight state funding shifts:
Pima County leaders have long complained that the state forces local governments to pay for state-provided services. Now they plan to make their case to every property owner in the county.
In this year’s tax statements, county officials plan to include a breakdown of how primary property taxes are spent, and how much of local collections support state services.
“Over the years, more and more things have been shifted to the county,” Pima County Administrator Chuck Huckelberry said.
Along with tax statements, the county plans to send a chart that shows as much as one-third of primary property tax collections, or more than $104.4 million this year, will be transferred to the state.
The total primary levy, used to fund ongoing government services, in the current tax year is expected to be $334.5 million. The county secondary property tax is used to pay debt from past bonds.
The county’s primary property tax rate is $4.3877 per $100 of assessed value. The total property tax rate for this fiscal year, including secondary, flood control and fire district assistance taxes, is $5.9632.
That equals a 20-cent increase over last year’s total rate.
The Legislature has in recent years forced counties pay for services the state traditionally provided, Huckelberry said.
Criminal-justice programs have been the frequent target for cost shifts.
The Legislature created the restoration-to-competency program in 1995 as a way to determine if criminal defendants were mentally able to face prosecution and work to restore it if they weren’t.
The state initially paid the costs of the program but gradually began to require counties to pay larger portions, ultimately forcing counties to fund the entire program.
Rather than pay the state for the service, which was administered at huge per-defendant expense at the Arizona State Hospital in Phoenix, Pima County began its own restoration-to-competency program in jail.
Program costs this year are estimated at more than $1.7 million.
The state has required counties to pay for the housing and treatment of defendants classified as sexually violent at Arizona State Hospital. This year the costs for Pima County are expected to exceed $1.2 million.
This year, state lawmakers required counties to pay a portion of the costs to operate the state juvenile justice system.
The formula is based on overall county populations, rather than the number of juveniles each county has in state facilities. For Pima County, this means $1.8 million to support state juvenile corrections.
County officials have said the funding formula is unfair because Pima County operates its own juvenile corrections facility and sends few children to state-run facilities.
Pima County’s battle with the state over cost shifts escalated this year, with the county filing a lawsuit challenging the practice.
The legal challenge focuses on the state’s budget, which in effect could require Pima County to transfer between $17 million and $22 million to Tucson Unified School District.
State law caps the collective primary property tax rates in areas of overlapping taxing authority to 10 percent of the full cash value of owner-occupied residential properties. If the rate exceeded this, homeowners were given a credit on their property taxes.
In parts of Pima County, this occurs where the county, city, community college and school districts overlap.
In the past, the state had reimbursed school districts if the cumulative rate exceeded $10 per $100 of assessed value.
The current state budget limits the reimbursements to $1 million per county and requires the county government to fund the schools’ overages.
Pima’s lawsuit says, in part, that the state forces the county to levy a tax on county residents and transfer it to another government. In some cases to a government that many Pima taxpayers have no connection with, like residents of Green Valley, Vail, Marana, Oro Valley or Ajo whose taxes would be given to TUSD.
In case you think it is just “Baja Arizona” Democrats making this case, you are wrong.
Ethan Orr, a former Republican state legislator from Tucson, said the state has tried to hide expenses by forcing local governments to pay for state services.
“I think the state has pushed unfunded mandates onto the school districts, cities and counties,” Orr said.
He said it’s been a long-standing practice in the Legislature to transfer costs to lower governments, particularly during periods of economic decline, but one he opposed when he was in elected office.
Former Republican lawmaker Pete Hershberger agreed. “The state Legislature says, ‘We didn’t raise your taxes,’” Hershberger said. “It’s disingenuous.”
He said the end result of state cost shifts has been higher taxes at the local level to cover the expenses.
Last month, Republican Pima County Supervisor Ray Carroll supported the county’s lawsuit in an opinion in the Arizona Daily Star. State legislators should understand what they’re voting for:
Rather than fix the problem of 35 years ago, the 2015 Legislature passed the cost for the error onto many counties, cities, community college districts and public schools all over the state.
This change in the law requires Pima County taxpayers to transfer their money to Tucson Unified School District even though more than half of them don’t live in the district. How Pima County comes up with the money — a tax increase or budget cut — is irrelevant. It’s forcing taxpayers in one jurisdiction to hand over money to another jurisdiction yet the taxpayers in the former have no say over how the money will be spent in the latter.
This whole scheme is not only wrong, I believe it’s unconstitutional. It’s taxation without representation. That’s why I supported the vote to sue the state and have this law overturned.
Pima County Administrator Chuck Huckelberry had an opinion piece in the Arizona Daily Star explaining Pima County’s new tax statement. Not all of the taxes collected by the county stay in the county:
Pima County is required to send all property owners an annual property tax statement. The county assessor determines the value of your property for tax purposes. The Board of Supervisors is required to calculate the amount of property tax you owe based on the tax rates adopted by the governing bodies of individual jurisdictions, and the county treasurer collects your property tax payments. The county collects and distributes property taxes for all 94 property-taxing jurisdictions within the county.
But just because the bill comes from Pima County, don’t mistakenly think it’s a Pima County tax bill. The Board of Supervisors controls only four of the 94 property tax levies made by various jurisdictions within Pima County. Only a fraction of your property taxes are collected for the county’s use.
A typical homeowner living in Pima County will pay property taxes to a school district, Pima Community College, Pima County, possibly a city, and in some cases a fire district. Last year’s property tax for the eight taxing jurisdictions with the greatest percentage shares is shown in the accompanying table.
* * *
But not all of the money raised by the county’s property tax stays in Pima County.
Of the $322 million county general fund, the state takes $105 million for its programs. It is incorrect to think the state does not have a property tax. It simply requires the county to tax for it.
Borrowing a line from “The Wizard of Oz,” “Pay no attention to the man behind the curtain.” In this case, the “man behind the curtain” is the governor and state Legislature. If the state were listed on your property tax bill, the county’s percentage of your bill would decrease from 27 percent to 18 percent.
The property tax increase you will receive this year is only because of state cost transfers imposed on county taxpayers by the state.
Since one-third of your county property taxes go to support state programs, you should consider one-third of your Pima County property tax a state property tax. Your county property tax primarily supports the county criminal justice system: $143 million (44 percent) supports the Sheriff’s Department; $55 million (17 percent) is for the courts; and $35 million (11 percent) goes to the county attorney to prosecute criminals and to indigent defense services to defend them as required by the constitution.
You will receive your property tax statement in September. Please remember the county is required to calculate and collect property taxes, but we are only responsible for a little over a quarter of your total tax bill.
Fiscal year 2014/15
Property Tax levy: Dollars levied: % of total levy
School districts: $528,509,573: 44.4%
County general fund: $217,196,854: 18%
State-mandated “property tax”: $104,436,287: 9%
Pima College: $100,326,624: 8.4%
Fire districts: $74,755,581: 6.3%
County debt service: $53,059,292: 4.5%
Cities and towns: $45,649,673: 3.8%
County library district: $32,747,156: 2.7%
County flood control district: $20,539,235: 1.7%