The Arizona Daily Star reports that Pima County has finally had enough of our lawless Tea-Publican Arizona legislature shifting state responsibilities onto county taxpayers and sweeping up county tax dollars so they can claim that they “balanced” the state budget, only to give more corporate welfare tax breaks to their political cronies. Pima County sues state over budget changes:
The county’s request for special action in Arizona Supreme Court asks justices to undo the shift of more than $45 million in costs back to counties in Gov. Doug Ducey’s budget plan approved by the Legislature in March.
By law, the combined primary property taxes assessed throughout each county are capped at 1 percent of a home’s cash value. Since 1980, the state has provided extra funding to school districts for the amount that combined tax rates go above the cap.
Under the new budget, however, the state would now pay no more than $1 million per county in additional state aid for education and instead would force local governments to cover the costs.
That could cost Pima County taxpayers an extra $18 million and force the county to transfer nearly $9 million of that to Tucson Unified School District, county officials estimate.
Pima County’s primary property tax rate is $4.27 and TUSD’s primary rate is $6.80. Together, the two primary rates exceed the cap at a total of $11.07.
“It seems to me that we’re at a point where we need to be open and honest about how we’re being treated by the Legislature and governor,” County Board of Supervisor Richard Elías said, adding he thinks state actions have been arbitrary and unfair.
Supervisor Sharon Bronson agreed, saying education funding is the responsibility of state government, not the county.
“It’s punishing us for a crime we didn’t commit,” Bronson said.
The county makes two main legal arguments in its request for special action.
The first argument contends the state violated separation of powers clauses established in the Arizona Constitution because the Legislature essentially delegated taxing authority to the state’s Property Tax Oversight Commission.
Commission members are appointed by the speaker of the House, Senate president and governor, and they are tasked with ensuring fair administration of property tax laws.
The county argues the Legislature allowed commissioners to determine to what degree a jurisdiction was in violation of the 1 percent cap.
State law, the county argues, mandates that the power to tax lies with the Legislature, a body directly accountable to the electorate, and not an appointed body like the commission.
Further, the county says the Legislature let the commission assign the responsibility to pay for the 1 percent overages with little or no guidance.
For example, Pima County likely will be responsible for overages assessed to TUSD. But in other parts of the state, the commission could determine that a city or town could bear the burden.
Pima County’s suit also argues the law violates equal protection guarantees by taxing property owners in one part of the county and transferring the funds to a government to which the property owners have no connection.
“That means that some portion of the revenue from Pima County’s property tax levy, which is collected from taxpayers countywide, will be levied and collected not for the county’s own general support but for the general support of TUSD,” the lawsuit states.
Pima County isn’t the only area likely to feel the effects of the law change.
In Pinal County, supervisors have to contend with an added $2.8 million cost as a result of numerous school districts and a community college district pushing the collective primary property tax above the 1 percent threshold.
While Pinal doesn’t plan to file a lawsuit, it does intend to lend support to one or more of the various legal filings expected in support of Pima County.
The Arizona Capitol Times (subscription required) provides additional details. Pima County sues state, saying it shifted burden to county taxpayers:
In a petition for special action filed with the Arizona Supreme Court, Pima County officials say a provision in the budget adopted in March by Arizona lawmakers will require the county to raise property taxes in order to properly fund the Tucson Unified School District.
The property tax revenues would go to TUSD to make up for a loss of additional education funding from the state, which for years has provided money to TUSD and other school districts affected by Arizona’s constitutional cap on property taxes. Under a provision adopted by the Legislature, the state will now provide no more than $1 million in additional education funding to those districts.
In fiscal year 2016, Pima County officials estimate they’ll have to cover as much as $18.6 million in additional aid to TUSD that in past years would have been provided by the state.
Attorneys for Pima County argue that the cost shift amounts to an unconstitutional requirement for the county to raise taxes. The attorneys says it would unconstitutionally require Arizonans in one jurisdiction be taxed to pay for services in another because Pima County residents who don’t live in TUSD would be forced to subsidize the district.
The county asked the Supreme Court to block the provision and require the state to continue to provide additional funding as it has in years past.
The county must adopt tax rates for its own budget by June 30, prompting them to seek a swift ruling from the Supreme Court, said County Administrator Chuck Huckelberry. If the county is going to provide additional aid to TUSD, it needs to know how much before June 30 to reset the property tax rate to raise new revenue, he said.
If the Supreme Court chooses not to act on the county’s petition, Pima County officials said they will pursue the case in Superior Court.
The Arizona Property Tax Oversight Commission and its members are also named as defendants. Attorneys for Pima County argue the budget provision unconstitutionally gives taxing authority to the commission, which would now be responsible for determining which taxing districts require additional education aid.
“I’ve voted against every tax increase that’s come before the Board of Supervisors since I joined the board in 1997. But transferring up to $18 million of former state costs onto Pima County simply because the state doesn’t want to pay it anymore is wrong,” said [Republican] Supervisor Ray Carroll. “That’s not fiscal conservatism. That’s punitive to the taxpayers of Pima County.”
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The Arizona Constitution requires that no residential property owner pay more than 1 percent of their assessed property value in property taxes.
Since the provision was added to the Constitution in 1980, Arizona has provided additional state aid for education to districts negatively affected by the property tax cap.
The districts often have many overlapping taxing jurisdictions with higher aggregate property tax rates, as is the case for the TUSD, said Chuck Essigs, director of government relations for the Arizona Association of School Business Officials.
“In Pima County and Pinal County, generally the political subdivisions have higher property tax rates than Maricopa County and some other areas of the state,” Essigs said. “So, they are the most likely areas where, if you add up all the subdivisions in a certain jurisdiction, it’s greater than 1 percent.”
TUSD’s tax rates are also higher than most districts in the state. The district is under court supervision as it seeks to settle a decades-old desegregation order. To raise additional funds needed to settle the order, TUSD uses a state-approved taxing mechanism to assess property taxes beyond the 1 percent cap.
The state has for years provided additional education funding to school districts. Those dollars allow aggregate property taxes to stay at rates low enough to avoid the 1 percent cap, while also properly funding schools as if there was no cap.
With lawmakers adopting a provision in this year’s budget that passes the cost of additional aid from the state to counties, Huckelberry said the county will have to raise property taxes to shoulder the new burden.
It’s unclear how much Pima County homeowners would be on the hook for if the Legislature’s budget remains unchanged.
With multiple taxing districts overlapping TUSD, Huckelberry estimates Pima County may be responsible for $8.4 million if the county shares the tax burden with other overlapping jurisdictions or as much as $18.4 million if Pima County must bear the burden alone.
Pima County officials are awaiting an interpretation of the new provision from the Arizona Property Tax Oversight Commission, Huckelberry said.
Kevin McCarthy, president of the Arizona Tax Research Association and a member of the Property Tax Oversight Commission, said it won’t be possible to determine which districts exceed the 1 percent cap on personal property taxes, and thus require additional educational assistance, until after taxes are assessed in August.
Essentially, Pima County can’t budget for how much it may owe TUSD until after it adopts a budget by June 30.
Huckelberry estimates that, to raise $8.4 million, Pima County – the only county in Arizona that doesn’t assess a sales tax – must raise its property tax rate of $4.27 per $100 of assessed property value by $0.11.
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This would affect Pima County residents such as Clarence Klinelifter, a business and property owner in Ajo and a plaintiff in the case. An $0.11 increase in property taxes would affect both his business and personal properties.
However, those additional funds would go to TUSD – a school district many miles away from Ajo. Attorneys for Pima County argue Klinelifter is an example of the unconstitutional taxation of taxpayers from one jurisdiction to support another.
The provision in the budget is a part of a trend of county dollars being swept up for the state’s benefit. Last year Pima County provided the state $83 million in revenue, Huckelberry said. This year, lawmakers shifted another $23 million in state costs to Pima County, he said.
Roughly one-third of Pima County’s property tax revenues are provided to the state, Huckelberry said.
Our lawless Tea-Publican Arizona legislature is just a den of thieves.