Arizona Property Tax Assessed Valuation Amendment, Proposition 117 (2012)

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Proposition 117
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Type:Constitutional amendment
Constitution:Arizona Constitution
Referred by:Arizona State Legislature
Topic:Taxes
Status:On the ballot
The Arizona Property Tax Assessed Valuation Amendment, also known as Proposition 117, will be on the November 6, 2012 general election ballot in the state of Arizona as a legislatively-referred constitutional amendment. The measure would limit the annual growth in the limited property value of locally assessed properties. The limit would begin in 2015. The formal title of the measure was Senate Concurrent Resolution 1025.[1]

Election results

See also: 2012 ballot measure election results

The following are unofficial election results:

Arizona Proposition 117
ResultVotesPercentage
Approveda Yes 791945 57.1%
No59610742.9%

Precinct totals are not final and have not yet been reported

Results via the Arizona Republic.

Text of the measure

Summary

The summary of the measure reads as follows:[2]

A Concurrent Resolution proposing an amendment to Constitution of Arizona; Amending Article IX, Section 18, Constitution of Arizona; Relating to property tax assessed valuation.[3]

Analysis by Legislative Council

The following is an analysis conducted by the state legislative council:

Proposition 117 would amend the Arizona Constitution to cap the annual increase in the value of real property used to calculate property taxes to 5% over the value of the property for the previous year, beginning with the 2015 tax year. Currently, there is no limit on full cash value. This limitation would apply to property values used in determining all property taxes on the real property.[3]

Support

  • The main campaign in favor of the measure is Yes on 117.
  • State Senator Steve Smith stated, "Prop. 117 will limit annual assessed value growth to 5 percent and will protect property taxpayers from dramatic increases in property valuations that often lead to significant tax increases. In addition, Prop 117 will simplify one of the most complicated property tax systems in the country."[4]

The following are arguments that were submitted to the Arizona Secretary of State for the state voter guide. More arguments can be read here:

  • "The Arizona Tax Research Association (ATRA) urges your support of Prop 117 because it will protect property taxpayers from dramatic increases in property valuations that often lead to significant tax increases. Prop 117 will limit annual assessed value growth to 5%. In addition, Prop 117 will simplify one of the most complicated property tax systems in the country. Currently, property in Arizona is taxed on two values: full cash, or market value (FCV) and the limited property value (LPV). The Constitution requires that FCV represent the market value, which is unlimited in the amount it can increase each year. In contrast, the LPV is required to annually increase by the greater of 10% or 25% of the difference between the current year FCV and the previous year's LPV. That doesn't just sound complicated - it is. Prop 117 limits the taxation of property to the LPV and the FCV will no longer be taxable. Eliminating the tax on market value will prevent a repeat of the dramatic increases in property taxes that occurred between 2004 and 2009 when real estate values skyrocketed. ATRA strongly believes that the 5% limit is fair for taxpayers and Arizona state and local governments. A reasonable limit will not only provide greater predictability for taxpayers, it will bring much needed stability to future local government budgets. Had the 5% limit been in place over the last decade, it would have prevented $33 billion in value from being added to the tax rolls that was ultimately removed when the market collapsed."
Submitted by David L. Minard, Treasurer, Arizona Tax Research Association; Kevin J. McCarthy, President, Arizona Tax Research Association.
  • "I am in full support of Proposition 117. I have worked in the Assessor's Office since 1977 and witnessed, first hand, the installation of the current property tax formula in 1980. At the time, it was a welcome relief from the runaway taxation that was occurring due to rising property values. However, the current system is flawed with many complicated formulas that are outdated and no longer are applicable to the times we live in. For many years I have been advocating that the Limited Value formula needed to be simplified and that property taxes needed to be more predictable. This measure does both. Having all ad-valorem property taxes calculated from the Limited Property Value and simplifying the LPV formula to a simple 5% calculation will greatly assist Arizona assessors in explaining tax bills to the property owner. Please join me and vote Yes on Proposition 117."
Submitted by Joe Wehrle, Yuma County Assessor.
  • "Proposition 117 is good for the taxpayers of Arizona. It creates a limitation for valuations of locally assessed taxpayers. The provision would not shift tax burdens from commercial properties to residential properties (homeowners). The original two tiered system of Full Cash Value and Limited value was to protect the taxpayers from rising values and uncontrolled spending by the taxing jurisdictions. History has shown that as property tax values grow, the impulse by government to "keep the tax rates steady", thus generate more revenue, increases. This proposal is timely as in most areas of the state; Full Cash and Limited Values are identical. Additionally, the administrative and judicial appeal systems will remain intact. I support Proposition 117 to provide more predictability and stability to the taxpayers of Arizona."
Submitted by James R. Brodnax, resident of Glendale, Arizona

Opposition

  • According to Lynne Weaver, chairman of Prop. 13 Arizona, in an editorial, "Prop. 117 does nothing to stop tax overrides put on the ballot by school districts. The maximum override used to be 10 percent but it was increased to 15 percent and a special election was held to allow the school districts to raise your taxes immediately. Will they increase overrides to 20 percent? 25 percent? More?"[5]

The following are arguments that were submitted to the Arizona Secretary of State for the state voter guide. More arguments can be read here:

  • "Statement: The Tucson Hispanic Chamber of Commerce does not support capping property taxes and further impeding the ability for our elected officials to make fiscally responsible decisions to support core services that should be provided by the state government. Tax reform is necessary in the State of Arizona and the disparity between business and residential property tax limits our state's ability to attract new business and for existing businesses to grow."
Submitted by Lea Marquez Peterson, President & CEO, Tucson Hispanic Chamber of Commerce; Tannya Gaxiola, Chairwoman, Tucson Hispanic Chamber of Commerce.
  • "Vote NO on Proposition 117, Property Tax Assessed Valuation. Prop 117 does nothing to limit your property tax bill or annual tax increases. Prop 117 just pretends to offer property tax relief or reform. It lacks any restraint on tax rate increases so does nothing to curb how much money taxing districts can collect from you. It still allows the addition of new taxing districts, more debt, and higher tax "overrides" to your bill. The Legislature put Prop 117 on the ballot and at the same time came close to passing HB 2405. Passage would have allowed every school district in the state to double their bond debt capacity which would then double the 2nd largest item on your property tax bill. Many in the Legislature are working to raise your property taxes, not limit them. Prop 117 is proof that property tax reform won't come from the Legislature. We must do it ourselves using the initiative process. Prop 13 Arizona, a Citizens Initiative for the 2014 ballot, is the reform we need. It uses purchase price (or decline-in-value provisions) as your tax basis, limits valuation increases to no more than 2% per year, and caps your total tax rate at 0.5% for all residential property or 1% for all other real property. No parcel taxes, overrides or exceptions to the tax caps. Prop 13 Arizona provides plenty of tax revenue for the government, just not unlimited tax increases as the current system allows. It puts family budgets first, not government's desire to tax and spend without limit. Vote NO on Proposition 117. It does nothing to fix our broken tax system."
Submitted by Lynne Weaver, Chairman, Prop 13 Arizona.
  • "Vote no on Prop 117! It does nothing to prevent taxing authorities from raising property taxes. While Proposition 117 is touted as a truth in taxation measure, the truth is that its affect on the Arizona Constitution is not clear. It adds uncertainty to the taxing process and may cause litigation for proper interpretation. Proponents of Prop 117, the Arizona Tax Research Association (ATRA), have conceded the fact that municipalities can, and most likely will, raise the tax rate on property owners to offset any loss in tax revenue. All Prop 117 does is reduce the current cap on Limited Property Values (LPV) from 10% to 5%. If the existing Constitutional cap of 10% is not working according to ATRA, why would 5% be effective? This is being marketed as a measure that reduces property taxes, which is not accurate. However, Prop 117 is a potential inhibitor to community bonding capacity, which affects the ability to provide public services to every community. One way or another, cities, towns, counties and other municipalities make-up for lost revenues. Prop 117 does not prevent property tax increases. Constitutional changes must be clean and clear. Vote no on Prop 117!"
Submitted by T. F. Naifef, resident of Phoenix.

Media endorsements

See also: Endorsements of Arizona ballot measures, 2012

Opposition

  • The Arizona Republic stated, "Unfortunately, Prop. 117 creates a windfall of opportunity for unanticipated consequences. It is not as onerous a restriction on property-tax assessments as was California's notoriously destabilizing Proposition 13 of 1978. But it has the potential to create similar problems."[6]

Path to the ballot

A majority vote is required in the Arizona State Legislature to send a constitutional amendment to the ballot. Arizona is one of ten states that allow a referred amendment to go on the ballot after a majority vote in one session of the state's legislature.

See also

External links

References