Property tax bills will contain unpleasant surprises

Property tax bills arriving soon will contain some unpleasant surprises.  While the housing market has plummeted, tax bills have not.  Just how bad they will be has yet to be determined.

Here's what to look for.

10% increase in Primary Property Taxes

Almost everyone will see a 10% increase in their Primary Property Taxes.  These are based on Limited Property Value (LPV) which can increase 10% per year till it equals Full Cash Value (FCV).  There's no limit on annual increases for FCV and we saw large annual increases during the housing market boom.

Primary Property Taxes go to your local school district for their Maintenance and Operations (M&O) funding, Community College District, City, and General County Fund.  Each of these taxing districts will receive 10% more revenue from primary property taxes unless they voted to reduce their tax rate.

The equation is Valuation X Tax Rate = Tax Due.

These tax bills are for the 2009 tax year and are based on valuation statements you received in March of 2008.

MaricopaCounty property owners can check their valuation online by going to www.Maricopa.gov and clicking on Assessor / Parcel Information.  Use the Advanced Search feature if you don't know your parcel number.  Compare your 2008 LPV to 2009 LPV to see if you had the full 10% increase.

Return of the State Equalization Tax

The State Equalization Tax was eliminated 3 years ago and may return to your tax bill this year.  It is included in your primary taxes so that 10% LPV increase applies here too.  The Arizona Legislature is working to permanently repeal this tax but may be vetoed by Governor Brewer.

New bond issues and overrides

Some school districts passed bond issues and overrides on the November 2008 ballot.  Check for increases on the back of your tax statement.  Bond issues and overrides are included in your secondary taxes and are calculated on the FCV of your property.

Property taxes only go up!

When valuations decline, tax rates automatically rise to assure no taxing district receives less tax revenue than the prior year.  If they cut all our valuations in half tomorrow, no one's property tax bill would go down a cent.  The system is rigged against us.

The taxing districts can vote to raise their rate on top of the automatic rate increase which many of them have been doing.

While your LPV went up 10% and your primary taxes went up 10% too, your FCV probably went down and yet your secondary taxes did not.

Confusing enough for you?

The link below is to a video of a Joint Legislative Budget Committee hearing.  Move the time slide bar to 1 hour, 7 minutes to hear Representative Farley and Kevin McCarthy, Arizona Tax Research Association, discuss this phenomenon of automatic tax rate increases.  Just copy and paste it into your browser to watch the video.

http://azleg.granicus.com/MediaPlayer.php?view_id=7&clip_id=2327

If you had bond issues that were retired or overrides that were not renewed and thus expired, you may see a lower property tax bill.  Eliminating bond issues and overrides is the only sure way to get a lower property tax bill under our current property tax laws.

Questions?  Send them to Info@Prop13Arizona.com

Prop 13 Arizona is the solution to these complicated property tax laws that produce unpredictable and unaffordable tax bills.

VOLUNTEER to collect signatures on your street or at your workplace.

DONATE to help us cover operating expenses and assure Prop 13 Arizona is on the 2010 ballot.  Without your support we will not succeed.  California's Prop 13 was entirely funded by individuals making average donations of $25.