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10/11/2012 6:01:00 AM
Arizona opinion divided on property tax measure
It would control property tax values, but not the taxing rate
Mohave County Assessor Ron Nicholson
Mohave County Assessor Ron Nicholson

Suzanne Adams-Ockrassa
Miner Staff Reporter

KINGMAN - Proposition 117 sounds like a great deal on property taxes for Arizona residents - but it could be a bust.

The proposition would simplify the current property tax system and limit how much taxing districts could increase the market value of a property.

But there won't be much tax relief unless there's also control over raising property tax rates, opponents say.

"It does absolutely nothing to limit property taxes," said Lynne Weaver of Prop 13 Arizona, a property tax reform organization, because it does nothing to stop tax districts from raising rates to keep revenues the same.

"It's all smoke and mirrors. It's deceitful and misleading," she said.

Not so, said Mohave County Assessor Ron Nicholson, who worked on the concept behind the proposition with several other county assessors and the Arizona Tax Research Association.

"I think it's a very good thing for taxpayers," he said.

In the current system, local taxing districts - such as fire districts - use the market value of a property to determine how much in taxes to charge a property owner. Market values are based on what the property was worth about a year and a half ago.

The law currently does not place a limit on how much a local tax district can increase the market value of a property, Nicholson said.

The law does limit how much a county can increase the value of property for primary property taxes. Primary property taxes are used to determine how much the county can charge a property owner.

This worked very well until the housing market crashed a few years ago, Nicholson said. Then, because assessed market values are a year and a half behind, people saw the assessed value of their house and their taxes increase while the true value of their home decreased.

If approved, the proposition would limit all increases in a property's market value to no more than 5 percent over the previous year's market value. It would require all taxing districts and local governments to use this limited market value to calculate their taxes.

The new law would take effect in 2014, but homeowners wouldn't see a change in their taxes until the value of their properties exceeded the 5 percent growth cap.

The idea, according to supporters of proposition, is to decrease the effect of rapid swings in property values, such as those the state experienced between 2004 and 2009.

"We're essentially tying all property taxes to the limited value of a property," Nicholson said.

Opponents say the proposition may control values, but it doesn't control the tax rate.

Taxing districts and local governments could continue to collect the same amount or increase the amount of taxes collected by adjusting the tax rate.

Nicholson agreed that the proposition doesn't control rates and won't prevent a tax increase. However, it does provide more transparency in government because now property owners get a better idea of which taxing districts are raising their rates, he said.

Opponents also claim that the proposition will shift the tax burden from large landowners and developers to medium- and low-income property owners.

Nicholson said this was unlikely because property taxes are not based on income and all residential properties pay the same tax rates. Also, commercial properties pay twice as much in property taxes as residential properties, he said.

Weaver, of Prop 13 Arizona, pointed out that property owners who live in more affluent communities are more likely to benefit from the 5 percent cap because their property is more likely to gain in value.

Proposition 117 would have no effect on the state's general fund, according to the Arizona Joint Legislative Budget Commission. This is because the state's property tax rate increases or decreases to make sure the state takes in the same amount of money each year for schools.

The proposition could have a negative effect on the ability of local governments and schools to get bonds to fix infrastructure.

Nicholson agreed that it could affect the initial offering of bonds for local governments and schools because the amount of money they can borrow is based on property values.

If property values are fixed, then governments and schools may be limited in how much money they get from a bond issue.

ICT - Dr. Mohtaseb
Related Stories:
• Propositions limit lawsuits, change arcane state rules
• Good for business, bad for homeowners?
• Prop 121 aimed at 'extremists,' but would it limit voter choices instead?
• Prop 120 challenges feds over public lands

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Reader Comments

Posted: Tuesday, November 6, 2012
Article comment by: Ron Nicholson Assessor

Nick, I would like to add that since 1996 when the legislature changed the law, I have been mandated to render values for tax bills two years into the future based upon sales three years in the past. We call this the Time Line.
For example: I will be mailing valuation notices this next February 2013 for Taxes bills due in Nov 2014 and March 2015 based upon sales occurring before last July 2012 and 2011. When an owner receives a tax bill, the value displayed is based upon sales three years or more old. And what is worse is that when the Tax Payer wakes up to sticker shock, it is too late to appeal unless the taxpayer has just acquired the property in the tax payment year. I would very much like to go back to the time when we would assess and tax all in the same year. It would be much more understandable.

Posted: Tuesday, November 6, 2012
Article comment by: Ron Nicholson Assessor

Responding to Mr. Schmidt. We are a Market Value Based County and as such develop approximately 95% of our values using sold property sales prices to value both the solds and unsolds. Other counties use cost to build as their basis which starts them off with a higher value. Simply put, we use statistics and a computer to render values based upon sold properties. This allows us to value properties for approximately $8.00 a parcel, as opposed to a fee appraiser, who might charge $300 or more. Using this methodology there will always be statistical spread with some properties valued to high and others to low. We hear from those that are too high in the appeals process and generally never hear from those that are too low. Market Value is our goal and statistically we strive for a median of 78% to 79% of Market Value. In your land example, we would attempt to value the land based on the sales of similar land parcels in the area. Land valuation has been particularly challenging as there have been so few sales. In your example the owner might consider merging his land parcel with his home to lower value or if he has the both parcels enclosed with a fence we would consider valuing as a whole. I hope this helps.

Posted: Tuesday, November 6, 2012
Article comment by: Nick Schmidt

I see the market values of my
property moving up and down
since 1996 and wonder how
they are determined. The assess-
ment procedure should be pub-
lished. - A former neighbor bought
the smallest lot (50x100) of bed-
rock for 20k just to park his car
on own ground. The value of my
(parking) lot shot up. That's fate.

Posted: Tuesday, November 6, 2012
Article comment by: Ron Nicholson Assessor

For 31 years Arizona has had two taxable property values. The Full Cash Value, which all Secondary tax calculations are based upon such as ‘Fire, Library, TV, Flood Control districts, and some educational institutions has no valuation cap and can increase by any amount up to market value. On the other hand, Limited Property Value, which all Primary tax calculations are based upon such as County, Cities and MCC are by the current constitution mandated to increase 10% or more every year till they equal the Full Cash Market Value. This amendment to the Constitution will immediately decrease in 2015 the Primary taxable values by 3% or more Reduce the Limited Property Value increases from 10% or more by over half to 5% And for the first time place a limit of 5% increases on Secondary taxable value. A NO vote for prop 117 is a vote for higher taxable values on all real property applying to all taxing jurisdictions. A YES vote for Prop 117 is a vote for lower taxable values on all real property applying to all taxing jurisdictions. The Realtors support this, the Chambers support this and all those who support limiting taxable value increases support this.

Some of you have expressed some concern of tax shifts between classes of properties due to a change from the 10% or more tax cap to a lesser 5% tax cap. Actually this Proposition will lessen the swing because it lessens the amount that values can increase. And to use the old balloon analogy: When you squeeze the balloon in one place it pops out somewhere else! In this case, all classes of real properties are being squeezed by the reduction equally and therefore reduce the tax shifts.

Posted: Tuesday, November 6, 2012
Article comment by: Ron Nicholson Assessor

The concern that this proposition does not address the entire property tax question such as Prop 13 is valid. It does not place limits on tax authority budgets, which are the only true way to limit growth in property taxes. This only places growth limits on taxable values. I worked with Marc Goldstone on a Prop 13 type change for three years. Marc gave this his heart and soul and it did not even make it to first base. This is our first chance to impact valuation increases and lessen their impact.

What is so hard to understand that a 5% limit on taxable assessed value is better for the taxpayer than having one half your tax bill tied to an assessed value with no limits in growth and the other half tied to an assessed value with a 10% or more limit on growth?

For those that have questions: Call me! 928-753-0703

Posted: Tuesday, November 6, 2012
Article comment by: The Fox Hound

I saw a great bumper sticker today thought I would share it for all my Republican friends. It said .......Obama is not a foreign born, brown skinned, Anti-War Socialist who wants to give away Health care YOUR THINKING OF JESUS

FACTS just priceless
Don't forget to vote

Posted: Tuesday, November 6, 2012
Article comment by: Ron Nicholson Assessor

[Comment deleted for excessive length]

Posted: Monday, November 5, 2012
Article comment by: sell ya a bridge .....

@"These comments make no sense".....I have learned a lesson about life, that when somebody says "Boy, have I got a deal for you!", to run the other way.

Posted: Monday, November 5, 2012
Article comment by: Got Tax? ...

Negative Consequences of Proposition 117

• It unfairly favors wealthy property owners and high dollar real estate.

• It forces Arizona voters to change the state constitution when it is not needed.

• It creates “windfall” for rapidly appreciating high growth areas that will far outpace the 5% value limit. It also creates a “windfall” for properties already on the tax rolls at only a fraction of their true value with no remedy to fix it.

• It destroys “equity” when property valuation limits allow the favored class to be taxed at a fraction of their true value when the majority would be paying their fair share.

• It impairs bonding capacity and bond ratings.

Posted: Monday, November 5, 2012
Article comment by: Fonda Tax ...

Assessment limits are often put forward as a means of combating two problems popularly associated
with rapidly appreciating property values: increasing tax bills and the redistribution of tax
burdens. In fact, 30 years of experience suggests that these limits are among the least effective,
least equitable, and least efficient strategies available for providing property tax relief.
Assessment limits benefit those whose property values have increased rapidly, with the greatest
tax reductions going to those whose property has risen fastest in value. At best, these limits
restrict aid to those who have increased property wealth and provide no relief to those whose
values are stagnant or declining.
Yet even taxpayers whose assessed values have been reduced by these caps can face higher
property taxes as rates rise to compensate for a diminished tax base. Rather than redressing shifts
in tax burdens, these limits themselves cause substantial tax reallocations and unpredictable
differences in effective property tax rates.
Better methods exist for addressing taxpayer discontent. The combination of truth in taxation
measures and a circuit breaker program for low-income taxpayers could go a long way toward
protecting those truly in need. Other instruments available to fashion effective property tax relief
include homestead exemptions and credits, classified tax rates, deferred payment options, and
the phase-in of new assessments.
Homeowners facing large and unexpected increases in their tax liability have a legitimate
expectation of governmental assistance. With these alternative tools legislators can respond to
calls for property tax reform without the distortions, inequities, and unintended consequences
of assessment limits.

Posted: Monday, November 5, 2012
Article comment by: Just A Tax ...

Limits that constrain changes in assessed or appraised value of property may appear to provide control but actually distort the distribution of the property tax, destroying property tax equity and increasing public confusion and administrative complexity. Owners whose properties are increasing in value more rapidly than the permitted rate of increase (say, 5 percent) receive a windfall at the expense of those whose properties are decreasing in value or are increasing at lower rates. In effect, valuation increase limits result in lower effective property tax rates for owners of desirable property and higher effective property tax rates for owners of less desirable property. Similarly, when state funds are distributed to school districts or other taxing jurisdictions based on taxable property value (indirect equalization), funding will tend to shift from poorer areas to wealthier areas with rapid appreciation—an illogical and undesirable result. Legislators and the public should be made aware of the inequities resulting from valuation increase limits and be actively discouraged from pursuing such limitations. Any other control is preferable.

Posted: Monday, November 5, 2012
Article comment by: Been Taxed .....

•PROP. 117 IS AN UNFAIR TAX SHIFT FROM LARGE PROPERTY OWNERS TO MIDDLE-CLASS HOMEOWNERS: Prop. 117 opens up a big loophole: It only caps appraisal values. That means governments can still increase the tax rates to make up the lost revenue, but it changes who PAYS. Disguised as reform, this is a massive TAX SHIFT away from higher appreciating property owned by wealthy developers onto homeowners in medium and low-income neighborhoods.

Posted: Wednesday, October 24, 2012
Article comment by: Walks Like a Duck, Talks Like a Duck !

Not so, said Mohave County Assessor Ron Nicholson, who worked on the concept behind the proposition with several other county assessors and the Arizona Tax Research Association.

This is a quote from the article. An Elected Public Official should not be meeting privately with a registered LOBBYIST...

Posted: Wednesday, October 24, 2012
Article comment by: THINK AGAIN

To Jennifer

LA County not withstanding - It is Mohave County that has the problem and the only correlation that comes into play is the familiarity with which the assessor conducts business in this county. He has his own cronies to answer to and his own agenda to fill. The fix has been in for years and Nicholson is just another entitlement incumbent that feels he "deserves" to roll into office, unopposed, for a third term. The sad part is that there are no other candidates available to contest the way he runs business. The county offices, in all parts of this state, are littered with the same type of Klingons. They NEVER get voted out because no one wants to bother, or they figure someone else can do the work at the polls. In this county you do not get what you pay for, EVER! This is also an area of government that most civilians don't want to deal with, so the scams continue.
Anyone that believes that this particular county official is in it to help or "do the work of the people" is living in la-la land. There is no true representation of the rights of homeowners or the value of real property, it is about satisfying quotas and quotients.

Question: Why has the assessor remained silent during this campaign season?? Re-read this article for the answer.

Posted: Monday, October 22, 2012
Article comment by: Jennifer Stielow

I believe it's important to clear up some of the incorrect accusations that are being made in response to this article. To "Investigation:" just to set the record straight, the LA assessor was actually arrested, along with his chief appraiser and an Arizona property tax consultant, for conspiring to slash property values and save millions of dollars in property taxes for clients (link pasted below). And speaking of property tax consultants, they happen to be opposed to Prop 117 because they are the only ones that benefit from our flawed system that allows values to grow uncontrollably. The consultants know that they will lose thousands in profits if Prop 117 passes so they will say absolutely anything to confuse voters on the issue.

For those of you who aren't conspiracy theorists and really don't know who ATRA is, we are the only statewide taxpayer organization that protects all taxpayers and has for over 72 years and Prop 117 will benefit all property taxpayers. Visit the ATRA website at for more information.

Posted: Thursday, October 18, 2012
Article comment by: INVESTIGATION !!

LA County Assessor just got locked up. Maybe Nicholson being posted on the ATRA website endorsing this Lobbyist sponsored propostion and an admission that he met with the lobbyist to conceive this trojan horse proposition means it is time to take a look under the hood..... Maybe our elected officials should comply with open meeting laws if this kind of crap is going on, especially something of this magnitude to change the constitution.

Posted: Wednesday, October 17, 2012
Article comment by: Suzanne Adams-Ockrassa

@now I'm confused
There are two property tax propositions on the ballot this Nov.
Prop 116 would give businesses a break on the "property" taxes they pay on their equipment.
Prop. 117 would change how property taxes for actual land and homes is calculated.

Posted: Monday, October 15, 2012
Article comment by: Frank Harris

Ron - is just a pawn. Fair - what's the parcel number and taxes for the empty lot between Hualapai Elementary School and LDS church - look it up on the county's GIS map tool. No parcel number - therefore no taxes. Yea, Ron has to go.

Posted: Monday, October 15, 2012
Article comment by: DV s

I am confused, when in doubt, say NO...!

Posted: Monday, October 15, 2012
Article comment by: These comments make no sense - I'm not confused at all, voting yes!!

I'm tired of paying higher taxes every year and pretty sure I'm better off with limits. Fairly black and white to me.

Posted: Monday, October 15, 2012
Article comment by: How soon they forget!!



Posted: Sunday, October 14, 2012
Article comment by: Assessor Compromised his Independence !

Nicholson has compromised his independence and duties as assessor. To say, that because commercial properties pay at a higher assesment ratio it is ok to use this Regressive, Trojan Horse Prop 117 to shift the taxes back to the homeowner is repulsive.

Posted: Sunday, October 14, 2012
Article comment by: Fed Up with Public Officials = Prop 117 !

Can elected officials just do their job, rather than trying to change the constitution?

Prop 117 is a Regressive, Trojan Horse Tax Policy that will create a favored class that is already starting to count their savings under the proposed valuation limit.

Google Property Value Limits and check the independent studies for yourself.

Posted: Sunday, October 14, 2012
Article comment by: Let Freedom Ding

Property taxes should be made illegal in Arizona. Seeing how the collapse of housing bubble has hit our citizens, this is the most dangerous tax to families.
Imagine someone paying on a home for 20 years, and paying taxes every year as though they owned it and yet they lose it to bank after foreclossure, that bank never paid those taxes. Property taxes have caused more economic destabilization than any other tax, Our founding fathers were against multiple taxes that would bring the middle class and/or poor into a position of being peasants or slaves. When our citizens are no longer under an impossible burden of taxation, then the American Dream will return. The richest people in America can see how the middle class has lost their buying power, if the poor & Middle Class fall, the rich will come tumbling after...

Posted: Saturday, October 13, 2012
Article comment by: Been Taxed !

Prop 117 = Property Tax Windfall to the most desireable properties in the state that their market appreciation will far outpace the 5% limit. Surprised that this measure is backed by ATRA, Lobbyist for the Big Guys, so much for the shift and shaft for the Little Guy..This is an Obvious NO VOTE on Prop 117

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