Voters might see yet another property tax reform initiative on the ballot in 2008. Prop. 13 Arizona is finalizing two initiatives and working on a possible third in preparation for the 2008 election.
"We want to get it just right," said Lynne Weaver, vice chair of the group. Prop. 13 Arizona's initiatives are based on California's Proposition 13, which went into effect in 1978, Weaver said. "We're sticking to it [Prop. 13] as closely as we can," she said.
The first initiative the group is working would roll back property values to 2003 assessments for current homeowners. Residents that purchased their property after Dec. 31, 2003, would have their assessments rolled back to the price they paid when they purchased the property. Each time a resident moves, the value of the property would be reset to the purchase price.
The initiative also caps residential property values at 1/2 of 1 percent and limits increases in value to 2 percent per year. The 2 percent should give governments and other taxing entities enough funds to deal with growth, the group says. At the same time, senior citizens on fixed incomes should be able to afford a 2 percent increase in their property taxes every year.
The second initiative the group is working on would eliminate all secondary taxes.
Instead of having a primary and secondary taxing districts, there would only be one type of property tax. Taxing districts would receive one lump sum to pay both their general expenses and bond obligations.
Weaver said she lived in California for several years and knows Prop. 13 works. Many taxing districts in California claimed they wouldn't be able to survive if Prop. 13 went into effect. Not only did they survive, they also ran more efficiently after Prop. 13 went into effect, she said.
Prop. 13 also kicked off 12 years of growth in the real estate market, she said. People like certainty. They knew when they bought a house exactly how much they would be paying in taxes. Whereas in Arizona, currently, you could purchase a house and have the taxes on it double in a year, she said. You don't know from year to year how much your taxes will be.
When asked about people who might decide not to move because they couldn't afford a new home, Weaver said she doubted whether the real estate market would ever see the wild swings it has seen in the last few years.
Besides, most people move every three to five years, she said. This provides enough change in the market to produce extra revenue for the government. Those residents who decide not to move were going to stay in their homes anyway.
Residents that do decide or have to move can make their purchase decision on not only the price of the home but also the taxes. If the price of a home and the taxes that go with it are too high, the resident has the option to say no and look elsewhere or not move, she said.
"People are terrified of taxes," she said. Mostly homeowners are terrified of losing their homes because they can't pay their property taxes.
Weaver said the values of homes and their taxes have gone up astronomically where she lives in Maricopa County due to land speculation. School districts in Maricopa got an especially high boost in their revenue without having to raise their taxing rates just by the increase in property values due to speculation. And now no one knows what they did with the money, Weaver said.
There are three types of taxation in Arizona: property taxes, income taxes and sales taxes, she said. Income taxes you have until the end of the year and can save up some money in order to pay them. Sales taxes you can avoid by purchasing items online or driving to a different area to purchase items at a lower tax rate. Property taxes are the most unfair, she said. You don't know what they will be until the tax bill comes.
Prop. 13 Arizona will take the control of setting property values out of the hands of the tax assessors. It will bring back control of the situation to the homeowners.
Weaver warned that Prop. 13 Arizona's two initiatives, as they are currently written, will only affect residential property owners. They will not help business or commercial property owners. The group would like to create a third initiative that would eliminate all of the nine property classes currently allowed under state law. Each class has a different taxing rate. Prop. 13 Arizona would eliminate all the classes and create one class, where all property, whether it was commercial or residential, would be taxed at the same rate.