Based on information being circulated by County Assessor Ron Nicholson, there have been several articles in the local press which contain misleading information as to the effects of HB 2001 passed in a special legislative session earlier this year.
First and foremost, this bill did NOT increase the tax rates on residential property in Mohave County or any other county. There are two provisions that MAY affect the amount homeowners pay in the future, and what follows is a broad outline of those provisions.
Some years ago, the Legislature created what is known as the "Homeowner's Rebate." This shows up on the property tax bill issued by the county as a credit labeled "State Aid to Education" and reduces the net amount of property tax owed. The state of Arizona reimburses the county for this amount, so there is no net gain or loss to the county. The Legislature has found that most homeowners are not aware of this benefit provided to them, but we have also found that this is being misused in two ways:
1) Rental property is not being properly classified, and the Homeowner Rebate is applied to these homes; and,
2) on many homes that have been foreclosed, banks that now pay the property taxes are also being extended the rebate.
In order to remedy these two situations, HB2001 included a provision that requires homeowners to certify every two years that the property in question is their primary residence, and thus qualify for the Homeowner Rebate. The only people who will be affected are those who own two or more homes, such as vacation homes or residences required because of job situations (including legislators who own property in Phoenix used as their session residence). The statewide average of the amount of the rebate is $190, and to receive the maximum of $600 per year a home would have to be valued at $700,000 or more. Mr. Nicholson has estimated that the amount in Mohave County would be $100 to $150 - again, this would only affect SECOND homes.
The manner in which this certification will be completed is still being worked out.
Mr. Nicholson has some understandable concerns about the amount of work that may be created for his office, but legislative staff is continuing to work with the Department Of Revenue and all county assessors to make this as easy as possible for all concerned. Additionally, the county will be provided with funds for first year start-up costs.
The Joint Legislative Budget Committee has estimated that the state will recoup $39 million when this is fully implemented. That is, mistaken and/or fraudulent application of the Homeowner Rebate will not be paid out of the general fund. This amount does not represent a loss to any county, nor is it a general tax increase.
The second issue involves a potential "shift" of property taxes from business to residential property. HB 2001 does include a number of provisions that will reduce the Net Assessed Taxable Value of both business personal property and real property. The assertion is that with businesses paying lower taxes, this will necessarily result in an increase to residential property taxes.
The entire intent of HB 2001 (otherwise known as the "jobs bill") is to make Arizona more business friendly, both to established companies and to those who will either relocate or start a new enterprise. And with new and expanded businesses comes not only sorely needed jobs, but also additional revenues of all types. Rather than increasing homeowners property taxes, this has the potential to actually reduce these taxes.
Knowing that all cities, towns and counties are continuing to face loss of revenue, the legislature has phased in the reductions over several years. By the time the plan is fully implemented, it is expected that overall revenues will increase, and thus there will be no need to shift taxes from one class of property to another.
Even if our expectations are not realized, and in the worst case scenario there is a loss of tax income to the county, it would be incumbent on the supervisors to continue to reduce county expenditures to reflect diminished revenue.
Much has been made of the speed with which this bill passed the legislature. However, the majority of the provisions were the result of 18 to 24 months of work that was done in consultation with leading economists. The result is a package that brings Arizona, known for it's high corporate and commercial property taxes, from one of the lowest rated states for business attraction all the way up to No. 7.
The crisis that Mohave county and all of Arizona faces is directly tied to national policies over which the AZ Legislature has little control. The best we can do is attempt to create an atmosphere in our state that will provide incentives to get our economy moving again, bringing jobs and tax revenue to fund necessary services and the programs that residents have come to expect.
State Representative Nancy McLain serves the residents of District 3, which includes Kingman and Golden Valley. She can be reached at (602) 926-5051.