Ignoring the governor’s hint of a veto, a House panel voted Thursday to permanently repeal the state property tax.
The party-line vote in the Republican-controlled Ways and Means Committee came over objections from some Democrats that while the levy is not currently being collected, the state should not now forgo money it may need in the future.
Rep. Steve Farley, D-Tucson, specifically pointed to the projections of economists that Arizona’s financial condition is getting worse, not better.
He said undermining state revenue sources will leave Arizona unable to meet its obligations.
It also comes a week after Gov. Janet Napolitano labeled the measure “irresponsible.”
But House Speaker Jim Weiers, R-Phoenix, shepherding the plan through the Legislature, said it is in line with a goal of the governor to help keep the state’s economy growing.
“This is making this state the very best place that you can in order to foster and promote business,” Weiers said. He said repealing the tax now — even though its collection is suspended until late 2009 — would provide that stimulus.
In fact, he pointed out that U.S. House Speaker Nancy Pelosi, D-Calif., is working on plans in Washington to stimulate the national economy, at least in part with a tax cut.
Lawmakers suspended the tax for three years as part of a 2006 budget deal when Arizona had more revenue than expenses. The tax returns automatically unless lawmakers repeal it.
Legislative staffers estimate if the tax comes back it would add about $76 a year to the property tax bill of a $200,000 home. For a $1 million business, the figure is $874.
Weiers acknowledged that could be seen as a relatively small amount of money. But he said that doesn’t mean it’s irrelevant, especially to those in danger of losing their homes.
“People are hanging on by fingernails now,” he said. “And I don’t think that we should be giving them the obliging kick over the cliff.”
Hanging over the debate is the state’s current deficit of nearly $1 billion. And both the governor and legislative leaders acknowledge that things will get worse, at least in the short term, with projections of the gap between revenue and expenses for next fiscal year between $1.2 billion and $1.7 billion.
Weiers said the state can solve that problem by spending more wisely, not by taking more money from taxpayers.
But Farley said that ignores the fact that people tax themselves to pay for services they can’t provide for themselves, like police, court systems and roads. And he said the soft economy has also resulted in more needy people who qualify for state-paid health care so they can stay healthy and participate in the economy.
“That takes a little bit of money from all of us in order to benefit the entire society,” he said. And Farley called the cost of the levy on each homeowner “a relatively small amount of money in exchange for the types of things the government can provide for our citizens so we can maximize our ability to produce.”
Republican legislative leaders intend to push the measure quickly to the governor’s desk: An identical bill was approved earlier this week by the Senate Finance Committee.