Guide to Mesa's proposed city property tax - East Valley Tribune: Mesa

Guide to Mesa's proposed city property tax

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Posted: Wednesday, April 19, 2006 10:56 am | Updated: 2:11 pm, Fri Oct 7, 2011.

On May 16, Mesa voters will decide whether to endorse two tax measures that will have a long-lasting financial impact on both the city and its taxpayers:

Today: The property tax issue.

WHAT IS THE MESA PROPERTY TAX?

Mesa has asked voters to approve the city’s first property tax in more than 60 years. Even though homeowners currently pay property tax that goes to schools and the county, this proposal would generate the city’s first property tax revenue since 1945 when community leaders repealed a previous city property tax.

HOW WOULD THE PROPERTY TAX WORK?

The property tax would raise up to $30 million next year to pay for general operations of the city. Property owners would be taxed at a rate determined by a complex formula based on their property’s value. Using actual real estate market value as a gauge, the county assesses each property’s “limited property value” and uses that figure to calculate how much tax is owed. For example, if the tax measure passes, the owner of a home with a limited property value of $150,000 would pay the city roughly $150 a year.

DOESN’T THE COUNTY USE A DIFFERENT TYPE OF ASSESSMENT FOR

OTHER TAXES?

Yes. The County Assessor’s Office uses two sets of property values to determine rates: Full-cash value and limited property value. The one used in this instance would be limited property value, used for primary property taxes that go toward general operation of schools, cities, community college districts and counties. Full-cash value is used for secondary taxes, which include bonds, budget overrides and special districts such as fire and flood control. The limited property value is calculated according to a formula mandated by the Legislature and cannot exceed the full cash value.

DON’T I ALREADY PAY A PROPERTY TAX?

Yes, Mesa property owners pay taxes annually to their school district and Maricopa County but do not pay a property tax to the city.

IF I DO NOT OWN PROPERTY DO I HAVE TO PAY A PROPERTY TAX?

There is no direct tax on renters, but landlords, if they choose, could incorporate the increased tax into their rents.

WILL THE PROPERTY TAX EVER GO UP?

Yes. The city’s property tax would be capped at $30 million in the first year, fiscal 2006-07, which begins July 1. But state law says primary property tax revenues can increase by 2 percent each year for inflation and for new construction. Beyond that, the city would not be able to raise more money unless Mesa voters first approved another tax measure.

WILL MY TAXES INCREASE EVERY YEAR?

Mesa residents would pay more to the city each year if their property’s assessed value increases and if the city authorizes collection of the maximum amount. A homeowner’s payment will likely increase by about 2 percent yearly. If a homeowner pays $150 to the city in 2006, a 2 percent hike would raise the annual payment by $3 in 2007. As values climb, Mesa would charge a lower rate to stay within its cap.

ARE SENIORS EXEMPT OR PROTECTED FROM TAX INCREASES?

If they meet certain residency requirements, seniors over 65 have the option of freezing their home’s full-cash value to keep their Mesa property tax from increasing past a certain point. To qualify, seniors must be named on the property title, live in their home at least nine months out of the year and have lived in the same home for at least two years before applying. The application must be renewed every three years.

WOULD ALL RESIDENTS PAY THE SAME RATE?

Both current and new residents would pay the same rate. The total amount due every year, however, would vary depending on the property’s value.

DO RESIDENCES AND BUSINESSES PAY THE SAME?

No. Business owners would be required to pay taxes equal to 2.4 times the amount levied on homeowners. In fact, owners of vacant land would also be charged a higher tax rate than homeowners. So, using a limited property value of $150,000, a homeowner would pay $150 a year, a business would pay $367.50 per year and an owner of vacant land would pay $240 per year.

HOW WOULD THE CITY USE THE MONEY?

State law restricts cities from earmarking future property tax money for specific programs. So tax revenue would be used for a combination of city programs and services, including public safety, the arts, recreation programs and staff salaries.

WHEN WOULD I START PAYING A MESA PROPERTY TAX?

If the property tax passes in May, the first bill for Mesa homeowners would be due in October. The 2006 assessment would be used for the October 2006 and April 2007 payments. The 2007 assessment, which was mailed to residents at the end of February, will go into effect on the tax bill coming in October 2007.

HOW MUCH WOULD YOU OWE?

$158 A YEAR: Andy O’Crowley bought this five-bedroom, 3,091-square-foot house in a mature Mesa neighborhood eight years ago for $112,700. The Ninth Street home, built in 1973 near Westwood High School, recently was appraised for $330,000.

However, homeowners aren’t taxed on the market value, but rather on a different formula used by the county based on a “limited property value.” O’Crowley’s first property tax payments to the city — about $158 a year — would be based on his 2006 “limited property value” of $158,500.

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