Budget impasse allows property tax to return - East Valley Tribune: News

Budget impasse allows property tax to return

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Posted: Thursday, August 13, 2009 4:13 pm | Updated: 1:13 am, Sat Oct 8, 2011.

Get ready for higher tax bills. The failure of lawmakers and the governor to reach an agreement on a state budget means that the state property tax, suspended in 2006, automatically returns.

Get ready for higher tax bills.

The failure of lawmakers and the governor to reach an agreement on a state budget means that the state property tax, suspended in 2006, automatically returns this year.

And for all intents and purposes, the time for lawmakers to act to repeal it has run out: State law requires county supervisors to set the tax rates Monday. That includes the state property tax, which is technically called a "county equalization tax.''

While the House and Senate have both approved measures to permanently repeal the levy, the plan still requires a final roll call vote in the House. Lawmakers do not convene until 1 p.m. Monday.

So far, though, legislative leaders are not sending Gov. Jan Brewer any of the budget measures they have approved. Senate President Bob Burns, R-Peoria, said Thursday that he wants some time to see if a deal on the budget can be struck, either with the governor or perhaps some Senate Democrats.

Burns even is refusing to send the Senate-passed bills back to the House, virtually guaranteeing the measure won't get to Brewer before the supervisors in the 15 counties set the tax rate. And that presumes Brewer would even sign the measure in the first place, as the Republican-controlled Legislature has yet to give her what she wants.

Gubernatorial press aide Paul Senseman pointed out that Brewer never wanted an immediate repeal. Instead, facing a $3 billion deficit, she wanted the levy to come back and then be phased out over the next three years.

Brewer agreed to the repeal only to get lawmakers to approve what she wanted: Asking voters to temporarily hike the state sales tax.

The inability to reach a budget deal by this point is why property taxes are going to go up.

The levy was put on hold in 2006 as part of a deal between Republican legislative leaders and Democratic Gov. Janet Napolitano when the state had a surplus. Lawmakers got not only the property tax suspension but also a permanent 10 percent cut in individual income taxes. Napolitano got more spending, including funding for full-day kindergarten.

The plan, at least the way Napolitano saw it, was to revisit the property tax issue this year after evaluating the state's financial condition.

Republicans, however, said it was always their intent to make the repeal permanent. And they said allowing it to return would be the largest tax hike in Arizona history, citing the $250 million it would raise.

Brewer, who became governor in January, agreed to the repeal - but only as part of an overall deal to temporarily boost state revenues with a sales tax to weather the recession. The last effort to do that, on Wednesday, fell one vote short in the Senate.

Jennifer Sweeney of the Arizona Association of Counties said time has run out with tax rates being set on Monday.

"The statute is pretty clear,'' she said. "There's not a lot of room for interpretation of that particular section.''

The levy would add about $66 a year to the property taxes on a $200,000 home.

Businesses, which are assessed differently than homes for tax purposes, would see a bigger hit. A $500,000 firm would have to pay an additional $363 a year.

The one possible bright spot is that gubernatorial and legislative staffers are quietly examining how the money, once collected, could be refunded if and when a budget deal is reached, assuming that deal includes permanent repeal of the property tax. Options range from giving property owners a credit on a future tax bill to actually sending out refund checks.

A deal, however, remains elusive.

Burns said Thursday he continues to try to line up the necessary 16 votes in the 30-member Senate to give Brewer that Dec. 8 election on a proposed one-cent hike in sales taxes for 2010 and 2011, decreasing to a half-cent surcharge in 2012. At this point, though, at least three of the 18 Republican senators are unwilling to go along.

In the alternative, Burns is trying to pick off one or more of the 12 Senate Democrats, arguing that a vote on higher sales taxes would give Arizonans a chance to restore some of the funds lawmakers needed to cut to balance the budget.

Burns thought he had that Wednesday with Sen. Richard Miranda, D-Phoenix.

"I've always supported the idea of the one-cent sales tax,'' Miranda said Thursday. "I feel that's a way that we're going to get more money into education, human services and law enforcement.''

But Miranda said that, in the end, he could not vote to refer the measure to the ballot because it is part of a larger effort by the Republican-controlled Legislature to sharply cut spending.

Senate Minority Leader Jorge Garcia, D-Tucson, said he doubts that Burns will be able to pick off Democrats, no matter what he offers them. Garcia said all the members of the caucus believe the budget package the Republicans negotiated with Brewer cuts spending too deep.

Garcia wants Burns instead to negotiate with the Democratic leadership for a package all the Democrats can support. But Burns said anything like that would lose him too many Republican votes.

Burns' refusal to send the Senate-passed bills to the House, which already has approved most of them, appears to be an effort to skirt an Arizona Supreme Court ruling issued Thursday which says that lawmakers cannot delay sending bills that have been finally approved to the governor.

Under that ruling, House Speaker Kirk Adams has to send those bills, which originated in his chamber, to Brewer. And that would start the clock that gives the governor five days, not counting Sunday, to either sign or veto them.

By keeping the House bills in the Senate, Burns allows Adams to avoid violating the Arizona Constitution, as the court ruling addressed only transmittal of bills to the governor, not the movement of approved measures between the chambers. Burns said that will give lawmakers more time to try to either come up with the votes for the tax referral or craft a new deal with Brewer.

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