Last spring, educators in the Apache Junction Unified School District got their first whiff of the outrage spreading among taxpayers when they unsuccessfully tried to renew a budget override.
They tried again in the fall — but that time, when the ballot measure failed again, the school district had plenty of company.
More than 80 percent of school district budget overrides in Maricopa County failed in November’s general election, and experts say tax fatigue was partly to blame.
Arizona homeowners are facing rising property taxes while school districts are facing tight budgets. That’s creating a problem for both parties that may result in a showdown at the polls.
In the East Valley and the rest of the state, assessed home values have gone up by as much as 60 percent for some homeowners in one year.
“That was a hard thing for people to accept,” said Apache Junction district spokeswoman Carol Shepherd. “People can’t sell their home for what it is assessed for in today’s market ... then you have all the foreclosures. If you can’t make the house payment, you certainly can’t see your taxes going up when your interest rate is about to double.”
Tax anxieties were primarily to blame for the override failures last time around, Judy Richardson of Stone and Youngberg, an investment firm, told a statewide gathering of school board members last week in Phoenix. Richardson said because of a tax shift this year, residential properties shouldered more of the tax burden than they had in years past.
In the two recent tax years, there has been a larger-than-normal shift from business to residential taxes, she said, so residential property taxpayers are carrying a larger piece of a school district’s assessed values than they were in years past.
The ramifications of the higher taxes will cost school districts. The Apache Junction district will lose about $1 million starting in July, when its override funds start dwindling.
And the Tempe Union High School District will see a reduction of $2.1 million from its budget in 2008, if it doesn’t pass a renewal next fall.
But schools aren’t the only ones saying they’re struggling to make ends meet.
DON’T TELL THE MEDIA
Two Arizona groups are circulating petitions for November ballot initiatives that would roll back property taxes and cap future tax limits.
Prop. 13 Arizona would roll back valuations to 2003 assessed full cash values or the purchase price after Dec. 31, 2003, and would cap the total tax collected at one-half of 1 percent for all residential property and 1 percent for commercial property.
It also would limit tax increases to 2 percent a year.
Lynne Weaver, chairwoman of the Prop. 13 Arizona initiative. said the concept is based on what was done in California in 1978 with its Proposition 13.
Weaver lived in Redondo Beach, Calif., for years and said it was that experience that inspired her to back the plan for Arizona.
“I loved Prop. 13 in California,” she said “I could plan and budget. When I moved here, all of a sudden, my property taxes almost tripled. I get calls from people all the time who are literally desperate about their tax situation. I’m sorry, we should not be doing this to people.”
Another group, Arizona Tax Revolt, is proposing two property tax initiatives that supporters say will roll back and limit future increases in property tax levies. In addition, it carries provisions to increase or decrease the levies. It also seeks to roll back taxes to 2003 limits.
The groups have until July to collect about 230,000 signatures.
At a recent conference of the Arizona School Boards Association, representatives from Triadvocates, a public affairs and lobbying group, warned members about the two initiatives and how they think they will be received by voters. “You want to make sure they don’t get on the ballot,” said Mike Gardener of Triadvocates. “If they do, they will pass.”
Their advice to board members: Talk to their friends and neighbors about the issues but to try not to talk about it with the media, which would give the issues free press.
‘IT’LL RUIN US’
Their message hits home with East Valley school board members.
Kyrene Elementary School District governing board president Sue Knudson said the property tax rollbacks and capped increases in taxes would make it impossible for schools to manage their budgets. “It’ll ruin us,” she said. “If either one hits the ballot, I know it will pass. People vote on emotions when it comes to taxes.”
School district officials say they won’t sit back this year and think that people understand how school funding works, or take for granted that people know why they ask for overrides.
The Tempe Union High School District will begin market research in January to determine why people voted against its override, said spokeswoman Linda Littell. The district will share that information with a political action committee expected to be formed by a number of people in the community already expressing interest in campaigning for a renewal.
The Chandler Unified School District never had an override fail, but will need to renew a budget override in November that passed by comfortable margins in 1998 and 2003. The district will take its explanation of property taxes and how schools are funded on the road this year to various organizations because it’s a hot topic in the community, district spokesman Terry Locke said.
“There’s a lot of misinformation out there about the impact of appraised values and budgets for school districts,” Locke said. “We want people to understand that even though those values went up, the schools aren’t getting a penny more.”
The state’s school finance system uses a formula setting a limit on how much each school district can spend on its schools, said Kevin McCarthy, president of the Arizona Tax Research Association. That limit is paid for through a combination of both state money and local taxes.
RICH AND POOR SCHOOLS
In poor districts, the majority of the money comes from the state, while in richer districts, property taxes raise a larger share of the money.
Every school district is required to levy taxes at a certain rate to fund its budget, McCarthy said. The difference between the amount of money raised and the state-mandated budget limit comes to the district in the form of state aid.
“So, if a district’s net assessed value goes up dramatically, schools won’t necessarily get any more money if their student growth didn’t go up,” McCarthy said. “It’ll mean there is a change in the mix of funding of the district, more from property taxes and less from state aid.”
When letters go out next month telling property owners about their new tax bills, experts say they can expect still more increases.
Assessed home values reflect market values from roughly two years prior, Richardson said, so even though home values are dropping throughout the Valley, the change won’t be reflected in homeowners’ tax bills until at least 2009.
And it’s unlikely those taxes will come down at all in the future, McCarthy said, unless policymakers make changes.