Businesses urge governor to repeal tax

Business owners came to the state Capitol on Monday to urge Gov. Janet Napolitano to sign legislation permanently repealing Arizona’s property tax. The news conference, organized by House Republican leaders, was designed to put pressure on the governor.

Most of those who spoke said allowing the levy to return as scheduled late next year would have a devastating effect on the economy.

Tim Jeffries, a consultant who works on strategic planning with small companies, said the $125 million that would be taken from businesses — about half the total state property tax revenue — could be better spent on creating thousands of new jobs.

But Jeffries, questioned after the news conference, said he could not say how many jobs were created, if any, when the levy went away in 2006. Instead, he responded that state government “expanded exorbitantly, perhaps irresponsibly” every time it has received more money.

Randy Johnson, whose company manages 18 mobile home parks in Arizona, said if the tax comes back it will be passed along to park residents and make such housing less affordable.

That theme was echoed by Neal Haney, a broker for another group of mobile home parks. He said property taxes make up between 3 and 5 percent of total rent.

Haney, however, balked at questions about how much mobile home park rent decreased when the tax disappeared in 2006.

“There are a lot of things that go into what rents are,” he said, ranging from maintenance to keeping the roads paved.

HB 2220, the measure to permanently repeal the levy, gained final Senate approval last week, but House Speaker Jim Weiers waited until late Monday to send the bill to the governor.

In the interim, business groups have embarked on a full-scale lobbying effort to get Napolitano to change her mind. That includes efforts by various chambers of commerce to deluge Napolitano’s office with phone calls.

That approach has not produced the desired results. Gubernatorial press aide Jeanine L’Ecuyer said the latest count as of Monday morning showed 356 people urging her to sign the repeal and 1,059 wanting her to veto the legislation.

Also Monday, three Republican members of the U.S. House of Representatives sent a letter to Napolitano urging her to approve the permanent repeal.

Part of the fight comes down to differing characterizations of what is at stake.

In 2006, when the state had more money than it needed, lawmakers permanently cut individual income tax rates by 10 percent.

The GOP majority also sought permanent repeal of the property tax. But Napolitano insisted instead on a temporary suspension.

That legislation is worded so that, absent legislative action, the levy returns late next year.

Republicans have said that action will result in “the largest tax increase in state history.” Napolitano, however, has instead portrayed what would happen in 2009 as simply the state recouping revenue it was already collecting before the suspension.

Weiers also poked fun at Napolitano’s effort to minimize the impact of the levy’s return when she said last month it amounted to “two lattes (a month) for education.”

If the tax were being levied today it would cost the owner of a $250,000 house about $93 a year, or about $7.75 a month. Weiers said that is the attitude of “elitists” who are “out of touch with what is going on in today’s economy.”

Weiers also pointed out, correctly, that suspension of the tax, technically an “education equalization” levy, did not reduce state aid to education. What was not collected from the property tax was made up from other sources.

Complicating the discussion is the state’s deficit, pegged at $1.2 billion for this year — which would not be affected either way — and approaching $2 billion next budget year if nothing changes on either the income or spending side.