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June 19, 2008 - 6:34PM

Voters may get chance to dump state property tax

Howard Fischer, Capitol Media Services

Arizona voters may get the chance to do what Gov. Janet Napolitano would not: permanently repeal the state property tax. A measure set for hearing next week would block the levy, suspended in 2006, from returning as scheduled late next year.

The language is identical to a bill Napolitano vetoed earlier this year. But the difference is this measure would bypass the governor and go directly to voters in November.

There likely are enough legislative votes to do that, just as there were for the original bill that Napolitano vetoed.

The proposal could prove popular at the polls: Allowing the levy to return next year would add about $80 to the tax of a $200,000 home. And it would increase property taxes on a $1 million business by more than $950.

Overall, the tax would bring in about $250 million a year.

The debate, both at the Capitol and ultimately on the street, is likely to turn on the question of who needs the money more.

Napolitano agreed to a permanent 10 percent cut in individual income taxes in 2006 when the state had more tax revenue coming in than needed.

She also approved a three-year suspension of the state property tax. But Napolitano insisted that it be set up so the levy returns automatically in late 2009, precluding the need to ask lawmakers at that time to make a potentially politically unpopular decision to hike the tax.

Since that time the state's economy has tanked, tax collections are down and Arizona faces a potential $2.2 billion deficit for the new fiscal year that begins in less than two weeks. And projections show a possible $1 billion gap between revenue and expenses the following budget year.

"Permanently repealing a tax that supports such basic needs as schools and education during a time of severe budgetary deficits would be the height of fiscal irresponsibility," the governor wrote in April when she vetoed the bill.

Rep. Sam Crump, R-Anthem, however, said Napolitano has it backwards. He said now is the perfect time to act to prevent higher property taxes next year.

"People are suffering," he said. "Families are having to reduce their budgets. Unfortunately I haven't seen the same willingness to reduce spending on her part."

Crump also said he is unwilling to wait until next year to see if the state can afford to live without the $250 million.

He said there is no indication Napolitano would be any more likely to sign the measure next session. And Crump said if she vetoes the measure again it would be difficult to call a special election before the tax bills go out in October 2009.

Crump has a backup plan in case some legislators balk at asking voters for permanent repeal: A second proposal, also scheduled for a hearing next week, would put a measure on the November ballot to continue the suspension through late 2012.

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