Tag Archives: PROPERTY TAX

economic development - 8 honored

$2.2 billion Maricopa County budget advances

The Maricopa County Board of Supervisors has advanced a $2.2 billion budget proposal that would lower spending, reduce taxes and increase employee pay.

Arizona’s most populous county plans to decrease its spending by $82.4 million next year. The proposed budget also includes the first employee pay increase in five years. The county employs about 13,000 people.

County officials say the budget will likely result in a modest property tax decrease for local homeowners.

The largest share of the budget will continue to go toward Sheriff Joe Arpaio.

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A look at the 9 measures on Arizona ballot

Here are the nine voter initiative and legislative referendum measures on Arizona’s Nov. 6 general election ballot:

SALES TAX INCREASE — Proposition 204 would replace a penny-on-the-dollar temporary sales tax increase set to expire in mid-2013 with a permanent increase of the same size. Revenue would have to be used for education, construction projects and social services. Initiative.

PRIMARY ELECTION — Proposition 121 would revamp the state’s primary election system. The two top finishers in the primary election would advance to the general election regardless of party affiliation. And voters, regardless of party affiliation, could vote for any candidate. Initiative.

STATE SOVEREIGNTY — Proposition 120 would have Arizona declare that the state has exclusive authority over all land within its borders. American Indian reservations and military bases would be exempt. Referendum.

PICKING JUDGES — Proposition 115 would give governors more say over judicial appointments. The governor would generally get at least eight nominations for each appointment, up from at least three now. Also, her appointments of attorney members of the nominating commission would not have to come off a list of lawyers recommended by the State Bar of Arizona. Referendum.

CRIME VICTIMS — Proposition 114 would provide a new legal shield to crime victims. A crime victim would not be liable for damages suffered by a person engaged in a felony or fleeing from a situation involving a felony. Referendum.

BUSINESS EQUIPMENT TAX— Proposition 116 would provide tax savings for smaller businesses. The exemption on value of equipment and machinery subject to property tax would increase from the current inflation-adjusted amount of $68,079 to $2.4 million for newly acquired equipment and machinery. Referendum.

PROPERTY TAX — Proposition 117 would impose a cap on property tax increases. Increases could not exceed 5 percent over the value for the previous year, beginning with the 2015 tax year. Referendum.

EDUCATION FUNDING — Proposition 118 would set a minimum amount for funding for schools and other designated beneficiaries of income from the state trust land fund for the next nine fiscal years. There is currently no minimum requirement on using the fund’s income. Referendum.

TRUST LAND SWAPS — Proposition 119 would allow swaps of state trust land under certain conditions. Trust land could be exchanged with other public land in Arizona to protect military installations from encroaching development or to convert trust land to public use. Referendum.

Tim Lawless Discusses HB 2001 - AZRE Magazine September/October 2011

Q&A With NAIOP-AZ President Tim Lawless: The Impact Of HB 2001

Q&A with NAIOP-AZ President Tim Lawless who discusses HB 2001,  commercial property tax and how the commercial real estate industry is affected by these tax cuts

Recently, the Arizona State Legislature passed the most sweeping economic development/job recovery bill in years (HB 2001). It included a number of phased tax cuts and tax credits for businesses along with a deal-closing fund to attract high wage firms to Arizona.

Q: WHAT WERE THE SPECIFICS?

Specifically, the corporate assessment ratio used to calculate commercial property taxes will be reduced from 20% to 19.5% in 2013, 19% in 2014, 18.5% in 2015, and 18% in 2016. Moreover, the current corporate income tax rate of 6.968% will be reduced over four years to 4.9%. The $25M “deal-closing fund” (the Arizona Competes Fund) partially derived from lottery revenues will also give the privatized Arizona Commerce Authority (ACA) a key tool in landing firms that may need a nudge in deciding between finalist states for relocation or regional expansion decisions.

Q: WHAT DOES IT MEAN FOR THE COMMERCIAL REAL ESTATE INDUSTRY?

Significantly, NAIOP-AZ’s top three priorities to: 1) reform our uncompetitive commercial property tax system; 2) to lower our corporate income tax rate; and 3) to enact a deal-closing fund to attract new firms to the state are all contained in the law. This is a remarkable turn of events for our industry. NAIOP-AZ helped lead the fight six years ago to begin lowering the property tax assessment ratio from 25% to 20%, which resulted in more than a billion dollars in property tax savings to businesses over this time. More needs to be done but we have successfully addressed the single biggest impediment to job creation in our state — high uncompetitive property taxes for commercial real estate.

Q: WHERE WILL WE RANK NOW COMPARED TO OTHER STATES?

The corporate income tax rate reduction down to 4.9% will bring us more in line with our Western state competitors (some of whom who do not have a corporate income tax) and give us the fifth lowest rate in the nation. We also are now seeing the fruits of our labor as we have moved from having among the top five worst business property tax burdens in the U.S. to currently 15th and with these changes we expect to move to the middle of the pack by 2016, which is more where we should have been all along.

Q: WON’T THE DECREASE IN BUSINESS PROPERTY TAXES BE SHIFTED TO HOMEOWNERS?

No, this was not the intent of the legislation. In order to address the issue of perceived shifts in taxation to residents, legislators agreed to toggle the “Homeowners Rebate” upward in the future per calculations from the Dept. of Revenue and to help finance this impact to the State General Fund by reforming the Homeowners Rebate for those that illegally take it on multiple homes that are not their primary residence and those homes that are vacant and in foreclosure. In short, those who are most deserving get a bump and those that are abusing the credit get dumped.

Q: WHAT BIG ISSUES ARE ON THE HORIZON FOR COMMERCIAL REAL ESTATE?”

The eventual sunset of the recent sales tax increase will exacerbate a structural budget deficit for our state should it prove politically untenable to cut base spending levels more than they have already. As a result, the spending lobby will be looking to raise almost a billion dollars, especially for K-12 education, at the ballot next year. Initial ideas are to either make permanent the temporary sales tax rate increase; to increase the sales tax to currently exempt goods and services; and/or to institute a new statewide property tax. Because commercial property tax rates are still considerably more than what residents pay, NAIOP-AZ would certainly fight the specific alternative to raise a new statewide property tax. This would erase all the progress we have made the last six years in making our state more competitive for job creation. The proposed expansion of the sales tax base to exempt goods and services would also bear close watching as some proposals may make commercial lease sales subject to state taxation again which would be a hindrance to economic recovery for our industry and in turn for the state.

Q: HOW WOULD YOU SUM UP THE ACCOMPLISHMENTS THIS SESSION?

Hopefully, the measures passed in the recent “Jobs Bill” will give your readers, our members and businesses in general the confidence that Arizona is a great state to locate, invest, and expand.

AZRE Magazine September/October 2011