Your property tax payment was due October 1st. If you haven’t paid yet, you have until November 1st before you start accruing an interest penalty.
Paying your property taxes should be a priority as the late fees are high and you will not receive any notices that you are delinquent or how much you owe.
If you have a mortgage on your home, your mortgage company is collecting your property taxes as part of your monthly mortgage payment. The mortgage company then sends your tax payment to your County Treasurer.
People who live in a rented apartment or home also pay property taxes. Your taxes are included in your rental payment. If your landlord’s taxes go up, the increase will be passed on to you in the form of higher rent.
You should closely review your printed copy of your property tax bill or go online at your county assessor’s website. The bill shows the taxing districts that receive your tax dollars, how much they receive, and the increase from last year. You will probably find some interesting and surprising information on your bill.
For those in Maricopa County, this link explains how to read your tax bill.
Arizona has the most complicated and complex property tax system in the nation. Few people understand it. That is intentional.
The tax formula was created in 1980, allegedly as an Arizona version of California’s famous Proposition 13 that protected property owners by using purchase price as the valuation, limiting valuation increases to 2% per year and capping total taxes at 1% of the property’s value. The Legislature promised a group behind a Citizens Initiative to bring the Prop 13 formula to Arizona that if they dropped their initiative, the Legislature would pass it into law for them, saving the group all that work. The group agreed, stopped their initiative campaign, and the Legislature passed new property tax laws that bear zero resemblance to the tax protections of Prop 13. It remains in place 41 years later with no sign of it ever being revised. There’s an important lesson in there.
Arizona’s convoluted tax system is described as a “Share of the Pie” system. The taxing districts decide how much money they want, they calculate a tax rate by dividing how much money they want by the total value of property in their district, then apply the tax rate to the value of your property. That’s how they calculate your “share of the pie”. It is all relative. If your value stays the same but other people’s valuations go down, you end up paying higher taxes. Your share goes up, their share goes down. Even if everyone’s property value was cut in half, the taxing districts would not collect a dollar less than what they wanted.
Property valuations are random and arbitrary and have no relationship to what someone might actually pay for your particular home.
Proposition 117, a 2012 ballot referendum that limits your valuation increase to 5% per year, did nothing to limit your annual property tax bill increases or make the system better. Prop 117 just pretends to offer property tax relief or reform. It lacks any restraint on tax rate increases so does nothing to curb how much money taxing districts can collect from you. It still allows the addition of new taxing districts, more debt, and higher tax overrides to your bill.
You may be wondering why such a dismal property tax system remains in place.
Well, it serves the taxing districts, politicians and lobbyists very well and does nothing for the property owner.
Politicians can grant favors to businesses or constituents with special property tax exemptions that eliminate or reduce their property taxes for a period of time. When they do this, the taxing districts still collect their desired tax revenue – everyone not given a special break simply pays more. Our property tax system is perfect for politicians.
Taxing districts like the system because no matter how bad the economy may be, how low property valuations may go, how many exemptions and special favors politicians my dole out, they still get all their desired tax revenue.
Our property tax system is a full employment act for lobbyists. Lobbyists can represent both clients who want their taxes lowered and also clients who want more tax revenue for their cause. With a complex system, you need a special lobbyist to help you get what you want.
Sorely needed property tax reform is not forthcoming because of the efforts of organizations like Arizona Tax Research Association (ATRA) and NAIOP, commercial real estate development association, who benefit from the current system and hold great sway over legislators and other elected officials.
The Legislature put Proposition 117 on the ballot at the behest of and with strong endorsements from ATRA and NAIOP.
ATRA will have even more power over the Legislature with the recent hiring of Sean McCarthy, son of ATRA President Kevin McCarthy, becoming a new member of the House Majority Staff, as recently announced by House Speaker Rusty Bowers.
It is up to us to take action and demand a new property tax system that puts homeowners first, not lobbyists, special interests, or politicians.
Everyone should be able to understand how the system works. It should be based on the most accurate valuation possible, the purchase price of a property, and limit valuation increases going forward, along with limits on taxation. Property tax bills should be predictable with no unaffordable surprises like we have now. Property owners should be able to plan and budget for their tax obligations.
Every taxpayer needs to start now and contact your State Senator HERE and your State Representatives HERE to demand action on property tax reform.
We don’t donate as much to candidate political campaigns as the well funded lobbyists, but we each have a vote on Election Day and we far outnumber the total votes cast by the lobbyists. But first we need to let our Legislators know what we want so they can take action during the next Legislative Session and earn our votes in the next election.