Property Tax System Irks Homeowners

If ever there was an indicator of a family’s financial distress, it’s when their home’s value declines by 50%, but not their mortgage payment. During the housing crash, many families walked from their homes. Another indicator of personal financial distress is when, as occurred in Gilbert, there is a 10% default rate in property tax payments. Ten percent of homeowners did not, or could not, pay their property taxes.

As this article, Taxation Vexation:Phoenix-Area Home Values Went Down; Property Taxes Stayed Up, explains, homeowners who believed they would see a corresponding lowering of their property taxes got a jolt. Their taxes remained pretty much at the same level.

During the epic housing crash, property values fell by almost 50 percent in Maricopa County. Did property taxes fall a similar amount? Not by a long shot.

As homeowners clung to the idea that lower tax bills would be one small consolation of the bust, schools and cities and fire districts and hundreds of other government entities stared down their own financial crises in the five years from 2008 to 2012.

The difference between a family’s budget crisis and a government’s is that families have no choice but to take a hard look at their budgets, reprioritize, and go line by line cutting non-essentials. Government bureaucrats might make some cuts, but for the most part, their budgets must be "maintained," and that includes school districts, towns, and cities. Their infamous fallback is to lobby for more money from those who don’t have options.

In the case of school districts, they threaten to lay off teachers in order to scare parents into approving taxes. Their motto seems to be: "Teachers and programs are our first priority. When cutting our budget, we cut them first."

School boards, city councils and other government entities, scrambling to avoid the full effects of the property-value crash, wielded their power to raise tax rates to collect more money.

In many — but hardly all — cases, school taxes are the main reason for higher-than-expected bills as districts raised rates to counter the drop in property values. And voters in many districts added to their school taxes by approving overrides — measures that raised extra cash for classroom operations — and construction bonds.

The cost of education: In many school districts, the combined tax rates have gone up nearly every year since the recession began.

And education, by far, accounts for the largest chunk of property-tax bills. Between 2008 and 2012, primary taxes earmarked for elementary, high school and community college accounted for 48 percent of tax bills, according to state treasurer records.

Add in voter-approved bonding issues and overrides that allow specific school districts to boost per-pupil funding, and education costs were responsible for, on average, 73 percent of a property-tax bill in 2012,according to The Republic’s analysis. In 2012, some voters reached their limits. Nearly half the bond and override measures in 28 districts failed in November.

Senior citizens are the most negatively affected, because they are on fixed incomes. Their expenses, however, are not fixed. They keep going up. Some elderly people simply cannot pay their property taxes. Should they sell a home they’ve spent 30 years paying for? The evil of property taxes is that you never, ever own your home.

School districts all across Arizona are sending property tax overides and tax bonds to the voters. Tell them to analyze and solve their budget crisis the same way you do: Take a hard look at your budget, reprioritize, and go line by line cutting non-essentials.