Many Rim Country residents this year were bewildered by property tax notices showing increased home values despite the drunk housing market’s hangover.
“It doesn’t make sense how in a market that is, I believe, down in Payson, can show such a huge amount of increase,” said Payson homeowner Carl Curtis.
The value of Curtis’ home increased by nearly 40 percent this year, which left him to pay an extra $329 in property taxes.
“I’ll pay my taxes,” Curtis said. “I just think there’s a problem with the system.”
Payson resident John Shevlin’s property values increased 25 percent from 2007 to 2008.
“I am outraged,” he said. “My income hasn’t gone up 10 percent every year.”
Officials say home values are derived from a state-set property tax formula that examines how much houses sold for two years before the current tax year.
For instance, this year’s home values were assessed by analyzing sales from 2005 and the first half of 2006.
“That’s the way the legislature set that up,” said Gila County Chief Appraiser Larry Huffer. “There is a lag time.”
The homeowners interviewed for this article understood the formula — they just didn’t agree with it.
“Any major trend that is radical, the assessor’s office should have some sort of mechanism to make adjustments to be fair to the taxpayer,” Curtis said.
Shevlin added, “With money being so tight with so many people, it’s vital that they get relief now instead of a one- or two-year lag.” He suggested a proposition like the one passed in California that limits the amount home values can increase at tax time, as long as the owner doesn’t sell.
The real estate market peaked in frenzy during 2005, according to previous reports. This year’s tax bills were based on a 13-percent increase in the county’s total assessed value, compared to roughly 10 percent the previous year.
In Arizona, the total amount of property taxes collected to fund the county, community colleges and towns are limited to a 2 percent annual increase, plus new construction.
The county reduced its tax rate this year, but many homeowners saw increased tax bills because of rising property values. Less than half of the taxing districts are limited to the 2 percent increase, while 57 percent are not.
Next year’s property values will increase in some areas and decrease in others, Huffer said. Curtis’ property values will decrease by a half-percent, while Shevlin’s will increase another 3 percent.
The lag time in Arizona’s formula means homeowners could eventually see declining property values in their tax bills.
While good news for taxpayers, less money could potentially impact county services.
Supervisor Tommie Martin said property taxes only supply roughly one-third of the county’s budget.
If the county should experience a loss in property tax revenue, Martin said she is looking at cost-saving measures, including the possibility of not bailing out the state in future years. This year, Gila County paid the state $725,000, because the state, by all accounts, is broke.
“We will pay this year’s. We aren’t going to quarrel with that,” Martin said. “But do we have to pay it? I don’t know that anybody has asked that.”
In fact, the federal government may have set precedent by ignoring a $501 million bill that the state has repeatedly sent it for incarcerating illegal aliens who broke state laws, according to the governor’s office.
Bailing the state out encourages fiscal mismanagement, Martin said.
Besides potentially ignoring the state’s cup jangling, Martin urges streamlining.
“Everybody is going to have to go through (his) own shop,” she said. “We absolutely have to have that conversation.”
But homeowners grappling with increased property tax bills amidst economic calamity wish they could do some streamlining, too — with their tax bills.
“All of a sudden my house value is going up without my being able to do a darn thing about it,” Shevlin said. “It’s an indirect cost that I have no control over.”
Curtis agreed. “It’s just common sense. People saying, ‘What’s going on?’”