The Payson Town Council raised its property tax rate last week, but paradoxically most homeowners will see their tax bills go down.
The council overruled the objections of the single citizen to speak at the public hearing and boosted the primary property tax rate to the legal limit.
However, a drop in the secondary tax rate as a result of the expiration of several bonds will result in a net decrease for most homeowners — about $1 on a $200,000 home.
Payson gets just 5 percent of its budget from property taxes. By contrast, sales taxes provide almost 60 percent of the town’s revenue.
Last week’s action means the council could in July set the primary tax rate at up to .2560 per $100 of assessed evaluation. The council could also settle on a final number that was less than that maximum.
However, Joe Pickens appealed to the council to not raise the rate and contribute even a little bit to very high local property tax rates, thanks to much larger levies by the schools, county, various public improvement districts and a community college district.
Pickens was one of just five people who showed up for the special meeting on taxes and budget.
Pickens said he pays about $2,400 a year on his property off Mud Springs Road, although he has no water or sewer service.
“I get very minimal public support from your city’s budget,” said Pickens.
“The assessed value of my property is going to go up and up and up (as the economy recovers). When that assessed value goes up in the future years, that revenue will go up and it’s going to cause my taxes to go up in the future.”
“What portion of your (property tax) bill goes to Payson?” asked Payson Mayor Kenny Evans.
“For mine, it’s $33 and change. But the total bill is about $200 a month — which is triple what I paid for a similar home in Scottsdale. This is the highest tax I’ve ever paid and I’ve lived in a lot of places.”
“But my point is that $33 is a pretty small share of $2,400,” said Evans.
The increased primary tax rate will bring in an extra $75,000, a sliver of the $20 million in revenues the town anticipates — not counting grants and bonds.
Town Finance Director Cindy Smith recommended the increase in part to compensate for a rare decrease in the town’s assessed value.
The town’s net assessed value dropped from $240 million for the current budget year to $236 million for the budget year that starts in July. New construction boosted the assessed value by just $1.6 million, compared to $11.4 million last year and $8.6 million the year before.
Councilor Ed Blair noted that if the assessed values do start to shoot up, the town can lower the rate so that the tax produces a consistent amount of revenue. “Really, it’s the county board of supervisors that’s driving it,” he added.
The county’s property tax rate is about 16 times Payson’s, which doesn’t provide fire protection. Most of the fire protection districts impose their own property tax rate that is about 10 times as high as Payson’s.
Payson relies heavily on sales tax revenue.
Gila County hasn’t yet set its property tax rate for next year. However, in previous meetings the members of the board of supervisors have generally attributed the region’s high property tax rate to the large number of special districts to provide things like water, fire and sewer systems.
Last year, Payson’s assessed value rose by about 10 percent, and the council cut the primary tax rate by about 12 percent.
In the end, the council voted unanimously to boost the primary property tax rate to the maximum and reduce the secondary tax rate enough to more than offset that increase.