secondary property tax;
assessed valuations
HB 2250 sets the assessment ratio for all classes of property at 10% of the full cash value for secondary property taxes that voters authorize after December 31, 2002.
HB 2250 passed the Ways and Means Committee. Unamended.
Currently, property in Arizona is divided into different property classes for taxation purposes, with some classes of property having higher assessment ratios than others. These ratios apply to both primary property taxes, which are used to fund the general operations of counties, cities and school districts, and secondary property taxes, which are used to pay for voter-approved bonds. The table below illustrates the property classification system and applicable assessment ratios for both primary and secondary assessments:
Class |
Property Description |
Assessment Ratio |
|
Class 1 Class 2 Class 3 Class 4 Class 5 Class 6 Class 7 Class 8 Class 9 |
Mines, utilities, most commercial Agricultural, golf courses Residential Rental property, care facilities Railroads, flight property Historic, military reuse, enterprise zones Commercial/commercial historic Rental/commercial historic Improvements on government property |
25% 16% 10% 10% formula 5% 25% / 1% 10% / 1% 1% |
|
*Class 7 and 8 have a different assessment ratio for the property and improvements to the property. These classes are historic properties, which have an assessment ratio that is the same for similar properties. However, improvements to these properties are currently assessed at 1% for up to ten years. (This encourages preservation and renovation of historic properties.) After ten years, the assessment ratio is the same for the property and the improvement. |
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Arizona is one of approximately nine states using a property classification system for taxes; other states typically use a single assessment ratio to calculate property taxes, and no other state has two sets of values. HB 2250 removes the classification system for secondary property taxes in Arizona so that all property is assessed at 10%. The single assessment ratio applies to obligations that voters approve after December 31, 2002.
The impact to political subdivisions varies depending on the distribution of the different classes of property in each district. However, this would not affect any existing bonds or overrides that were approved prior to December 31, 2002. In the future, each jurisdiction will have to take into account the variation of their district’s property to determine future impacts.