Dire Rates

Pima County's Proposed Tax Increase Will Hit Business -- And Some Homeowners -- Hard.

THE ODDS HAVE shifted in the game the Board of Supervisors is playing with taxpayers. Like the House, Pima County government eventually wins. And wins it all.

Supervisors who delayed hearings on the county's record $801 million budget until July 6 -- five days into the new fiscal year -- are flirting with a 15 percent property tax increase that they hope not many voters will notice when tax bills arrive just after Labor Day.

But the secrets of this game are getting out. The majority of homeowners in Pima County, those within the Tucson Unified School District, would not feel the impact of the county's property tax increase.

That break comes from a combination of state laws, including constitutional amendments spawned after Howard Jarvis' California tax revolt, that limit the net combined primary property tax rates for homeowners to $10 per $100 of assessed valuation. Primary taxes fund the daily operations of governments and schools. The combined primary tax rate for homeowners, including taxes for TUSD, the county, City of Tucson or South Tucson, the state, and Pima Community College, already adds up to more than $10, but is capped. The difference is made up by the state.

Only homeowners get such a break. Business owners will face the full force of the tax rate increases proposed by the county and adopted by Pima Community College.

Supervisors are desperate for money and are groping at ways to erase a $50 million deficit built by the unabated losses at Kino Community Hospital. The county's health system lost a wild $14 million in the last 12 months.

And after failing to get Republican Ray Carroll to provide his part of the required unanimous vote for a first-ever county sales tax, the Board of Supervisors was hoping to bury the tax increase under the state law that helps homeowners in high-tax districts.

The projected increase in the county's primary property tax is 57 cents per $100, bringing the rate to $4.25. Supervisors have toyed with the concept of forcing even bigger bucks out of the state by jacking up property taxes by as much as $1.60 per $100.

"They are thinking that this is an increase that they can apply to business and that it really doesn't hurt," says Chuck Josephson, owner of Print Well print shop at 2310 E. Broadway.

Not just in higher taxes for people like Josephson, who paid $5,131 this year in property taxes for his business and will pay more through a combined tax rate of $17.78 per $100 of assessed value, but in a damaged economy.

Josephson, the president of the conservative Pima County Republican Club, says the increase will set back attempts for business retention, expansion and recruitment.

"This hurts everybody," Josephson says. "It all gets passed on to consumers or in lower wages."

The consolation is not great for business operators like Josephson who live within TUSD and whose home property taxes will be spared the increase, if only because of the tax law.

Part of the problem is the mystery. Who knows what big-spending TUSD is doing? Superintendent George F. Garcia and his top budget man, Robert O'Toole, coaxed four Board members with no difficulty into approving the proposed budget and tax notice late last month by giving assurances that the tax rate would decrease. Rosalie Lopez dissented. The four supporters admitted they had not yet reviewed the budget and increased spending they voted to approve.

Three days later, TUSD put out contradictory, and in some cases, false information in required newspaper ads about its tax rates and their impact on homeowners.

The ads -- on separate pages of The Arizona Daily Star sports section on June 25 -- claimed the bill for the owner of a $80,000 home would rise by $10 even though, as shown in another legal notice on another page, the TUSD tax rate was declining.

Josephson knows not to rush out and praise TUSD bureaucrats. The proposed tax cut will mean nothing to homeowners. Even with it, the combined primary rate still exceeds $10 per $100. And TUSD spending is increasing from $330 million to $370 million. Josephson's home tax bill this year is $1,509.

Down south, the county's tax gambit gets more painful. Politically powerful homeowners in the retirement hamlet of Green Valley will see the full effect of the county's tax increase because tax rates in the Continental Elementary School District are so low that the $10 cap is far out of reach.

And in the Sahuarita School District homeowners and businesses got more bad news. A $19 million reduction in the property valuations for big mining operations, Cypress Sierrita and Asarco Mission, have school officials scrambling to make up the difference, which is more than 20 percent of the value of all property in the Sahuarita district. Homeowners will be hit for the difference. The owner of an $80,000 home, for example, will pay $124 more in property taxes this year for Sahuarita schools.

Those increases, combined with the increases business owners in TUSD face, only build suspicion that County Administrator Chuck Huckelberry and four supervisors -- Democrats Sharon Bronson, Raul Grijalva and Dan Eckstrom and Republican Mike Boyd -- are trying to make a half-cent sales tax increase more palatable.

"They are offering this as a way to have business say a sales tax is not so bad," Josephson says. "But what they really need to do is cut spending and get their financial house in order."