What is the state equalization property tax rate (formerly known as the county equalization assistance for education tax rate)?

This tax was enacted in 1981 at a rate of $0.50 per $100 of assessed value.  It was called the county equalization assistance for education tax rate at that time.  The board of supervisors in each county is required to levy the tax each year and it is the responsibility of the county treasurer to apportion the monies to the school districts within the county as provided by law.  It is important to note that under the school funding formula, a decrease in the county education rate does not decrease the amount of funds a school district will receive.  If a school district still requires funding after raising revenues through the qualifying tax rate and county equalization for education rate, the Legislature appropriates the remaining amount needed through basic state aid (hence, the General Fund picks up the cost of the loss of tax revenue).

In 1990, the rate was increased to $0.53 per $100 of assessed value.  Since the enactment of the Truth-In-Taxation (TNT) provisions in 1998, the rate has fallen each year to reflect the increases in property valuation.  In addition, the 1998 law changed the name of the county equalization assistance for education tax rate to the state equalization property tax rate. 

For tax years 2006, 2007 and 2008, the state equalization assistance property tax rate is set at zero. This means the General Fund will pick up the cost of the lost tax revenue for each of these three tax years.  In the 2006 tax year, the cost to the General Fund was $215.2 million.

Without further legislation, the state equalization property tax rate will be determined under the TNT statutes for tax year 2009 and beyond.  The rate will be calculated based on the truth in taxation adjusted rate from the 2005 tax year.

Why should we care if the state equalization property tax rate is permanently repealed?

All of us know that education funding in Arizona is grossly inadequate.  In December of 2008 the State of Arizona is facing a budget deficit of over $1.2 billion.  Since the state equalization property tax rate was set at zero for the 2006, 2007 and 2008 tax years, the state has lost the following in tax revenue collections for this tax: $215.2 million in 2006, approximately $230 million in 2007, and an estimated loss of $250 million in tax year 2008.  If this tax had not been repealed for these three tax years, we would have that much more to bargain with the Legislature when it comes to increased education funding.  This directly affects our member’s take home pay and the services we offer to our students.

What's next on this issue?

Senator Jim Waring has introduced a bill in the Senate and Representative Biggs in the House to permanently repeal the state equalization tax rate, despite havaing to cut over $350 million dollars from public education the second week of the session and facing at $3 billion dollar deficit in FY 2010.

Send your legislators a message on this issue.