Pima County will recoup some legal fees and can rest easy that the state will not appeal a Maricopa County Superior Court judge’s May ruling that freed the county of a nearly $16 million liability.
Those are some of the terms of a settlement recently reached between the state and county, ending a legal battle over how to handle situations in which homeowners are assessed primary property taxes that exceed 1 percent of their property’s value. The settlement was approved by the defendants this week and will be considered by the Board of Supervisors at its regular meeting Monday.
Pima County will be reimbursed roughly $53,000 in attorneys’ fees it paid Arizona when the case was reviewed by the Arizona Supreme Court. Both parties will cover their own attorneys’ fees accrued during the lawsuit. Pima County will withdraw an application to recoup roughly $164,000 in such costs, county lobbyist Michael Racy said of the agreement.
At the center of the lawsuit, brought by the county last summer, was a piece of 2015 state legislation that shifted much of the responsibility from the state to local jurisdictions for covering payments to taxing districts when their taxpayers’ bills exceed the voter-approved 1 percent cap.
Previously, the state covered all of the costs, but Senate Bill 1476 capped Arizona’s annual contribution at $1 million per county. The Property Tax Oversight Commission, the defendant in the case and the state body tasked with divvying up responsibility for covering 1 percent costs among local jurisdictions, decided this past spring that Pima county was on the hook for all of a nearly $16 million bill, most of it due to the Tucson Unified School District.
Supervisors approved a tax hike last year and was considering another this year to cover those costs. Instead, after the May ruling, the supervisors approved a budget in July that cut primary property taxes.
Racy said it was possible similar legislation could be proposed during the next legislative cycle, but that he would “surprised if it took the same format as SB 1476,” adding that a coalition of counties, school districts, community colleges has come together to oppose such efforts.
“We are confident the coalition is strong enough to dissuade future legislatures from attempting to transfer educational costs from the state to other taxing jurisdictions,” reads an Aug. 8 recent memo from County Administrator Chuck Huckelberry on the settlement.
Jennifer Stielow, with the Arizona Tax Research Association, suggested that a better legislative approach to the issue is to address the underlying issues that push tax rates in school districts and other taxing bodies higher, such as desegregation in TUSD.
