A Maricopa County Superior Court judge has sided with Pima County in a lawsuit over an effort by the state to shift more of an education tax burden onto taxpayers here.
Pima County’s lawsuit, filed last summer, claims a state budget change last year unconstitutionally forces millions of dollars in education spending that had previously been handled by the state onto Pima County taxpayers.
Before Monday’s ruling, Pima County was facing a $7.4 million bill, almost all of which was due to the Tucson Unified School District. That’s a result of a 2015 state law that changed the way Arizona handles situations in which homeowners are assessed property taxes that exceed 1 percent of their property’s full cash value.
County Administrator Chuck Huckelberry included a 10-cent primary property tax hike in the coming fiscal year’s proposed budget to help cover the additional cost. However, he told the Arizona Daily Star on Tuesday the increase may no longer be necessary with the ruling.
In the ruling, Judge Christopher Whitten said the Legislature unconstitutionally gave a state commission the power to determine which jurisdictions are liable when homeowners’ tax bills exceed the 1 percent threshold.
“The power and responsibility to tax is vested in the Arizona Legislature and may not be delegated by it,” he wrote of the responsibilities given to the Property Tax Oversight Commission.
The county had set aside $8.4 million in last year’s budget for payments to TUSD, expecting that the commission would split the $15.8 million bill among Tucson, Pima Community College and TUSD. However, the commission decided in March that Pima County would bear all of the costs.
As a result of the commission’s decision, “77 percent of the parcels in Pima County, the majority of which are located outside TUSD boundaries, will pay this additional property tax to TUSD,” according to a memo written by Huckelberry a month before Whitten’s decision.
Since 1980, when Arizona voters approved the 1 percent primary property tax cap, the state had provided tax credits to property owners to compensate them for school district tax bills that pushed total property tax burdens over the cap, according to several memos written by Huckelberry.
However, Senate Bill 1476, which passed during last year’s legislative session, capped the amount of so-called Additional State Aid to Education that the state would provide to each county at $1 million and gave the oversight commission the power to determine how to apportion the remainder to local jurisdictions.
It was in response to that legislation that Pima County sued the state.
With the legal win, Huckelberry said, the method of dealing with overtaxed property owners reverts to the previous system, at least for the foreseeable future.
“If it hadn’t gone our way, then we’d be recommending the tax increase, knowing that obviously both parties can appeal,” Huckelberry said of the ruling. “Now that we at least (know) in Superior Court that we won, we’re inclined to simply assume that we’re not going to be liable for that payment this year.”
Whitten’s ruling says the defendants have until May 27 to object to it, and that a signed judgment will be provided by June 30.
A spokeswoman with the Arizona Attorney General’s Office and a staffer for Gov. Doug Ducey said the ruling was still being reviewed and that no decision about an appeal had been made.
Huckelberry said the county intends to file a request to recoup attorney’s fees accrued at the Arizona Supreme Court, where the suit was originally filed, and with Maricopa County Superior Court.
