ARIZONA HOUSE OF REPRESENTATIVES Fifty-fourth Legislature Second Regular Session
	Senate: FIN DP 10-0-0-0 | 3^rd Read: 25-5-0-0 House: WM DP 10-0-0-0

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SCR 1043: constitutional property tax exemptions

Sponsor:  Senator Mesnard, LD 17

Caucus & COW

Overview

Amends the Arizona Constitution, subject to voter approval, to repeal sections relating to property tax exemptions and replaces the sections with a consolidated property tax exemption section.

History

The property of Arizona residents who are widows, widowers, persons with disabilities or honorably discharged veterans with a service or nonservice-connected disability, is exempt from taxation to the extent allowed by the Constitution of Arizona and subject to the conditions and limitations prescribed by statute (A.R.S. § 42-11111).

In Benjamin v. Arizona Department of Revenue, 163 Ariz. 182 (App. 1989), the Arizona Court of Appeals held that the veteran’s property tax exemption was unconstitutional because it imposed an Arizona residency requirement that violated the 14th Amendment to the U.S. Constitution.

According to the Joint Legislative Budget Committee (JLBC) fiscal note, the impact of S.C.R. 1043 and its companion S.B. 1575 cannot be determined due to data constraints. S.C.R. 1043 and S.B. 1575 could increase the state's Basic State Aid cost for K-12 schools and reduce the cost of the Homeowner's Rebate program but may have offsetting savings under the automatic school tax rate adjustments provided by under the state’s Truth-in-Taxation provisions (JLBC fiscal note).

Provisions

1. Repeals Article IX Sections 2, 2.1, 2.2 and 2.3 of the Arizona Constitution. (Sec. 1)

2. Property that has been conveyed to evade taxation is not exempt. (Sec. 2)

3. Replaces Sections 2, 2.1 2.2 and 2.3 with a consolidated section 2, Property subject to taxation: Exemptions, that states the following:

a) Exempts all federal, state, county and municipal property;

b) Public debts evidenced by bonds of this state and its counties; municipalities and political subdivisions;

c) Household goods that are owned by the user of the goods solely for noncommercial purposes;

d) Stocks of raw or finished materials, unassembled parts, works in process or finished products constituting the inventory of a retailer or wholesaler that is located in this state and principally engaged in resale. (Sec. 2)

4. States that the exemptions in this section are self-executing and no action needs to be taken. (Sec. 2)

5. Allows the legislature to exempt the following:

a) Property of an educational, charitable or religious association or institution that is not used or held for profit;

b) Personal property that is used in a trade or business or for agricultural purposes;

c) Cemeteries that are set apart and used to inter deceased human beings;

d) The property of a widow or widower who is an Arizona resident;

e) Property of an Arizona resident who is at least 18 years-old and has a medically certified total and permanent disability;

f) The property of an honorably discharged veteran who is an Arizona resident with a service or non-service-related disability as determined by the United States Department of Veterans Affairs. (Sec. 2)

6. Allows the legislature to determine, by law, exemptions and amounts for exemptions in section E of this section (Provision 5 of this fact sheet). (Sec. 2)

7. Limits a person's eligibility to one category for exemptions pertaining to a widow, widower, person with a disability or veteran with a disability. (Sec. 2)

8. Requires the Secretary of State to submit this proposition to the voters at the next general election as provided by article XXI, Constitution of Arizona. (Sec. 2)

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                        SCR 1043

Initials: VP/BG Page 0 Caucus & COW

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