Brewer vetoes bill that would have given landowners who rent to churches a property tax break

2014-04-23T00:00:00Z Brewer vetoes bill that would have given landowners who rent to churches a property tax breakBy Howard Fischer Capitol Media Services Arizona Daily Star

PHOENIX — Landowners who lease buildings to churches will not be getting a property tax break.

Gov. Jan Brewer vetoed legislation Tuesday that would have given favorable tax treatment to property leased to religious institutions for worship.

Current law says property used or held primarily for worship is exempt from all property taxes if it is not used or held for profit. Proponents of HB 2281 said that helps congregations rich enough to afford their own facilities.

But congregations that lack the finances to own their facilities are stuck leasing. And that property is now classified as commercial and taxed based on an assessed value at 19.5 percent of its market value.

HB 2281 would have reduced the assessment ratio to just 1 percent, and there would be no tax if the property leased to a religious institution were owned by a charity.

Opponents pointed out that, for most levels of government, property taxes are a zero-sum game.

A city or county first decides how much it needs to raise. Then it divides that into the total assessed valuation of the city or county to come up with a tax rate.

If some property is exempt from taxes, that lowers the overall assessed value of the city or county, which means the tax rate has to be higher to raise the needed funds.

Brewer acknowledged those concerns in her veto.

“There is insufficient data to determine the size of the tax shift to homeowners and businesses that would have occurred as the result of this legislation,” she wrote in her veto.

The governor also had concerns concerning the implementation of the proposed law. She said HB 2281 would have required assessors to constantly track how each piece of commercial property was being used.

Rep. Debbie Lesko, R-Peoria, who sponsored the legislation, said it was crafted carefully so as not to be a financial benefit to property owners.

Lesko said it required any tax savings to be passed on to the church in the form of lower rent.

Brewer was unconvinced.

“Since lease rates are based on market dynamics, there is no guarantee that property owners will pass this benefit on to their tenants, despite a provision in the bill that attempts to accomplish this,” the governor wrote.

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