ARIZONA HOUSE OF REPRESENTATIVES Fifty-fifth Legislature First Regular Session
	Sente: FIN DPA 8-2-0-0 | 3^rd Read 16-14-0-0

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SB 1260: property tax exemptions; statutory conformity

Sponsor:  Senator Mesnard, LD 17

Committee on Ways & Means

Overview

Conditional on the voter approval of S.C.R. 1019, exempts, from property tax, the property of veterans with service or nonservice-connected disabilities who are Arizona residents.

History

The properties of Arizona residents who are widows, widowers or persons with disabilities are exempt from taxation to the extent allowed by the Constitution of Arizona and subject to the conditions and limitations prescribed by statute. Exemptions from property taxation for widows, widowers and persons with disabilities are allowed in statute at the amount of $3,000 if the person's total assessment does not exceed $20,000 — no exemption is awarded if the assessment exceeds $20,000. The Arizona Department of Revenue calculates changes in the exemption and household income limitations based on the average annual increase, if any, in the gross domestic product price deflator, in the two most recent complete state fiscal years using data provided by the U.S. Department of Commerce (A.R.S. § 42-11111).

The property of certain qualifying Arizona veterans was previously also exempted from taxation under the Constitution of Arizona, but in Benjamin v. Arizona Department of Revenue, (163 Ariz. 182 (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. Further, the court concluded that the residency requirement for veterans was integral in purpose to the provision exempting them from property taxes and thus could not be severed. Thereafter, the exemption for military veterans was deemed unenforceable and of no effect.

The Legislature may exempt up to $50,000 of the full cash value of personal property used for agriculture purposes or in trade or business (Ariz. Const. art. 9, § 2). The Legislature has codified an exemption for personal property used for agriculture purposes or in trade or business, which is adjusted for inflation and is currently valued at  $195,878 in tax year 2021 (A.R.S. § 42-11127).

Provisions

1. Exempts the property of a veteran with a service or nonservice-connected disability who is an Arizona resident from property tax, in the following amounts:

a) $4,117, if the person's total assessment does not exceed $27,970; or

b) No exemption if the person's total assessment exceeds $27,498. (Sec. 2)

2. Limits the $4,117 property tax exemption for a veteran with a service or nonservice-connected disability who is an Arizona resident, by multiplying the total exemption amount by the percentage of the veteran's disability, as rated by the U.S. Department of Veterans Affairs. (Sec. 2)

3. Updates, to reflect the present-day amounts, the household income limits:

a) From $25,000 to $34,301 if no children under 18 years of age reside with the claimant; or

b) From $50,000 to $41,151 if one or more children under 18 years of age — or a claimant's child who has a total and permanent physical or mental disability — resides with the claimant. (Sec. 2)

4. Requires a veteran with a service or nonservice-connected disability who is an Arizona resident to initially establish eligibility for the property tax exemption by filing an affidavit with the county assessor. (Sec. 2)

5. Increases, to conform with the inflation index, — from $50,000 to $195,878 — the exemption amount for personal property used in trade, business or for agricultural purposes. (Sec. 3)

6. Defines veteran. (Sec. 2) 

7. Conditions the enactment of this legislation on the Constitution of Arizona being amended as prescribed in S.C.R. 1019, Fifty-fifth Legislature, First Regular Session, by a vote of the people at the next general election. (Sec. 6)

8. Contains technical changes. (Sec. 2, 3)

9. Contains conforming changes. (Sec. 1, 2, 3, 4, 5)

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                        SB 1260

Initials VP/NM Page 0 Ways & Means

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