Truth in Taxation notice published; city property taxes to remain a fraction of owners’ total tax bill

Scottsdale is publishing a Truth in Taxation notice, as required by Arizona State law, and is publishing an accompanying notice to inform owners that the city’s property tax rate will decrease next year.

About 11 cents of every dollar in property taxes paid by Scottsdale property owners goes to city government, and the remainder goes to public schools, the county, community colleges and various special taxing districts. The other taxing entities may also be required by law to publish “Truth in Taxation” notices to explain changes in the amount of property taxes they collect.

Scottsdale’s notice also explains that two types of city property taxes affect owners’ tax bills – primary and secondary – and the Truth in Taxation notice deals only with primary property taxes.

The City Council is set for final adoption of the fiscal year 2007-08 budget, in the City Hall Kiva. A legally required public hearing on the proposed property tax levy will be held immediately prior to the final budget adoption.

Under Arizona’s two-tiered property tax system, primary, or “limited,” property taxes pay for government operations. Secondary, or “unlimited,” property taxes pay for voter-approved bonds. The bonds fund construction of public facilities and infrastructure.

The Scottsdale Financial Services staff estimates that the current primary property tax rate of 42 cents will decrease to about 38 cents per $100 of assessed valuation under the proposed 2007-08 budget. The secondary rate is proposed to drop from 55 cents to 41 cents per $100 of assessed valuation in 2007-08.

To simplify the calculation for property owners, Scottsdale officials often refer to a “combined” rate that includes both taxes. The Financial Services Department staff projects the city’s combined rate will decrease from the current 97 cents to 79 cents for fiscal year 2007-08. The owner of a home valued at $100,000, for example, would pay about $79 in city property taxes.

The city’s requirement to publish a Truth in Taxation notice is linked to the total amount of primary property taxes expected next year. Although the city’s primary property tax rate is decreasing, the total amount of taxes the city will collect is expected to increase in 2007-08 because property values are higher and new construction has been added to the property tax rolls.