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Prop. 116, business property tax measure, loses by double digits

Prop. 116, business property tax measure, loses by double digitsDespite facing virtually no opposition, Proposition 116, an initiative to dramatically lower the property taxes that Arizona businesses pay on equipment, was rejected by voters.

Voters said no to the initiative to raise the exemption for Arizona’s business personal property tax, 44 percent to 56 percent.

Prop. 116’s defeat was surprising, considering its widespread support and lack of opposition. The Legislature referred the initiative to the ballot on a unanimous vote, no campaign committee formed against it and not a single opposition argument was submitted to the Secretary of State’s Office.

The initiative, a longtime priority for the Arizona chapter of the National Federation of Independent Business, would have exempted up to $2.4 million of a company’s business personal property from Arizona’s property taxes. The amount of the exemption is pegged to the annual average earnings of 50 employees.

The current exemption is about $68,000.

Farrell Quinlan, the director of NFIB’s Arizona chapter, said the campaign didn’t raise the money it needed to make its case to voters because supporters believed Prop. 116 was headed to an easy victory.

The Vote Yes on 116 committee only raised about $57,000.

But the language of the initiative was confusing, Quinlan said, and since the campaign didn’t have the money to get its message out and explain it, many opted to simply vote against a ballot measure they didn’t understand.

“It was a challenge to raise money for the campaign because everyone believed that it was so self-evident that this was a good proposal that of course it was going to pass,” Quinlan said. “We didn’t have a big enough megaphone to get voters to feel comfortable voting yes.”

Quinlan said it’s too early to say whether NFIB will push to get a business personal property tax cut on the ballot again. But he said he’ll continue the fight and compared the measure to a long-running attempt for an initiative allowing swaps of state land around military installations, which voters approved after rejecting it seven times in the past.

“It may take a couple of attempts,” Quinlan said. “We got the policy right and the politics is lagging. We’ll look to see if we can move this forward in other ways or come back with another proposition in the future.”

Because the business personal property tax exemption is enshrined in the Arizona Constitution, changes to the law must be approved by voters.

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