A joint technical education district (JTED) that largely serves the state’s Native American population in northern Arizona is seeking to raise its property tax rate by 2,500 percent without voter approval, using what some critics say is a loophole in state law.

The Northeast Arizona Technical Institute of Vocational Education, or NATIVE, technical education district hopes to raise the tax rate from the statutorily defined primary property tax levy of $0.05 per $100 of assessed valuation to $1.25 per $100 as a secondary property tax.

At its July 13 meeting, the NATIVE Governing Board determined that, in light of the Legislature’s decision last session to freeze state aid for JTEDs and not provide full student count funding to NATIVE, there would not be enough revenue to meet the district’s $3.5 million budget. In order to receive that much revenue, the board found property taxes in the district would need to be raised to $2.53 per $100; instead the board approved a hike of roughly half that amount.

The district spans part of three counties: Apache, Navajo and Coconino.

NATIVE’s lawyers — Flagstaff law firm Mangum, Wall, Stoops & Warden — sent a letter to the county attorney’s offices in the three counties in late August explaining the district’s rationale in approving the tax increase and asking the three boards of supervisors in the counties to levy the taxes.

Essentially, NATIVE says in the letter it not only has the power under ARS § 15-393(F), through the county boards of supervisors, to levy the current $0.05 per $100 of assessed valuation tax rate — the tax that all JTEDs are afforded for funding — but that ARS § 15-992 allows for an additional secondary tax rate to provide additional revenue to meet the district’s approved budget.

ARS § 15-992, enacted in 1981, says in part: “The board of supervisors of each county shall annually…levy school district taxes on the property in any school district in which additional amounts are required…”

Although the taxing authority of JTEDs was not established by the Legislature until 1990, NATIVE’s lawyers said in their letter that, according to the Rules of Statutory Construction, since the more specific JTED statute governs over the more general statute in ARS § 15-992 and the more recently enacted statute governs over prior acts, the secondary property tax can be levied for the support of a JTED.

In an e-mail to a state Department of Education finance official, Navajo County Deputy County Attorney Lance Payette wrote that the three county attorneys’ offices do not believe the county school superintendents or the boards of supervisors have the authority to question the “underlying legalities of a budget adopted by another taxing jurisdiction such as a JTED.” Therefore, the attorneys for the counties agreed they would recommend the school superintendents and boards of supervisors levy the taxes sought by NATIVE, with the understanding they are merely performing the ministerial duties as required by law, and any defense of the rate would fall on the district.

2 Counties OK’d Tax Rate

Navajo County approved the tax rate in a special meeting Aug. 29; Apache County approved it during its Aug. 30 meeting. It is unclear if Coconino County will be required to approve the tax rate, since only one school district — Tuba City School District — is a member of NATIVE.

Dean Pickett, one of the lawyers for NATIVE, said the firm is preparing a formal legal opinion on the issue that will be submitted to the attorney general for review. He said there was no timeline for submitting the opinion to the AG.

Department Of Education Stand: Local Issue

The Department of Education took no stand on the issue in an Aug. 19 memo sent to all JTED superintendents. The department determined “this is a local issue that must be addressed” with county school superintendents and attorneys offices.

A finance official from the department did not return a call for comment.

Rep. Mark Anderson, R-18, said NATIVE is “entitled to give it a shot,” but is arguing over nothing more than a technicality they have interpreted differently than was intended.

“My reading of it is the common sense, legislative intent position, that they wouldn’t be able to [raise taxes],” he said. “But, there’s technicalities and people can interpret statute different ways.”

Mr. Anderson says the drastic hike in the tax rate is unfair to voters who approved the district’s creation on the belief that the cost to them would be minimal.

“When the voters voted for it, it said a nickel tax,” he said. “If somebody had wanted them to have an unlimited access to the tax base, they should have written that.”

If a judge or the attorney general rules in NATIVE’s favor, Mr. Anderson said the Legislature will work to close the loophole next session.

Meeting Is Sept. 8

He is co-chair of the Task Force on Joint Technological Education Districts and said the committee will discuss the tax rate issue at its Sept. 8 meeting. —