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Vetoed church lease tax bill back again this session

Black cross in grass at sunsetA bill Gov. Jan Brewer vetoed last year giving a property tax break to private property owners who lease space to churches has been introduced again in the new legislative session.

House Bill 2128 is designed to give churches that lease their buildings nearly the same property tax break that churches that own their own buildings receive, said Sen. Debbie Lesko, R-Peoria, who sponsored the bill last year when she was in the House. The idea is that their lease payments will decrease if the property owner is getting a tax break.

Lesko said it’s just not fair some churches must pay full property taxes when those that can buy are exempt from property taxes altogether and with a new governor she was willing to give it another try.

“And this will make it fair, because the church is doing the same type of worship services,” Lesko said Monday. “It will help smaller churches that can’t afford to purchase their property to get similar tax treatment.”

The bill would affect about one half of one percent of commercial property owners, a spokesman from the Maricopa County Assessor’s Office said last year.

The bill would lower the property tax assessment ratio from 18½ to just 1 percent and could cost the state between $300,000 and $2.1 million in fiscal year 2016, last year’s estimate by the Legislature’s analysts said.

Brewer’s veto letter last year said there are too many administrative challenges in accurately classifying rental properties and that the bill would have exacerbated those woes by requiring that the state track the way commercial property is used. She also worried property owners might not pass on the savings and that there was insufficient data to determine the fiscal impact of the tax break.

“Our property tax classification system is one of the most complicated in the nation and continues to be one of Arizona’s thorniest tax policy problems,” Brewer wrote. “Granting piecemeal relief exacerbates inequities and results in additional constituencies seeking similar treatment.”

Lesko disagreed that it would be too difficult to track the tax break and said she still supports the bill.

“There’s all types of tax policy that goes on that the Department of Revenue and county assessors have to evaluate, so this is no different,” she said.

This year’s House sponsor is Rep. Darin Mitchell, R-Litchfield Park. The bill has not yet had a committee hearing.

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