Frequently Asked Questions
What is the purpose of the election?
The Town is requesting voter approval to levy a primary (ad valorem) property tax not to exceed $7,000,000.00 for the purposes permitted by applicable law. If such amount is approved by the voters, it will be the base for determining levy limitations for the Town for subsequent fiscal years.
When is the deadline to register to vote for the property tax election?
The deadline to register to vote in an upcoming election is midnight on the 29th day before the election. Close of registration for the May 15, 2018, election is April 16, 2018.
How/Where can I register to vote for the election?
The Town does not handle voter registration. Please visit the Maricopa County Recorder’s Office for more information at https://recorder.maricopa.gov/.
What are primary and secondary property taxes?
Primary property taxes fund the maintenance and operation budgets for local governments. The Town does not currently have a primary property tax. A Yes vote would create a primary property tax. Secondary property taxes pay for bond issues, budget overrides, and special districts and these tax rates are separate from the primary property tax rates. Your Fountain Hills tax bill shows a listing of separate state, county, and local entities who collect a primary and/or secondary property tax.
When would the property tax become effective?
If the election results authorize implementation of the primary property tax, Maricopa County shall be notified that the Town will be levying a property tax in the fiscal year following the election. Therefore, the tax would be effective for fiscal year 2018-2019 (tax year 2018) with the first payments due October 1, 2018.
How are primary property taxes collected?
Primary property taxes for Fountain Hills are billed and collected in the same manner as current property taxes are collected by the Maricopa County Treasurer’s office. Any property tax due to the Town would not change any of the Maricopa County Treasurer’s current processes, and would be collected with the annual bill mailed out by the Treasurer’s office.
When is the tax paid/due?
Based on the Maricopa County Treasurer’s current procedures, property tax is due in two (2) halves. The first half is due on October 1 of the tax year. The second half is due on March 1 of the subsequent year. This process will remain consistent whether the voters approve a primary tax or not.
If voters approve the primary property tax ballot question, is there an end date set?
If the election results authorize implementation of the primary property tax, the amount proposed to be raised in the first year will be used as a base for determining levy limitations for the Town in subsequent years. No end date is included in the election initiative.
How does Fountain Hills compare to other Arizona communities?
The majority of full service municipalities in the Phoenix area and elsewhere in the state have a primary property tax. Scottsdale, Chandler, Tempe, Queen Creek, Phoenix, Glendale, Peoria, Avondale, Goodyear, Surprise, El Mirage, Buckeye, Tolleson, and others utilize a primary property tax to help fund municipal services. The full service municipalities without a primary property tax have other significant revenue sources that are unique to their city/town and are able to generate sufficient revenues without the need for a primary property tax.
Why is a Town of Fountain Hills primary property tax needed?
Our local government needs a sustainable source of revenue in order to maintain levels of service in Fountain Hills. This property tax is one-step towards that goal. Funds will help to provide a reliable source of revenue for street improvements, as well as investing in public safety, environmental issues, and other Town services.
What specific financial challenges are being addressed by this ballot question?
A primary property tax will help to alleviate many of the financial challenges facing Fountain Hills including:
An increasing proportion of total expenditures for public safety costs, along with increased costs for maintenance, repair and/or replacement of aging infrastructure (roads, buildings, parks, the Fountain, etc.), resulting in less available funding for other core services;
- dependence upon State shared revenues that are subject to State legislative adjustments, e.g. sweeping of State shared revenue to fund operating expenditures; as well as a decreased share of these monies for Fountain Hills due to increased population of other surrounding communities combined with negligible or decreased population growth in Fountain Hills;
- dependence upon economically volatile local sales tax to fund operational expenditures and capital improvement projects;
- lack of alternate revenue sources sufficient to maintain current service levels;
- other potential state legislation impacting revenues, e.g., unfunded mandates;
- maintaining adequate staffing levels to provide current service levels.
What other financial options have been considered?
The Town Council considered a public safety fee, increasing the sales tax rate, establishing a fire district, as well as other options. After reviewing the options, the Mayor and Council agreed to refer a property tax to the voters to help the Town to address the Town’s financial issues. The Town Council also decided to eliminate the $36 annual environmental fee if the primary property tax ballot question is approved. One additional consideration taken into account by the Council was that property taxes may be deductible on income tax returns, but a fee is not.
Do commercial businesses/property owners pay the same rate as residential/individual homeowners?
While the tax rate is the same for all property types, the calculation for commercial and residential property values is different, resulting in residential properties generally owing and paying less than commercial properties. All properties have a Limited Property Value (LPV) assigned by the Maricopa County Assessor. A percentage of that LPV is then calculated based on rates established by the voters to establish a Net Assessed Limited Property Value. Residential properties are assessed at 10% of the LPV, commercial properties are assessed at 18%, and agricultural property/vacant land is assessed at 15%. These Net Assessed Limited Property Values are then multiplied by the various tax rates.
What has been the Town’s General Fund operating costs per 1,000 residents over the last decade?
For fiscal year 17-18, the operating cost is $0.71 per 1,000 residents. Only Queen Creek has a lower cost at $0.61 while Goodyear and Paradise Valley have a cost of $1.73 and Scottsdale is at $1.22. The Town’s costs for FY12-13 was $0.60 and for FY06-07 it was $0.69
What is the formula to calculate the property tax?
The Limited Property Value (LPV) assigned by the Maricopa County Assessor for a property is multiplied by the assessment rate (also known as Ratio) for the property type. That result is then multiplied by the property tax rate and divided by 100. For example, if your home’s LPV is $300,000, multiply $300,000 by 10% to arrive at the ‘assessed valued’ of $30,000. Multiply $30,000 times the property tax rate of $1.5001 to obtain $45,003. Divide $45,003 by 100 to obtain the tax due of $450.03. A property tax estimating tool is available on the town’s website along with more information.
Who is responsible for paying the property tax? Is it the landlord, the tenant, or the owner?
The owner of any parcel is ultimately responsible for making sure that property taxes are paid.
What happens if I do not pay the property tax?
Interest is assessed by State law for property taxes not paid by the due date. This interest rate is currently set at 16% per annum, prorated monthly. If the taxes are not paid in full within 13 months, an advertising fee of the greater of 5% or $5 will be assessed.
During the 16th month, the County Treasurer’s office offers a tax lien on the property for sale. If the tax lien is not redeemed within three (3) years from the date of sale, the purchaser may initiate foreclosure proceedings. Parcels with prior year delinquent taxes still owing at the end of December become candidates for the Maricopa County’s Back Tax Lien Sale the following February. The Maricopa County Treasurer’s office is responsible for all collection activities. Their website is https://treasurer.maricopa.gov/.
How is the amount of property taxes pro-rated if I do not pay the entire amount due?
Maricopa County does not prorate taxes. If a tax bill is not paid in full, the bill is considered delinquent. Taxpayers have the ability to pay the bill in full when the bill is received in October or pay in two installments (October and March). Additionally, the taxpayers who own homes with a mortgage may have their bank withhold money monthly into escrow to pay the taxes.
Past, Present, and Future
If approved at the election, how much property tax is to be authorized? If approved, will/can it increase in subsequent years?
Initially, $7,000,000 is being referred to voters for consideration. If the voters approve the property tax ballot question, the rate established in the initial year will be used as a basis for future year calculations. The amount of increase (if any) is limited to not more than 2% annually.
What is the history of a primary property tax ballot question in the Town of Fountain Hills?
Since the Town was incorporated, there have been three unsuccessful attempts to introduce a primary property tax levy in Fountain Hills. The elections were held on May 21, 2002, May 21, 2003, and, May 20, 2008.
How has the Town reduced staff over the years in order to stay within its budget?
In FY 2001-2002, the number of Full-Time Equivalent (FTE) employees was 115. That number was significantly reduced in FY 2003-2004 to 77 and again in FY2010-2011 to 61. The current FTE count is 56 for FY 2017-2018.
What are the Town’s ‘reserves’?
At June 30, 2017, the General Fund unassigned balance (available for spending) amounted to $2,696,999, which does not include the Rainy Day Fund, balance of $2,714,135. At June 30, 2012, the unassigned balance was $3,656,173 not including the Rainy Day Fund of $2,190,910. At June 30, 2007, the unassigned balance was $2,204,810 with a Rainy Day Fund balance of $2,922,391.
How the Tax Dollars Will Be Spent
Why does the Town need a primary property tax now, after all these years without one?
For many years, the Town has relied on revenues from building permits, as well as State-shared revenues and other revenues. Due in part to the past and current economy and in part due to the Town’s near build-out status, revenues from building permits have significantly declined. State-shared revenues have also declined, in part due to population issues, and in part due to the State’s potential for utilization of these revenues. While cuts have been made in an attempt to curb expenses, these cuts can only address shortfalls to a limited extent. Rising costs, due in a large part to aging infrastructure and increasing public safety costs, also affects the timing of the need to address revenue issues.
If approved, how would the additional funds be utilized?
If approved, the primary property tax would generate additional funding to avoid revenue shortfalls and enable the Town to invest up to an additional $4 million annually in street reconstruction projects and street maintenance. The additional funding would also ensure that police and fire services ($8 million in FY17-18) continue to be fully funded and help the Town absorb future contract increases passed on to the Town by Rural Metro and Maricopa County Sheriff’s Office. In addition, the Town will be able to fund the Facilities Replacement Fund which will preserve our existing facilities. With the elimination of the $36 environmental fee, funds will be needed to continue the tasks required for maintaining and protecting the environment, including dam and wash maintenance, street sweeping and dust control, storm water management, and a household hazardous waste collection event. A breakdown appears below.
What happens if the property tax ballot question does not pass? What services might be reduced or eliminated?
If the property tax ballot question does not pass, other options will have to be utilized to balance the budget. There are two other options to accomplish this:
- increasing revenue and/or
- reducing expenses.
While specific items have not yet been planned, some potential reductions might include programs currently offered, customer service levels, road maintenance, as well as reductions in fire and safety programs. Included in the options available to the Town are raising the local sales tax, increasing fees, reducing service levels, making further staff reductions, as well as other considerations.
Why doesn’t the Town issue bonds for street repairs and maintenance?
The Internal Revenue Service regulations only allow the issuance of tax-exempt bonds for new construction or reconstruction projects. Tax-exempt bonds cannot be used for normal repairs and maintenance or to pay for operating costs of the Town. While the Town issued General Obligation (GO) bonds to repair Saguaro Boulevard, the work that was completed on Saguaro was an extensive reconstruction project, not just a mill and overlay project. A mill and overlay project removes and inch or two of the top asphalt and then replaces that level with new asphalt. However, that option was not available for Saguaro due to the condition of the road.
The Town’s attorney has offered the following guidance: Whether tax-exempt bond proceeds can be used to finance a street improvement project depends on the facts and circumstances of the project. It is the Town’s position that that determination be made in accordance with all applicable IRS guidance and all applicable federal tax regulations governing the issuance of tax-exempt bonds and the use of the proceeds of such bonds. State law authority to issue bonds for a particular purpose does not fully determine that such a purpose can be financed on a tax-exempt basis.
I already pay property taxes. How are these taxes now used?
Your detailed property tax statement will itemize the amounts charged for various items included in the tax bill. The Town is currently collecting a secondary property tax, which is used to pay for outstanding debt, primarily the Saguaro road bonds. More information may be obtained from the Maricopa County Treasurer’s Resources site, Understanding Your Tax Bill. The taxes included in the bill are made up of a number of service items, including education, county, and special district taxes.
If the election is successful, how much would the Town levy on taxable property?
As currently proposed, the Town would levy a property tax not to exceed $7,000,000.00. This equates to a tax rate of $1.5001 per $100 of assessed value (based on Limited Property Value (LPV). According to recent calculations, the average residential Limited Property Value in Fountain Hills is $305,967. A property with this Limited Property Value would pay approximately $458.98 annually for this new primary property tax.
How much will I pay?
How much the individual property owner would be charged for a new primary property tax depends on the Limited Property Value of their property. The Maricopa County Assessor determines the Limited Property Value for each property. According to recent calculations, the average residential limited property value in Fountain Hills is $305,967. A property with this Limited Property Value would pay approximately $458.98, which equates to $38.25 monthly, or $1.28 per day, for this new primary property tax.
Are there any Exemptions or Assistance Programs available?
Yes, Maricopa County offers Seniors Valuation Protection, the Widows/Widowers/Disabled Exemption, and the Elderly Assistance Fund. Information about these programs is available at http://treasurer.maricopa.gov/. Click the link for Assistance Programs under the Resource tab.
What is the breakdown of the current property tax?
Current property tax dollars are broken out approximately as follows: out of each dollar, $.53 is spent towards Education, $.19 for Maricopa County government expenses, $.13 for Sanitary District expenses, $.06 for Town of Fountain Hills bonds, and $.09 for other items.
What is the average home value in Fountain Hills?
According to recent calculations, the average residential limited property value in Fountain Hills is $305,967.
Who determines the Net Assessed Value (NAV)?
The Maricopa County Assessor determines the Limited Property Value. Voter-approved initiative established the Net Assessed Value at 10% for residential properties, 18% for commercial and industrial properties, and 15% for agricultural property/vacant land.
Obtaining More Information
Will there be any additional information available for residents about the primary property tax?
Yes. There are multiple resources for residents to learn more about the primary property tax. The Town is planning several informational open houses that will be held at the Community Center. Dates and times will be available on the Town’s website http://www.fh.az.gov/vote2018. In addition, the Information Pamphlet regarding the property tax ballot question will be mailed around April 10, 2018, to each household in which a registered votes resides. Please read the information in this FAQ, go to the Town’s web site on property tax http://www.fh.az.gov/property-tax, attend an informational seminar, or read the information in the publications of Fountain First and the Fountain Hill Times.
Does the Town have a web site devoted to the property tax?
Yes. Go to http://www.fh.az.gov/vote2018.