Tempe Leaves Property Tax Rate Unchanged

The Tempe City Council voted four-to-three to leave property taxes unchanged at a rate of $1.40 per $100 of assessed value.

The "assessed value" of each property class is determined using percentages set by the State Legislature. The residential assessment percentage is 10%.

In Tempe the "primary" and "secondary" tax rates are $0.5183 and $0.8817, respectively.

Exercises
  1. The Tempe City Council voted _____:_____ to leave the property tax rate unchanged.

  2. ______% of the Tempe City Council voted against lowering the property tax rate.

  3. The median home price in Tempe increased by _______% between 2005 and 2006.

  4. This year, Tempe's median home value was $194,000 versus $132,000 last year. The owner of a median assessed home will pay approximately $________ per month more in property taxes.

Arizona Republic Math

The following was copied, without editing, from the 7 April 2007 Tempe section of the Arizona Republic.

   "This year, the median full cash value of a Tempe based
    on county assessments is $194,000, up from $132,000 last
    year.  As a result, the average homeowner will pay about
    almost $63 more in city taxes this year.

Say what?

"Median" and "average" are two different statistics. The Republic's math doesn't match GDT's math.

Calculating Percent Increase in Property Tax

The following calculations were done using the Unix 'dc' (desk calculator) command. Note: 'dc' is a reverse polish notation calculator.

   $ dc
   4k                   # four decimal digits of precision
   194000               # 2006 median home value
   .1*p                 # multiply by 10% to get assessed value
   19400.0              # assessed value
   100/p                # divide assessed value into number of $100 units
   194.0000             # taxable assessed value
   1.4*p                # $1.40 is Tempe's tax rate
   271.6000             # city of Tempe taxes
   132000               # 2005 median home value
   .1*p                 # 2005 median home assessed value
   13200.0              # 2005 median assessed value
   100/p                # divide assessed value into number of $100 units
   132.0000             # taxable assessed value
   1.4*p                # Tempe's tax rate
   184.8000             # city of Tempe's taxes
   -p                   # difference between 2006 and 2005 taxes
   86.8
   184.8/p              # divide by 2005 taxes (original amount)
   .4696
   100*p                # convert into a percentage
   46.9600              # % increase in taxes
   q                    # quit the calculator

The owner of a median priced home in Tempe will see a 46.96% increase in their property tax.

Raising Taxes Without Raising Taxes
   "Take a trip and never leave the farm!"
   -- Wildwood Flower by Jim Stafford
Update::2007.04.14

I (GDT) was wrong with respect to calculating Tempe residential property tax. A huge THANK YOU to Tempe mayor Hugh Hallman for sharing the following with me via an email message.

   "However, the reason none of the 'math' works in the calculations 
    is that there are a couple of 'missing' facts.  First, the split 
    between 'primary' property tax and 'secondary' property tax in 
    Tempe is, essentially, $.50 (primary) and $.90 (secondary)." 

The primary and secondary tax rates were specified at the start of this BAB, but I didn't include them in the email message I sent to the Tempe City Council. Mayor Hallman rounded the two tax rates for us. [The primary and secondary rates are 0.5183 and 0.8817, respectively.]

Mayor Hallman's email message continued with the following critical information.

   "And Second, the reason that matters is there is a 'limitation' 
    imposed on the amount by which primary tax can increase.  Once 
    one applies the rather complicated formulae, the result is that 
    the primary tax, on mean average, can only increase by 14 percent 
    this first year, while the secondary will increase by the full 
    amount of the valuation increases (the full 47 percent on mean 
    average).  Accordingly, on mean average, the total property tax 
    bill at the median average house valuation, will increase in the 
    first year by 34 percent."
In a nutshell, increases in primary taxes are limited by law.

      2005 city of Tempe tax on a $132,000 residential property
      =========================================================
      secondary:  $132,000 x .1 / 100 x 0.8817 = $116.38
        primary:  $132,000 x .1 / 100 x 0.5183 = $ 68.42
          total:  $116.38 + $68.42 = $184.80

      2006 city of Tempe tax on a $194,000 residential property
      =========================================================
      secondary:  $194,000 x .1 / 100 x 0.8817 = $171.05
        primary:  $194,000 x .1 / 100 x 0.5183 = $100.55
   adj. primary:  $68.42 x 1.14 = $78.00
          total:  $171.05 + $78.00 = $249.05

       increase:  $249.05 - $184.40 = $64.65
     % increase:  $64.65 / $184.40 x 100 = 35.05%

Doh! GDT's calculation is a full one percent off from Mr. Hallman's and GDT doesn't know why. Recall, the Arizona Republic reported that the average tax bill will increase $63. Using $63 instead of $64.65 results in a 34.16% increase in property tax, which better approximates the Mayor's 34%.

Update::2007.04.14

Onnie Shekerjian is an AzCentral.com blogger who also a Tempe City Council member. Onnie posted about Tempe's property tax increase saying the issue it was a done deal and that taxpayers had to look at other parts of their property tax statements. Onnie's posting prompted a comment from GDT (Gerald8100).

   Comment from: Gerald8100; 04/14/07 @ 06:42
   Onnie wrote: "TALK TO THE OTHER ENTITIES THAT COLLECT THE 
                 OTHER 90% OF YOUR PROPERTY TAX."

   No need to yell at us and I understand your posting was after 
   the debate, but those little 10 percents add up. For example, 
   the Maricopa Community Colleges have been nice little piggies 
   for the last decade. In 2006, 11.5% of my Maricopa County 
   property tax went to the community colleges.

Creator: Gerald D. Thurman [gthurman@gmail.com]
Created: 08 April 2007

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