You may have heard about the lawsuit filed by the Arizona Cattlemen's Association over property taxes. Hello, I'm Gary Edelbrock here, and I'm speaking with Pam Pearsall, the County Assessor. She asked for an opportunity to explain the issue. Here's what she said:

It's Only a 27¢ Increase

The law suit by the Arizona Cattlemen's Association boils down to about a $0.27 (27 cents) per acre increase total in property taxes and this will be phased in over seven years.

I am running the Assessor’s Office on the principle of treating all taxpayers fairly and equitably. This requires not giving favors to special interest groups or to any member of said group. When the Assessor gives a group or someone in that group a “special favor” the assessor has actually shifted a portion of the property taxes that this special group should be paying onto the backs of the remaining tax payers which I believe to be morally wrong and not keeping in line with my fiduciary responsibility as county assessor.

It is not only fair but is a legal requirement (per Arizona Revised Statutes 42- 13051 (B) (2)) to update property values annually. This includes all property types, including those properties falling under various agricultural classifications. Since my tenure as assessor began in January 2009, I have endeavored to equitably and fairly assess all property types in Yavapai County. This has included revisiting a number of properties that were granted “special” favors or that were “overlooked” under past administrations. One area that has not been updated for several decades involves properties falling under agricultural classification. Pursuant to requirement by the Arizona Department of Revenue, a county wide (as well as state wide) examination of agricultural property leases was recently undertaken, resulting in an increase in assessed value for grazing lands as well as other categories of agricultural use lands in Yavapai County. Apparently an increase in assessed full cash property values in Yavapai County, after 20+ years of no change, was deemed unfair by a select group of property owners, even though rather significant changes have occurred in every other category of property types.

Below is a graph of the average property values by property type in Yavapai County since 1992:

This graph illustrates general increases for all property types (except agricultural lands) between 1992 and 2007 with most categories increasing between 78.25% and 162.37% during this 15 year time span while agricultural values remained unchanged. Some decline occurred after 2007 due to deteriorating market conditions with decreases between 2.89% and 14.13% indicated for the non-agricultural properties. The noted increase for agricultural properties of 227.27% reflects the fact that these values were not addressed during the interim time and also reflect the difference in valuation methodology utilized in calculating agricultural land values per ARS statute, compared with other property types.

Properties that had been classified as agricultural grazing land did nothave their values updated for several decades in Yavapai County, resulting in valuations of $7.56 per acre being utilized for property tax purposes year after year sincebefore 1987. This caused a disproportionate property tax shift to occur each year on the remaining property owners as other properties increased in value while agricultural propertyvalues remained stable.

I updated Agricultural Grazing Land values for the 2012 tax year from $7.56 to $25.00 per acre based on agricultural lease rate information provided by the Arizona Department of Revenue and effective as of the date this value was established. Actual property taxes will be calculated based on the in Limited Property Value which is phased in over a seven year period of time beginning in 2012.

Overall this means an increase of about $0.27 (27 cents)per acre in property taxes with this increase being incrementally phased in over several years rather than occurring in just one tax year. The following table illustrates the noted tax phase in by year.

Note: The Limited Property Value acts as a “circuit breaker” limiting the increase in taxes from one year to the next. Therefore, it takes 7 years for the property taxes to be phased in based on the updated values. The taxes are increased to about $0.38 per acre total after 7 years.

It may seem that the updated $25.00 per acre value for grazing land is rather low, compared with per acre values for non-agricultural tracts. Agricultural properties are not valued at “market value” but rather are valued utilizing a “current use” value basisper specific requirements prescribed in statute. I specifically followed these requirements when recently updatingthese values. However, there is a disagreement between the Cattleman’s Association and the Assessors Office on what the “current use” value should be. Based on the Department of Revenue Lease Study provided specifically for this purpose, I have determined the appropriate “current use” valueshould be increased from $7.56 to $25.00 per acre. The Cattleman’s Association, based on a study that they procured, actually believe that the agricultural classified propertyvalue hasdeclined from $7.56 to $3.54 per acre. While common sense would dictate that prices have generally increased from the late 1980’s through the present (in spite of the recent market downturn), at the end of the day it appears as if the court may have to render a final decision as to the “accurate”value for agricultural property in Yavapai County.

In conclusion, while paying property taxes is far from being our favorite activity, it is one of the burdens we bear for the right to own and utilize property including receiving certain services such as police/fire protection, schools, etc. As your county assessor, I feel that the burden of property taxes should be as fair and equitable as possible for all property owners and should be based on the correct application of State of Arizona statutes provided to ensure this fairness and equity when estimating the full cash value for all property types. For decades, many property owners have paid an increasingly disproportionate share of the overall tax burden due to increases in their property values while agricultural property owners have benefited from not having periodic reassessment of their property values, resulting in having to pay less than a proportionate share of the property tax burden. At this time I am endeavoring only to be fair, under the law, by bringing agricultural land values to a realistic level, based on statutory requirements.

Pamela J. Pearsall
Yavapai County Assessor