The Goldwater Institute released a new study today that argues property tax exemptions for large, metropolitan development projects are forcing cities to raise taxes on citizens to compensate for lost revenue.
According to the report, the city of Phoenix has about $2 billion worth of property that's going virtually untaxed and that a program designed compensate the city for the tax break is only charging developers a fraction of what they would be bringing in without the deal.
Mark Flatten, a Goldwater investigative reporter, found that businesses qualifying for a Government Property Lease Excise Tax are paying at least $31 million less than what they would be paying without the tax exemption.
That seems to be the point of the program, but Flatten tells New Times that while cities love the deal because the businesses often bring in other revenue, it's hurting taxpayers.
"The problem is that when they give out these tax breaks, everybody else gets hit," he says.
Flatten says the problem is that school districts, which get most of their revenue from property taxes, are forced to shift the burden to taxpayers who have to make up for the lost funds.
"School districts have a specified amount of money they're allowed to spend and they're gonna spend it," Flatten says."
When property taxes aren't bringing in enough money meet a school district's budget, Flatten says, the property taxes of people living within the district are raised.
According to the report, residents in school districts near Sky Harbor Airport and in central Phoenix have seen their property taxes go up by $183 near the airport and about $90 in central Phoenix as a result of lost revenue from development deals that used GPLET.
The other problem with the program is that city governments don't just hand it out to anyone who wants it.
If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
You have successfully signed up for your selected newsletter(s) - please keep an eye on your mailbox, we're movin' in!
Cities offer GPLET to businesses on a case-by-case basis based on how valuable the business is deemed to be by the government.
"These things are almost identical to what went on with City North," Flatten says.
Check out the whole Goldwater report here.