If you're wondering how your state could spend so little on critical services yet still collapse into a budget crisis, look no further than this little phrase in Arizona tax law: ". . . and common areas used as an airport."
This line will cost you and other Arizonans hundreds of thousands of dollars over the next decade. And the phrase explains, along with other seemingly harmless rhetorical tidbits like it, why this state is in such a ridiculous state of debt and disrepair.
Here's the anatomy of a tax loophole:
This phrase about airports was slipped into legislation by Republican state Representative Bob Robson just after he was elected to the Arizona House of Representatives in 2000.
After Robson's seemingly innocuous amendment, which passed the House with only two no votes, the revised statute regarding the taxation of residential common areas read (stick with me here):
"Common areas consist of . . . property that is intended for the use of the owners and residents of a residential subdivision . . . and include common beautification areas and common areas used as an airport."
Clearly important legislation for all Arizonans. Now we all can taxi our jets into the airplane hangars attached to our homes without paying taxes on our runways.
You get the idea. How many residential common areas are currently used as airports in the Valley?
Stellar Airpark in Chandler, where, thanks to creative Valley developer Mark-Taylor, rich people can now land their planes and taxi right up to the giant hangars attached to their mansions.
Thanks to Robson's little sentence fragment, the property tax valuation on this Chandler airstrip dropped last year from $2.4 million to $24,502, according to the Maricopa County Assessor's Office.
Which maybe wouldn't be so bad if the airstrip was only used by nearby residents.
Instead, the airstrip is also used by several companies, including two flight schools, which have bought property along the airstrip in recent years.
There's Angel Air Flight Training Center and Accelerated Flight Crew Training, both of which brag on their Web sites about how many students and planes they have. There's also KRN Aviation Services and Rotorway International, the world's oldest and largest manufacturer of kit helicopters, according to its owners.
Many more industrial sites are ready for development along the airstrip. What company wouldn't want to land its planes for free?
So, why would Robson be involved in such an obvious tax giveaway?
According to campaign finance reports, executives and the wives of executives of Mark-Taylor Development, Inc., contributed at least $840 to Robson's campaign.
Those contributions flowed just as Jeffrey Mark, plane lover and co-founder of Mark-Taylor Development, was beginning to build his own home in the Stellar Airpark development.
At that time, too, Robson was vice mayor of Chandler. At that time, Mark-Taylor Development was trying to win city approval for a 120-unit apartment complex to be built as part of Chandler's downtown redevelopment.
Tit for tat. Quid pro quo. Arizona business as usual.
"It's certainly a statute designed for a specific group of people," says Fred Kelly, a deputy assessor in the Maricopa County Assessor's Office.
For his part, Robson argues that the bill saved taxpayers money because, prior to the legislation, the Airpark homeowners had repeatedly won their appeals of the county's tax assessment on their property. The law saved the homeowners the cost of appeals, he says, and saved the County Assessor's Office the cost of annual appeal reviews.
Robson also says he was not contacted by the Mark-Taylor executives who donated to this campaign. He says the legislation was presented to him by Senator Lori Daniels.
Now, Arizona has one of the most convoluted and loophole-riddled tax codes in the United States, according to Kelly and other assessors.
For the rich, there's an added bonus to complicated and intentionally vague tax laws.
They make it impossible for county assessors to argue their case.
For example, at Stellar Airpark, neither companies nor homeowners are required to document the number of times they use the airstrip.
By law, common areas must be used "primarily" by homeowners.
So, even though assessors know the airstrip is used heavily for commercial traffic, they have no way to collect the data needed to prove it is primarily used by businesses, which would substantially alter its tax status.
And like Bill Clinton arguing the meaning of the word "is," a good tax attorney would have a field day arguing the exact meaning of "primarily."
"The legal language is not defined enough," Kelly says. "We would need overwhelming evidence to fight this, and there's no way for us to get overwhelming evidence."
Besides, a good tax lawyer also can always punch a hole in an assessment from the county.
Indeed, many of the state's best tax lawyers have built their firms on money made appealing tax assessments before the State Board of Equalization, where, in essence, you've got rich Republicans appealing to rich Republicans appointed by rich-Republican-loving Jane Hull and the Maricopa and Pima County Board of Supervisors.
Last year, in granting hundreds of appeals, that board reduced the amount of taxable property in Arizona by $421 million, from about $7.5 billion to $7.1 billion.
That value of Arizona property shielded from taxation jumps into the billions when you consider the property that evades taxes because of screwball state tax laws and a lack of tax-law enforcement.
Arizona's budget crisis is real.
But the real solution is not in cutting programs or raising taxes. The solution is in closing the tax gaps created in the last decade for anybody with the cash and influence to buy a legislator's ear.
If all of these little tax giveaways could be axed from state law in the next year, Arizona's state government would likely soon have a balanced budget.
But for that to happen, the legislators guilty of authoring these kinds of sentences either need to find their consciences, or they need the boot from their constituencies in the November elections.
Legislators finding their consciences? Sorry for the naiveté.
They just need the boot.
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