Retirees in Arizona File Lawsuit Challenging School Taxes

By Ellen Flax — March 29, 1989 3 min read
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Attempts by Arizona lawmakers to reduce a controversial property tax that disproportionately affects residents of retirement communities threaten to reopen a longstanding argument about the state’s large elderly population’s responsibility to help finance public schools.

The new law, adopted last year, imposed a tax of 50 cents per $100 of assessed valuation on homes that do not lie within a school district’s boundaries. The tax rate is to be increased by 50 cents a year until it reaches $4.72 in 1997.

Currently, the residents of all but about a dozen districts, which contain power plants and large industrial sites, are taxed at the $4.72 rate.

Last fall, residents of one of the state’s largest retirement communities filed a lawsuit challenging the property tax in a state superior court. The suit by the Sun City Taxpayers Association alleges that the tax is unconstitutional because those who pay it are not eligible to vote in any school-board elections.

In addition, the suit argues that the tax is unfair because those subject to it would not be entitled to a 56 percent rebate that the state provides to other homeowners.

Bills that would lower the top tax rate on retirement-community residents to $2.36 and make them eligible for the rebate remain stalled in the legislature.

But lawmakers who represent residents of Sun City, Sun City West, and Youngtown, all large retirement communities affected by the new tax, believe a last-minute deal may still be possible.

Other lawmakers, though, argue that in a tight budget year, the state cannot afford to lose the estimated $3.75 million raised by the new tax.

Educators, meanwhile, contend that retirement-community residents who support both the lawsuit and the proposed tax changes are being short-sighted.

“They are not looking far enough down the road,” said Mary Kay Haviland, director of government relations for the Arizona Education Association. “Those children they help to educate today will help pay Social Security tomorrow.”

Antipathy between some of the retirement communities and local school districts in the Phoenix area date back to the mid-1970’s. After numerous school-tax levies were defeated, primarily due to senior citizens’ votes, the retirement havens were allowed to secede from the districts either by mutual consent or as a consequence of elections.

Hays Cape, an official of the Sun City taxpayers’ group, said that residents of the community feel a strong obligation towards public education. He noted that they currently pay taxes to the county that support elementary and secondary schools and the local community-college system.

The new tax, Mr. Cape argued, will not necessarily benefit public schools because the revenues will flow directly into the state’s general fund, rather than to districts.

He also said that the residents of Sun City and other middle-to-upper-income retirement communities, which have a combined population of more than 60,000, demand fewer government services than surrounding areas.

“We are not against schools,” Mr. Cape said. “We’re just against being hooked too much for nothing.”

Most legislators and educators, however, contend that these communities should pay a greater share of education costs.

Amending the new tax law, they say, will be especially unfair to residents of retirement communities elsewhere in the state that are part of organized school districts.

“The retired people in my district are paying their fair share of the tax,” said Representative Peter Goudinoff, who represents a part of Tucson. “Why should one group clustered in one area escape their fair share?”

“The underlying philosophical question is whether or not you should only pay for services you use,” said Judy Richardson, the state education department’s director of school finance.

“Even if your police force costs less in Sun City, if you go into Phoenix, you still don’t want to be mugged,” she said. “You have an interest in services provided in other areas as well.”

A version of this article appeared in the March 29, 1989 edition of Education Week as Retirees in Arizona File Lawsuit Challenging School Taxes


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