Arizona lawmakers voted this week to permanently eliminate the state's property tax. If signed into law by Governor Jan Brewer, the revenue loss to the state is expected to be about $250 million. This is the worst time in recent memory to cut taxes, given Arizona's shortfall of more than $3 billion.
Even worse, this cut represents a leap backward for social justice advocates. As this article explains, "The tax was designed to more evenly spread the burden of funding public schools in local communities."
In states where education is mainly funded through local property taxes, poor districts often must levy much higher property taxes than wealthier districts in order to adequately fund schools. A state property tax applies a uniform property tax rate to all taxing districts, making school funding more equitable.
Repealing this tax won't spell the end of state aid to poorer school districts in Arizona -- but it will certainly make it harder to ensure equitable school funding in the long-run.
To put this measure in context, the Arizona legislature's response to its fiscal situation has become increasingly unsound lately. One budget-balancing idea gaining support among legislative leaders: selling and then leasing back state government property in what one leader approvingly refers to as "taking out a mortgage." Never mind that this approach to personal finance didn't work out so well for many Arizona homeowners in the last couple of years.