Phoenix • A change of heart for three key Arizona Republicans led to the passage of a bill that grants tax breaks to property owners who lease space to churches.
The bill appeared to be defeated before three key Republicans changed their vote from “no” to “yes” and helped pass House Bill 2281, sponsored by Rep. Debbie Lesko, R-Peoria, on Thursday. The vote changes from Reps. Bob Robson and Jeff Dial of Chandler and Douglas Coleman of Apache Junction came after pleas from at least 10 Republicans who chided their colleagues for voting against the bill.
The measure would grant property owners who lease to churches but are not religiously affiliated themselves tax breaks approaching the ones churches get when they own property. The tax break applies only to space used for worship services.
It would affect about one half of one percent of commercial property owners, according to a spokesman from the Maricopa County Assessor’s Office.
Still, that could cost the state between $300,000 and $2.1 million in fiscal year 2016.
Lesko says her bill aims to help out small churches that don’t yet have the money to buy space and who have to pay property taxes through rent.
But opponents say the bill language is so loose that there’s no way to ensure that property owners pass on the savings to their tenants — the churches. They say it is also costly to the state.
“I am voting no because this is another example of something that sounds good in a short title but can be morphed into something that has unintended consequences,” Rep. Heather Carter, R-Cave Creek, said. “The property owner still fundamentally receives the tax benefit.”
Rep. J.D. Mesnard, R-Chandler, said property owners must sign an affidavit saying they will pass on the savings. Mesnard reprimanded members who had voted against the bill.
“I don’t know if we’re against reading bills or reading all of fiscal notes, but if you look at it, it’s very clear we’re talking about a minuscule amount of money to the state that is going to have a huge impact to our tiny churches out there,” Mesnard said.
Churches who want the tax break have to apply through the County Assessor’s Office. The office would then go to the property and ensure that it is being used for worship services, spokesman Robert Pizorno said. The bill would reduce the property value tax assessment ratio of 18.5 percent to 1 percent. For example, if someone owned a commercial property valued at $1,000,000, the amount of property taxes that the owner would owe would be based on $10,000.
Pizorno said it’s not clear how many churches in Maricopa County lease space from non-religious property owners, but that it is a tiny number.