Proposition 312, designed to offer tax refunds to property owners in cities that fail to enforce laws around homeless encampments, may not have much muscle in Southern Arizona. In Tucson and nearby cities, minimal or nonexistent primary property taxes mean most residents won’t see significant refunds.
Prop. 312 was passed by 18 points by voters in November. It requires property owners with grievances against their local jurisdictions to apply to the Arizona Department of Revenue, which has implemented an application process.
But most residents of Pima County will be able to apply only for minor tax refunds if they are impacted by homeless encampments. That’s because, according to a county memo and information from county officials, the jurisdictional and taxative patchwork gets some counties and cities off the hook.
And some Southern Arizonans, property owners in Marana, Oro Valley, and Sahuarita — towns that collect no primary property taxes — will not be able to apply for a refund at all, county officials and state experts say.
“I think that nobody in an incorporated community down here,” such as those three jurisdictions, said Pima County Administrator Jan Lesher, “has any recourse.”
The Arizona Legislative Council, which reviews laws passed by the Arizona legislature, confirmed that people living in incorporated areas that don’t collect property taxes cannot apply for refunds. The council said they could not offer further comment about the interpretation of the law, referring questions to county and city attorneys.
Altogether, there are 40 incorporated cities and towns in Arizona that collect no primary property taxes. According to the department of revenue, that “means that the maximum amount of reimbursement that could be received for a property in an incorporated city or town that does not levy a property tax is $0.”
According to the proposition as it’s now part of Arizona State law, “A property owner whose real property is located in the corporate boundaries of a city or town is eligible to apply for a refund only from that city or town. A property owner whose real property is located in an unincorporated area of a county is eligible to apply for a refund only from that county.”
In the city of Tucson, which is incorporated, property owners primarily pay taxes to the county. That means they would be eligible for only minor refunds from the city.
The same holds for Phoenix and Maricopa County. While property owners in Phoenix pay some property taxes to the city, most of those taxes go to Maricopa.
In Fiscal Year 2023/2024, the city of Tucson collected $16.9 million in property taxes, which made up less than 2.5% of the total revenue of $677 million. That was based on a primary tax rate of 43 cents per $100 dollars of assessed property value.
The primary property tax rate of Pima County is more than 10 times higher, at $5.10 dollars for $100 dollars of assessed value. The county pulled in $542 million dollars of property taxes in Fiscal Year 2023/2024, accounting for more than one-third of its total revenue.
But despite the likely minimal refunds, advocates for more humane solutions to problems with homelessness are still concerned.
Xavier Martinez is a community organizer with Amphi Liberation Mutual Aid.
“Even just a minor impact on revenue, it’s a chiseling off of funding that could lead to services that are helping rather than just harming,” Martinez said.
The proposition — first written as a bill by Republican legislators — is one of a series of ways residents are pushing to address the rise in unsheltered communities.
Residents of Tucson will also soon be voting on Prop 414, which proposes combining more policing and enforcement with more affordable housing through a tax increase.
Confusion about refunds
The board of supervisors has been uncertain about the impacts of the new law since it was passed, and last November began researching the “fiscal and operational impacts” on the county of Prop 312 and four other recently passed statewide ballot measures. Acknowledging that it’s been “challenging” to interpret the new laws, a Dec. 30 county memo says that counties may have “considerable latitude in the practical implementation” of them.
The city is also struggling to understand Prop 312.
“Tucson should team up with Phoenix and other cities to study what the fiscal dangers are for us,” said Tucson councilmember Paul Cunningham of Ward 2.
He suggested that Tucson should commission the Grand Canyon Institute to analyze the law and assess the risk for the city and develop suggestions on how to mitigate that risk.
Councilmember Karin Uhlich, of Ward 6, acknowledging that Tucson’s property taxes are “nominal” compared to those charged by the county, said Prop 312 was a message to public officials.
“The mayor and council is acutely aware of our communities’ growing concern regarding unsheltered, homeless people,” Uhlich told Arizona Luminaria, adding that some people were experiencing “compassion fatigue as the impacts are felt by residents and businesses.”
She said the passage of Prop 312 was “an indication that people want solutions and want help,” but said she was skeptical it would be an effective solution.
The county memo notes that the threshold for demonstrating a “policy, pattern or practice” of non-enforcement of laws is “significant protection.”
That’s because, according to the memo, the county has “a long history of policy and programmatic actions taken to mitigate the impact of public nuisance damages associated with unhoused individuals.”
The memo notes that while property owners can basically appeal a negative ruling, they are entitled to legal fees if they are ultimately successful. The county is not subject to winning back any legal fees, however, which, the memo warns, may create “a potential for spurious legal actions.”
Yana Kunichoff contributed research to this article.
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