Opinion: Concerns over the Tempe tax scheme case

Although the case has been settled, there are a few bothersome details

Last month, The State Press reported on a recently settled lawsuit between Arizona Attorney General Mark Brnovich and the city of Tempe, and the details uncovered are unsettling for more than one reason.

Read more: The attorney general against Tempe over property taxes: What happened?

The basic gist of the case was that there were a couple business deals between Tempe and private businesses that used government property lease excise taxes instead of property taxes, and the issue rested in whether the GPLET rate the city was using was outdated and illegal. Tempe claimed that it was justified because a part of the GPLET statutes says that the rates can be grandfathered in on older developments.

The whole case was relatively short-lived. State Rep. Vince Leach, R-Tucson, filed a petition to Brnovich for an investigation on January 2, and the case was settled on June 26. One of the deals was determined to not be an issue, and then they settled before they determined the other. Moving forward, the city will not be allowed to use the old rate for any current or future deals.

As far as an initial reaction, it’s great that this was found out and resolved without it having to be a long, drawn-out ordeal, and the city was rightfully held accountable.

“Tax deals like this unfairly shift the tax burden to other hardworking taxpayers and deprive our schools from much needed revenue," Brnovich said in a written statement. “This settlement gives the State the total relief sought in the suit, without the expense of ongoing litigation.”

So there you have it, right? The resolution was simple, and Brnovich said it best. Other taxpayers will remain unaffected as long as businesses are paying their fair share. But there were a couple other details about the case that are bothersome.

It is somewhat surprising that no one took note of the loose interpretation of the GPLET rates back when the deals were originally made. These deals are not hidden – they are public record, and yet, it took so long for the issues to surface. And when they were finally pointed out, it was not by someone from the city, but by a state legislator from Tucson, which seems to suggest his motivation was purely political.

In all fairness, what Tempe was attempting to do was not malicious. Incentivizing private businesses to come to the city is overall economically beneficial. 

“The City of Tempe has responsibly, selectively and legally made use of the limited development incentive tools that are allowed by Arizona state law,” Tempe said in a statement. “For decades, these tools have allowed Tempe chances to compete nationally and to bring in strong commercial, residential and office projects that provide regional jobs and improve quality of life for Tempe residents.”

Despite this, whether the deal makers recognized potential legality issues at the time these deals were made is unknown. However, as far as overall takeaways go, you can’t help but wonder what other tax issues, among other things, lay in plain sight, but go unnoticed by citizens of Tempe and its lawmakers, perhaps only to be mentioned if it could possibly benefit a campaign.

 Reach the columnist at amblodge@asu.edu or follow @AndiBlodgett on Twitter.

Editor’s note: The opinions presented in this column are the author’s and do not imply any endorsement from The State Press or its editors.

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