Santa Cruz County District 3 Supervisor John Fanning says the county has not gone far enough in reducing property tax rates.
The county is in year two of a four-year plan to reduce its primary tax rate by three cents per year per $100 of assessed value — for a total reduction of 12 cents over a four-year period.
But because Limited Property Values (LPV) — the value upon which property taxes are based — are rising 5 percent year after year, taxpayers will again see an increase in the amount owed when they receive their property tax bill later this month. And they will continue to climb on an annual basis.
“With our dropping of the tax rates three cents and the property values moving up 5 percent, it’s not a wash,” Fanning said. “So our goal, no matter what it takes — I can’t promise anything — is to make that a wash so that we do not have to have a Truth in Taxation hearing next year. Which means instead of the three-cent drop, it’s going to have to be more significant. I think we’re looking at 12 to 15 cents.”
PROPERTY TAX GLOSSARY
Full Cash Value (FCV): Market value of a property on the open market, determined by annual appraisal by the assessor’s office and based on comparable land values and any improvements on the land.
Limited Property Value (LPV): Value of a property for taxation purposes, limited to a 5 percent annual increase and cannot exceed the property’s Full Cash Value. (The 5 percent limit does not apply to new construction, major additions or a change in how a property is used.)
Assessed value: The monetary amount for each property that is used to calculate tax rates. For primary residential property, the assessed value is 10 percent of LPV.
Tax rate: A percentage, set by each taxing district, that taxpayers will be billed per $100 of assessed value.
Tax district: A governmental entity with the authority to levy taxes.
Tax levy: The total amount of money a taxing district needs to raise through property taxation to meet its budget.
County taxpayers were told at a Truth in Taxation hearing in early August that they can expect their taxes to increase by $5.41 per $100,000 in assessed value for the upcoming year. For a home assessed at $300,000, that’s an additional $16.23 in county taxes; for one assessed at $500,000, that’s an additional $27.05.
But the county’s tax rate accounts for only a portion of tax bills. In reality, bills will increase by larger amounts. That’s because the increases in LPV also apply to secondary taxes that make up more than half of many tax bills: School districts, fire districts, community college districts, flood control districts, etc. Tax rates for those districts have held steady for the most part, but the higher assessments translate to higher tax bills.
Let’s take, for example, a 15-acre property in Sonoita with a 2,200-square-foot single-family residence built in 1995, a 1,200-square foot barn and 800-square-foot shed. The property’s full cash value dropped from $434,391 to $421,390 from 2024 to 2025 due to depreciation, but the limited value went from $312,090 to $327,695, resulting in the tax bill increasing from $5,636 to $5,926.
Of that total, $1,732 went toward the county’s general fund, $2,702 to local school districts and $1,416 to the Sonoita-Elgin Fire District. So even as the county drops its tax rates, the amount paid for secondary taxes will continue to rise, based on increases in the LPV. In this particular case, 69 percent of the taxes were secondary, and thus unaffected by the lower tax rate.
The impact of rising assessments would be less pronounced in Patagonia, where there is no fire district tax and parcels tend to be smaller, but there would still be an annual tax increase for school districts, even though the district tax rates have remained flat.
Tax rates (per $100 assessed value)
| Taxing District | Fiscal Year 2027 | Fiscal Year 2026 | Fiscal Year 2025 |
|---|---|---|---|
| Santa Cruz County (primary) | $3.9465 | $3.9765 | $4.0065 |
| Santa Cruz County (secondary) | $0.7893 | $0.8953 | $0.9013 |
| Patagonia Elementary School | $3.4773 | $3.5173 | $3.7686 |
| Patagonia Union High School | $2.1648 | $2.2357 | $2.5273 |
| Sonoita Elementary School | $3.9057 | $3.9649 | $4.1772 |
| Sonoita-Elgin Fire District | $3.2500 | $3.2500 | $3.100 |
Property value assessments are at the heart of the matter. According to the state statute being applied by County Assessor Pablo Ramos, a homeowner’s Limited Property Value is “statutorily required” to go up 5 percent over the preceding year’s value — provided that the LPV does not exceed the property’s Full Cash Value.
Rebecca Wilder, spokesperson for the Arizona Department of Revenue, confirmed Santa Cruz’s interpretation as correct. “The LPV of property is the limited property value in the preceding valuation year plus 5 percent of that value, and the current LPV of a parcel may not exceed its current full cash value. The assessor has no discretion to use a different figure,” Wilder wrote.
The mandatory 5 percent increase came as an outgrowth of Proposition 117, approved by the voters in 2012 to counter rapidly rising property values in the state. The proposition stated that property values used to determine property taxes can increase by “no more than 5 percent above the previous year.”
Vanessa Register of Nogales was among those speaking at the Taxation hearing in early August and questioned if the wording in the proposition gave the county supervisors discretion to increase property valuations by less than 5 percent.
“It says ‘limited to’ (5 percent), not ‘required to,’ Register said.
“I think you have to ask yourself, what was the purpose of 117, and why did the voters approve it. It was so that we couldn’t be hit with new taxes and it wouldn’t increase too much and people on limited incomes would not be able to pay their taxes and lose their homes.”
In response, Ramos said the intent of the law is to provide certainty for taxing districts on how to budget from one year to the next, “so you guys could have a good look into the future to see what you were going to be able to levy. I don’t think the board has the power to limit the percentage.”
The Department of Revenue’s Wilder backed up that assessment: “The board of supervisors’ authority runs to the tax rate and the levy, not to valuation.” In other words, in order to neutralize the increase in assessments, counties and other taxing districts must reduce their tax rates by enough to offset rising property values.
Jennifer Stielow, vice president of the Arizona Tax Research Association, which lobbied for Proposition 117 in 2012, acknowledged the possibility of confusion in the wording of the proposition but said the statutory requirements were considerably higher prior to its passing, writing:
“Prior to 117, the LPV increased by the greater of 10 percent (at least) or 25% of the difference between the current year FCV and previous year LPV (during the real estate boom years, growth in the statewide LPV exceeded 10 percent). To be clear, the LPV was “required” to increase both prior to and after 117 — the passage of 117 dropped it to 5 percent Additionally, prior to 117, the FCV (market value, therefore unlimited in its annual growth) was a taxable value and that is no longer the case with 117. ATRA’s advocacy for Prop 117 in 2012 was to address the volatility, and lack of stability, in Arizona’s property tax system.”
The continued escalation in taxes comes at a time when the county is seeking an increase in its spending limitation with a proposition on the November ballot (Proposition 417), in anticipation of increased revenues from the South32 mining operation. While an increased spending limit would not impact tax rates, its juxtaposition against rising tax bills raises concerns.
“A key talking point was ‘no new taxes,’” Register said. “But you will increase established taxes like property tax to the full allowable amount. If increased revenues are expected, why raise my property taxes?”
The county has scheduled public presentation on Proposition 417 for Wednesday, Sept. 9, from 5:30 to 6:30 p.m. at the county complex in Nogales.
Property tax rates have long been a sore spot for Santa Cruz County residents. The county’s primary rate of $3.9465 per $100 of assessed value is third highest among the state’s 15 counties — trailing only Pima ($4.194) and Gila ($4.190). And yet, the county has the state’s third highest poverty rate, according to the U.S. Census Bureau (20.2 percent), and ranks 12th of the 15 in median household income ($53,614).
In the eastern portion of the county, where tax bills are generally higher, the tax rates are not the only bone of contention. Where and how those revenues are spent is equally vexing.
“In the 41 years I’ve lived in eastern Santa Cruz County, I’ve experienced the same helpless feeling that high property taxes are collected, but we get nothing in return; few road repairs, poor law enforcement response, no parks, no playgrounds or walking and bike paths,” wrote Elgin resident Sue Downing in a letter to the PRT. “Not even a public restroom or trash can for the tourists that our county government craves.”