Arizona residents voted down a constitutional amendment to lower business personal property taxes. Meanwhile, a proposition to reform the property tax system was approved.
Proposition 116 - Defeated
With Prop 116's defeat, Arizona's inflation-adjusted personal property tax exemption will remain at $68,079.
Proposition 117 - Passed
Prop 117 was touted as a truth-in-taxation measure that will simplify the property tax system. Arizona real property is currently taxed on two values:
1. Full Cash Value (FCV), and
2. Limited property value (LPV)
Prop 117 eliminates the FCV and lowers the cap on LPV to 5%.
Despite the passage of Prop 117, opponents fear it will do nothing to limit property tax bills or annual tax increases. Municipalities can simply raise their tax rate to offset any loss in revenue associated with a lower cap.