Tax Law to Benefit Churches Signed by Arizona Governor

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Source: Ronald J. Hansen, “Churches Could See Tax-Free Rent under Legislation,” azcentral.com, Jan. 27, 2015

Arizona Governor Doug Ducey (R) signed a bill on Mar. 23, 2015 that will give property owners a tax break when they lease property to religious groups, including churches. The new law is intended to benefit churches by allowing property owners to pass on their tax savings to religious groups in the form of cheaper leases. A similar measure was vetoed in 2014 by then-Governor Jan Brewer (R).

Under the law, properties owned by educational, religious, or charitable organizations are exempt from incurring property taxes if they are leased to religious groups and primarily used for religious worship. Other property owners who lease property to churches receive a reduction in their “property tax assessment ratio” on that property from 18.5% to 1%, thus lowering their tax burden.

State Senator Debbie Lesko (R), who sponsored the 2014 bill when she was a House member, said that because churches owning property already receive a tax exemption, it’s only fair that churches leasing property get the same benefit: “It will help smaller churches that can’t afford to purchase their property to get similar tax treatment.” The Center for Arizona Policy, a conservative lobbying group, also supported the bill and welcomed the new law, stating that “Churches from throughout the state will benefit from this important legislation.”

An analysis performed by Arizona Legislature budget staff estimated that the tax cut could create a shortfall costing the state government up to $2.1 million per year in additional education funding, as dictated by the state’s “Basic Aid Formula.”

A group that lobbied against the bill, the Secular Coalition for Arizona, highlighted one potential beneficiary, the Faithful Word Baptist Church. Faithful Word’s pastor Steve Anderson has gained notoriety by calling for the execution of gays, praying for President Obama’s death, and labeling Jews as antichrists. Faithful Word is located on a leased property that will have its property tax assessment ratio lowered to 1% once the law takes effect.

When former Governor Brewer vetoed last year’s version of the bill, she expressed concern that “there is no guarantee that the property owners will pass this benefit on to their tenants.” She also said the law would complicate administrative procedures and that the tax burden would shift to homeowners and other businesses.

Sources:

Steven L. Anderson, “Revelation 2,” faithfulwordbaptist.org, Jan. 2013

Arizona State Legislature, “[Analysis of] HB 2128: Leased Religious Property; Class Nine,” azleg.gov, Feb. 5, 2015

Arizona State Legislature, “HB 2128: Leased Religious Property; Class Nine,” azleg.gov, 2015

Bob Christie, Associated Press, “Church Lease Tax Bill Vetoed by Brewer Is Back This Session,” washingtontimes.com, Jan. 20, 2015

Ronald J. Hansen, “Churches Could See Tax-Free Rent under Legislation,” azcentral.com, Jan. 27, 2015

Ronald J. Hansen, “Churches Win Rental Tax Break with Ducey Approval,” azcentral.com, Mar. 23, 2015

Matthew Hendley, “Arizona Lawmakers Pass New Tax Break for Religious Groups,” phoenixnewtimes.com, Mar. 19, 2015

Matthew Hendley, “Jan Brewer Vetoes New Tax Break for Religious Groups,” phoenixnewtimes.com, Apr. 23, 2014

Matthew Hendley, “New Tax Break for Religious Groups, Once Vetoed by Jan Brewer, Makes a Comeback,” phoenixnewtimes.com, Jan. 28, 2015

James King, “Tempe Church Labeled Hate Group; Pastor Tells New Times Government Should Put Homosexuals to Death,” phoenixnewtimes.com, Dec. 2, 2010

Tram Mai, KPNX-TV, “Pastor Calls for Killing Gays to End AIDS,” usatoday.com, Dec. 6, 2014