PHOENIX — Maricopa County fire districts say a court decision could force them to cut essential services, rely on older equipment, or shut down fire stations after learning they owe millions of dollars in tax refunds because of a property tax dispute the fire districts didn’t cause.
“This just came out of nowhere,” Arizona Fire & Medical Authority Chief Mark Burdick said. “It’s our ability to respond, when you need us on your worst day.”
Burdick said his fire authority is on the hook to pay back $5.9 million in tax refunds, which amounts to 10% of his annual budget after a judge ruled Maricopa County overtaxed some property owners.
“It was a bomb. We went $6 million,” he said. “It's almost like they're trying to put fire districts out of business.”
The Arizona Fire & Medical Authority operates 12 fire stations, largely in unincorporated parts of the county and mainly serving senior communities in Sun City West and Sun Lakes.
Burdick said they first learned they would owe back money when the county treasurer sent a notice late last year, but he never expected it would be this much or they would have to pay it back in a single year with interest.
“That means we cut services. Or we have a capital account,” he said.
Burdick said cutting a check from their capital account means they can’t buy new fire trucks, ambulances, or fire gear.
“We have no input on how they assessed the tax, zero. But we're paying the price,” he said.
Court decision at the center of property tax dispute
This all stems from a 2016 lawsuit: Qasimyar v. Maricopa County.
A tax court ruled in favor of property owners who sued the county, alleging they were improperly and erroneously assessed when their properties went from a primary resident to a rental or secondary home or vice versa. And therefore, should have seen lower property tax bills because of what’s known as a “change of use."
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The Arizona Court of Appeals upheld the ruling and agreed some property owners were overtaxed, which forced hundreds of thousands of homes to be reassessed and resulted in property tax refunds from 2015 to 2021.
The Maricopa County Assessor and Treasurer both have websites now dedicated to the far-reaching impacts of the court decision.
Other fire districts, taxing authorities also impacted
It’s not only one fire authority having to come up with millions of dollars in tax refunds in a single year.
John Flynn with the Arizona Fire District Association said Maricopa County fire districts owe an estimated $10.6 million.
“This is a very serious situation,” Flynn said. “It will devastate our ability to deliver services.”
In all, the county treasurer estimates it will have to pay back $329 million in property tax refunds. Hundreds of millions of dollars from all county taxing districts, including school districts, fire districts, cities and towns are on the hook to repay.
The county said 164,000 property owners will receive refunds from that bucket of more than $300 million.
“This is a situation that has occurred because of an error that the county assessor made in assessing properties, residential properties,” Flynn said.
ABC15 has obtained the list from the Maricopa County Treasurer which shows each district and how much they owe. Search the database below.
Maricopa County Assessor inherited lawsuits impact
Maricopa County Assessor Eddie Cook was not in office when the lawsuit was filed, he said he was sympathetic to the concerns from fire districts but does not agree with the judge’s decision.
“The county assessor, in my opinion, did not make a mistake in the 2016 timeframe. I believe the judge was incorrect in the ruling,” Cook said.
When asked if the county did everything it could to fight the lawsuit and judge’s ruling Cook said, “I wasn’t here when it happened. I believe that we could have been better.”
Despite his opinion, Cook acknowledges the court’s decision has resulted in significant challenges for taxing districts, especially those like fire districts which rely solely on tax revenue.
“I get it. It’s not fair for them. They did nothing wrong,” he said. “The county is going to try to help these particular jurisdictions that are going to suffer the most.”
Since the court’s decision, state lawmakers passed a bill essentially overturning the judge’s ruling moving forward.
“The bill that we passed, it fixes this, and it won’t happen again,” Cook said.
But the state law change is not retroactive. It doesn’t change the impact on fire districts now having to pay back millions of dollars in tax refunds, and with an 8% annual interest rate, until paid in full, according to an April notice from the county treasurer.
“The assessor made a mistake. And we’re going to pay back with interest,” Chief Burdick said.
“There’s going to have to be [a solution]. There has to be. Or the solution is going to be we’re going to disrupt and diminish services,” Flynn said.
ABC15 asked the county assessor why taxing districts are accruing interest and we’re told that’s a question for the county treasurer.
Maricopa County Treasurer John Allen’s office told ABC15 it had no comment and to direct our questions to the Maricopa County Board of Supervisors.
A spokesman for the Board of Supervisors said it is actively working on possible solutions, but there are no concrete solutions yet.
State lawmakers recently passed a bill, HB2909, which gives certain taxing districts more financing options, but it’s still not clear what the legislation could mean for fire districts and how they pay back these funds.
ABC15 will continue reporting on this issue.
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