Primary Property taxes are an important source of revenue for the city services we all depend on, such as police, fire, parks, street repair, and recreation.
Understanding property taxes can be a complex undertaking. Here at the City of Surprise, we aim to give you the information in an easy to understand format to help you see how property taxes affect you, your family and the life of your community.
You will find frequently asked questions, links to helpful resources, and a phone contact if you would like more information.
Where do my property taxes go?
Several government agencies receive a portion of your property tax dollars, including public education, Maricopa County and special districts. On your property tax bill, you can see which agencies collect property tax, each agency’s tax rate, and the exact amount each agency receives.
How much of my property tax does the City of Surprise receive?
For every property tax dollar you pay, The City of Surprise receives approximately
$0.09 (9 cents). This represents one of the lowest municipal property tax rates in the Valley.
How much of the City budget do my property taxes represent?
Property taxes make up approximately 7% of the City of Surprise General Fund. The majority of the City’s budget comes from local sales taxes and revenues shared with the City by the state of Arizona.
How does the City use my property tax dollars?
Property taxes pay a portion of the cost of basic, vital services such as police, fire, road maintenance, parks and recreation services.
Does the City decide the property tax rate?
The City Council decides how much revenue is needed from property taxes to keep vital, basic services going in Surprise, within limits established by state law. The Council then approves a tax rate designed to collect that amount. Each year the Council approves the property tax rate during the budget process. Other agencies collecting property taxes follow a similar procedure.
What determines whether my taxes go up or down?
There are two factors: the tax rate set by each agency that collects property taxes, and the assessed value of your property and the property of others as determined by the Maricopa County Assessor’s Office.
How are my property taxes calculated?
Your property tax is the total of each taxing agency’s portion. Each agency sets its own tax rate, within limits established by state law. Those separate rates are applied to the assessed value of your property and a total amount is established.
On your property tax bill, you can see each agency, its rate and the total amount collected.
Why can’t the City just keep my taxes exactly the same as they were last year?
Because how much you pay depends in part on the assessed value of your property, all other properties, and on how much tax revenue the Council is budgeted to receive. In any given year, those numbers could go up, down or stay the same.
After the City Council decides how much revenue from property taxes is needed to keep vital, basic services going in Surprise, it approves a tax rate designed to collect that amount. How that rate affects your property tax depends on your and other property owners’ ever changing assessed values.
It is not possible to assign a custom property tax rate to every property in Surprise in order for the City portion of your property tax to remain exactly the same each year.
There is more about this in the next question.
I’ve heard that raising the rate doesn’t necessarily mean my taxes go up, and lowering the rate doesn’t necessarily mean my taxes go down. How is that possible?
The amount of property tax you pay each year depends on two factors: the assessed value of your property, and the property tax rates set by agencies that collect property tax. The Surprise City Council approves the rate for the Surprise portion of the property tax.
If your property is worth $100,000 one year, its assessed value is $10,000, or 10%. The City tax rate for FY2016 is $0.7591 per $100 of assessed value (the same rate as FY15), so a resident would pay $75.91 for the Surprise portion of property taxes. The formula looks like this:
$100,000 x 10% = $10,000 (assessed value)
$10,000 (assessed value) x $0.7591 per $100 (tax rate) = $75.91
Let’s say the City increases the rate to $0.79 cents per $100 the next year, but the value of your property declines to $80,000, with an assessed value of $8,000. You would pay $63.20.
$80,000 x 10% = $8,000 (assessed value)
$8,000 (assessed value) x $0.79 per $100 (tax rate) = $63.20
So even though the City property tax rate is higher, the amount you pay is lower because the assessed value of your property is lower.
Now, let’s say the City lowers the rate to $.7491 per $100 the next year, but the value of your property increases to $120,000, with an assessed value of $12,000. You would pay $89.89.
$120,000 x 10% = $12,000 (assessed value)
$12,000 (assessed value) x $0.7491 per $100 (tax rate) = $89.89
So even though the City property tax rate is lower, the amount you pay is higher because the assessed value of your property is higher.
There are other possibilities, too. For example, a declining real estate environment means most valuations go down, some more than others, some less. Some remain the same or even go up. If the Council keeps the property tax revenues it collects the same, people whose property value declines more than yours will pay less than you. This is also true if your valuation remains the same or goes up.
In other words, you could pay more property tax than another property owner even if your assessed value goes down. It all depends on the individual assessments of all properties in Surprise and how much revenue the Council budgets for.
Also, a tax rate increase may not necessarily mean you pay more property taxes. In fact, if your assessed value decreases more than the average decline, you will pay less in property taxes even with a higher tax rate.