Arizona Bill Would Exempt Churches from Paying Property Taxes on Buildings They Rent January 27, 2015

Arizona Bill Would Exempt Churches from Paying Property Taxes on Buildings They Rent

Arizona legislators have just introduced a bill that would allow churches to claim a property tax exemption on buildings they rent rather than just own. A similar bill was vetoed by Gov. Jan Brewer last year, but there’s no telling if the same thing will happen under new Governor Doug Ducey.

House Bill 2128, which passed through the House Ways & Means Committee yesterday on a 6-3 party-line vote, points out that the state already “exempts property owned by a non-profit educational, charitable and religious organization from taxation.”

However, if a church rents space from, say, a public school, they can now claim an exemption on it, too. That rule would not apply to secular non-profit groups that rent the same space.

Arizona State Capitol building

The conservative group Center for Arizona Policy explains why they love this bill (emphasis theirs):

Small churches that are just starting out, churches without the resources to buy, or “church plants” that rent their property should not be penalized for failing to own.

Churches provide countless benefits to our communities so that is why they are exempted from paying property tax. A church should not be excluded from this benefit merely because they rent their property.

If that’s the case, then neither should other non-profit groups in the same position.

For that reason, Alex Luchenitser, Associate Legal Director for Americans United for Separation of Church and State, told me (via email) that this bill in unconstitutional:

The U.S. Supreme Court has made clear that it is constitutional for churches to receive property tax exemptions only because such exemptions are also granted to a broad range of non-profit organizations. The Supreme Court has further made clear that the U.S. Constitution bars governmental bodies from favoring religious institutions over non-religious institutions.

This proposed bill would grant property tax exemptions only for property that is leased to religious or educational institutions. Property leased to other non-profit institutions would not receive the exemption. It is therefore plainly unconstitutional.

To render the proposed legislation constitutional, the exemption would have to be extended to property leased to any kind of non-profit institution.

So Arizona lawmakers face a legal battle if they continue pushing this bill through. Now would be a good time for citizens to contact their elected officials and ask them to vote against it.

By the way, this portion of the bill stood out as well:

[The bill] Qualifies aviation-related items as class nine property [and therefore tax exempt].

I guess struggling religious leaders can get tax-exempt private jets, too?

***Update***: I love that this blogger refers to the bill the “Pastor Steven Anderson Tax Break.”

(Image via Sue Stokes / Shutterstock.com. Thanks to Brooke for the link)


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