Maricopa County tax error costs Fountain Hills schools $1.9 million

By George Zeliff
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The Fountain Hills Unified School District (FHUSD) owes $1.9 million in cash after the Arizona Court of Appeals upheld a ruling that Maricopa County overtaxed a group of property owners from 2015 through 2021.

Stemming from the 2016 Qasimyar v. Maricopa County lawsuit, property owners successfully argued that their properties should have been reassessed because the properties changed classification from an owner-occupied residential home to a rental or secondary home, or vice versa.

The Maricopa County Assessor’s Office didn’t consider that a change in use, since the properties were still residential, but a tax court sided with the property owners. An appeals court upheld that decision in 2021, and the county reassessed approximately 55,000 other homes that changed classification in 2022 and 2023.

State law has been changed since the appeal so that reclassifying a home to a rental or secondary home, or the other way around, doesn’t count as a change in use. Maricopa County school districts, fire districts, cities and towns will have to pay back more than $329 million, with school districts on the hook for nearly $150 million.

The estimated financial impacts on districts includes interest through February 2024, and interest will continue to accrue at a rate of 8% annually.

The Office of the Maricopa County School Superintendent told districts they could request a recalculation of the state aid they received during the years impacted by the Qasimyar decision. School districts need governing board approval to request a recalculation from the Arizona Department of Education.

“We’re going to bring forward a plan to the governing board how to handle Fountain Hills’ obligation for that lawsuit,” FHUSD financial consultant Tyler Moore said. “More to come.”

Moore said the district needs to raise cash and thinks the district can make some payments this year and pay the rest going into the next fiscal year.

Tax authorities across Maricopa County must come up with cash to refund the county’s tax error. Larger entities, like Scottsdale Unified School District ($27.5 million) and the Maricopa County Community College District ($44.69 million), have larger repayments than FHUSD.

If a change in law impacts budget calculations, school districts are allowed to revise their fiscal year budgets by September 15. The FHUSD governing board next meets on Wednesday, August 7, and then Wednesday, August 21.

All meetings begin at 6 p.m. and are held in the FHUSD Learning Center. All board meetings are recorded and livestreamed on the FHUSD YouTube channel.