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Updated Apr 22, 2014 - 7:55 pm

Governor vetoes religious tax breaks

PHOENIX -- Arizona Gov. Jan Brewer says she vetoed a bill allowing private property owners who lease space to churches to get a tax break because of several logistical concerns and because it's possible that owners who get the tax break will not pass on the savings to their renters.

House Bill 2281 would have granted property owners who lease to churches but aren't themselves religiously affiliated similar tax breaks to what churches get when they own property. The tax break applies only to space used for worship services.

The bill, which Brewer vetoed on Tuesday, would affect about one-half of 1 percent of commercial property owners. It could cost the state between $300,000 and $2.1 million in fiscal year 2016.

Proponents say the bill helps small churches that don't yet have the income to build their own establishments.

But Brewer said there are too many administrative challenges in accurately classifying rental properties and that the bill would have exacerbated those woes by requiring that the state track the way commercial property is used. She also worried there is insufficient data to determine the fiscal impact of the tax break.

"Our property tax classification system is one of the most complicated in the nation and continues to be one of Arizona's thorniest tax policy problems," Brewer wrote.

"Granting piecemeal relief exacerbates inequities and results in additional constituencies seeking similar treatment."

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