Issue 3 - January 25, 2013

Legislative Overview

Today marks the end of the second week of the legislative session. With only three days for legislative business, the Capitol once again saw sparse activity both on the floor and in committees.

Despite the dearth of action, as of this morning 730 bills, memorials and resolutions have been introduced this year, 515 of which originated in the House of Representatives. The disparity is to be expected at this point, as last Thursday marked the 7-bill limit for representatives. The League is currently tracking 147 bills for their potential impact on municipal operations.

The League expects the Legislature to begin its labors in earnest next week, particularly in the House.

The topic of transaction privilege tax (TPT) reform was center stage in the Senate Finance and House Ways and Means committees this week as Michael Hunter, director of policy for Governor Brewer and chairman of the TPT Simplification Task Force presented the task force's recommendations. The recommendations that contain potential negative impacts to cities and towns have been previously highlighted in the bulletin. The League will continue to monitor the issue and awaits the introduction of a concrete proposal for analysis and review.

Taxes on Commercial Leases

Over the last several years, the Legislature has exempted certain corporate entities from paying commercial lease sales tax; namely, those that own property under one entity and lease space to "themselves" under another entity. This year, Senator Michele Reagan (R-Scottsdale) has introduced SB 1028 (municipal TPT exemption; leases; LLC), which would add limited liability companies owning and leasing space to themselves to the list of those exempted. It is clear from this bill, bills passed in previous years, and the fact that the state does not tax this activity that the Legislature does not want commercial lease sales tax paid when lease arrangements are between the same people. Rather than add the numerous types of corporate entities to the exempted list year after year, we have agreed to work with Senator Reagan on an amendment that would exempt all entities that are owned by the same shareholders from paying commercial lease tax, regardless of its corporate structure.

The bill was scheduled to be heard in Senate Finance this week, but was held at the request of Senator Reagan in order to allow us to work on an amendment that accomplishes the legislative intent and ensures that cities can continue to collect commercial lease sales tax on property owners who are in the business of leasing property. This bill will hopefully serve as an example of how the municipalities are working towards simplifying and making the tax code more consistent.

Other Bills of Note

(All bills being actively monitored by the League can be found here.)

Bill Number - Subject - Short Title
HB 2005 - political subdivision entities; public access - transparency

Legislative Bulletin is published by the League of Arizona Cities and Towns.
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