The Arizona Legislature saw a notable increase in activity this week. At the forefront of legislative action was the "fast-tracking" of
two spending measures. The first pair of bills (HB 2502 and SB 1249: supplemental appropriation; CPS funding) provide $4.4 million to
Child Protective Services for the hiring of 50 additional caseworkers. This aligns with the governor's request in her State of the
State address. The Governor signed HB 2502 yesterday afternoon, making it the first chaptered bill of the session.
The second measures (HB 2503 and SB 1250: supplemental appropriation; IRC) provide the Independent Redistricting Commission (IRC) with
$500,000 in additional revenue. The appropriation is intended to cover additional costs incurred by the IRC due to litigation; however,
it should be noted that the proposed amounts falls short of the $2.7 million requested by the IRC.
As a point of clarification, each measure has two bill numbers associated with it, because introducing and moving identical bills
through each chamber allows the issue to go to the governor's desk for action quicker than the traditional approach. Additionally,
each bill appropriates funds from the current budget.
The topic of sales tax reform continues to pervade legislative discussions. A measure has yet to be dropped, which makes it difficult
to analyze the harm or benefit these initiatives might create. It is because of this uncertainty that the League feels it is vital that
local elected officials continue to reach out to their delegation and express their concerns about the various sales tax
Monday February 4, marks a key deadline: after 5 p.m., bills can no longer be introduced in the Senate. February 11 marks a similar
deadline for the House of Representatives.
Taxes on Commercial Leases
Last week, the League outlined a bill sponsored by Senator Michele Reagan (R-Scottsdale), which proposes to add limited liability
companies that own and lease space to themselves under another limited liability company to the list of entities exempt from paying
commercial lease tax. The League is simultaneously working with Representative Eddie Farnsworth (R-Gilbert) on
HB 2324 (municipal tax code; leases)
which proposes the same concept. As you may recall from last week's bulletin article, the Legislature has already 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. 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, the League has agreed to work with legislators on amendments that would exempt all
entities that are owned by the same shareholders from paying commercial lease tax, regardless of its corporate structure.
HB 2324 unanimously passed out of the House Committee on Ways and Means on Monday, January 28. There is a commitment from Representative
Farnsworth to work on an amendment for Committee of the Whole. This bill will hopefully serve as another example of how the
municipalities are working toward 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 - Short Title - Subject(s)
HB 2026: local governments; union dues; deductions - personnel
HB 2259: vocational rehabilitation; prosthetic appliances; orthodontics - finance
HB 2347: tax levy; bond costs - finance
SB 1103: charter school; zoning procedures - regulatory
Legislative Bulletin is published by the League of Arizona Cities and Towns.
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