This week was the last week to hold hearings on bills in their chamber of origin. Committee agendas were jam packed and
strike-everything amendments were rampant. Many committees had agendas with more than 20 bills. There was also considerable floor
activity and bills are now being transmitted to the other chamber. The next major deadline is March 20th when committee work, with the
exception of Appropriations, will conclude.
HB 2590: TPT reform; contractors,
sponsored by Rep. Karen Fann (R-Prescott), was heard in Ways & Means and passed unanimously, 9-0. On Thursday, its companion bill, SB
1446, passed out of the Senate by a vote of 28-1-1. SB 1446 was then substituted in place of HB 2590, and passed out of the House by a
vote of 57-0-3. Based on these vote totals, the bill's emergency clause will be effective, so the changes go into effect immediately on
the signature of the Governor, with a retroactive date of January 1, 2015. SB 1446 clarifies the definitions of the terms "replacement"
and "alteration"; provides bright-line tests for both residential and non-residential alteration projects to determine when they are
subject to tax on materials as opposed to being considered prime contracting; and, clarifies which contractors should keep their TPT
license going forward. The bill allows licensed contractors who are doing alteration projects to continue buying all materials without
tax, provided they pay retail TPT on the materials to the jurisdiction where the project is being done. The bill now goes to the
Governor for signature. The League appreciates the leadership of Senator Lesko (SB 1446) and Representative Karen Fann, sponsor of the
identical House bill (HB 2590), on this important issue.
Other TPT Bills of Note
A strike-everything amendment to Senator Debbie Lesko's (R-Peoria)
SB 1120: now fine art; TPT; exemption
passed Senate Finance on a 3-2 vote. The striker creates an exemption for sales of fine art to nonresidents who are physically in the
store completing a purchase when the seller ships the artwork out of State to the buyer for their use at an out-of-state location. This
partially undoes a tax uniformity change agreed upon as part of HB 2111 in 2013. That bill eliminated the State exemption for sales to
nonresidents who are physically in the store completing a purchase when the item was shipped by the seller out of state to the buyer.
This essentially reinstates that exemption, but only for sales of "fine art" as defined in A.R.S. 44-1771. Although this will have a
negative impact on shared revenue, the bill does not include preemption against municipal tax. The bill goes on to the Rules
Another of Senator Lesko's bills,
SB 1133: TPT; municipalities; customer refund claims,
passed Senate Finance by a 4-1 vote. This bill allows a customer to make a direct claim for refund to DOR or a non-program City when
they believe they paid tax to a vendor (taxpayer) on a transaction that could have been exempt if the buyer had presented an exemption
certificate at the time of the sale. The bill provides the customer with the first option of requesting an assignment and waiver from
the vendor. If the vendor fails or refuses to assign their rights to the refund, the customer can file a claim directly with DOR or a
Non-program city. This bill opens the door to a significant risk of fraudulent refund claims by customers of companies that have gone
out of business. It also raises troubling theoretical issues, particularly related to the fundamental definition of who is a taxpayer in
Arizona. This effectively places the customer in the role of the ultimate taxpayer, which leads to our tax system being more aligned
with a sales tax than a true transaction privilege tax, and the numerous adverse impacts that would have on our current system. The bill
goes on to the Rules Committee.
HB 2563: health facilities; substance abuse recovery,
sponsored by Rep. Noel Campbell (R-Prescott), passed the House Children and Family Affairs Committee by a vote of 7-1. The bill attempts
to provide more regulation on sober living facilities located in cities and towns, as many of them now have no local governmental
oversight or siting requirements. The League supports the bill. It now goes onto the Rules Committee.
On Thursday, the House Government and Higher Education Committee passed
HB 2008: S/E fireworks, by a
vote of 6-3. Although the bill was sponsored by Rep. T.J. Shope (R-Coolidge), the strike everything amendment was sponsored by the
committee Chair, Rep. Bob Thorpe (R-Flagstaff). A major portion of the League's opposition is that there are numerous areas in the state
that interface with wild lands or preserves, but the bill only addresses a particular carve out related to preserves of a certain size.
There are also stipulations on signage where fireworks are sold. The League had no opportunity to meet on the bill before it showed up
as a strike-everything amendment and believes that since there has been fireworks legislation several years in a row, it is time for a
moratorium. The bill goes on to the Rules Committee.
HB 2570: municipalities; vegetation requirements; prohibition,
sponsored by Rep. Darin Mitchell(R-Litchfield Park) passed the House Government and Higher Education Committee on Thursday by a vote of
6-3. The measure prohibits cities and towns from placing specific restrictions on property owners regarding the installation or removal
of vegetation. The League opposed this measure saying such decisions should be left up to local communities to determine the best
practices for aesthetics, drought resistance and erosion control. The bill now moves on to the Rules Committee.
SB 1443: occupational disease; post-traumatic stress disorder,
sponsored by Sen. Steve Smith (R - Maricopa) expands the list of occupational diseases for firefighters and peace officers to include
post-traumatic stress disorder, and that the disorder is deemed to arise out of their employment. The bill could have significant
financial repercussions for cities and towns for workers' compensation costs and insurance rates; therefore the League is opposed due to
the unknown cost ramifications. The bill passed the Senate Public Safety and Military Technology Committee by a vote of 6-0 and now goes
on to the Rules Committee.
Legislative Bill Monitoring
(All bills being actively monitored by the League
can be found here.)
HB 2590: TPT reform; contractors
HB 2008: S/E fireworks
HB 2563: health facilities; substance abuse recovery
HB 2570: municipalities; vegetation requirements; prohibition
SB 1120: now fine art; TPT; exemption
SB 1133: TPT; municipalities; customer refund claims
SB 1443: occupational disease; post-traumatic stress disorder
Legislative Bulletin is published by the League of Arizona Cities and Towns.
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