Issue 10 - March 20, 2015
This week was full of activity as members sought to have their bills passed out of committee before the deadline to hear bills in regular
committee passed. This is also the time of year when a number of strike everything amendments are introduced with only limited time to assess
their impact. If standard practice continues, only the House and Senate Appropriations committees will be allowed to consider bills next week.
HB 2315 financial information; comprehensive database; positing
relates to the requirement for cities and towns to post financial data on the OpenBooks website hosted by the Arizona Department of
Administration. This week, the sponsor, Rep. Brenda Barton (R-Payson), held a meeting to discuss the issues and concerns that local governments have
with the bill. An amendment was made to the bill to change the penalty for malfeasance from removal of office to a fine. However,
during the meeting participants had many unanswered questions related to the complicated administration of this bill. After hearing our
concerns, Rep. Brenda Barton agreed to delay implementation of the bill to January 1, 2016 in order to work with cities, towns and other
affected local governments to clarify what compliance means in the definitions and to streamline the process with the Arizona Department of
On Thursday, the House Government and Higher Education Committee failed to pass the strike everything amendment to
SB 1192, by a vote of 3-5. Sponsored by
Representative Bob Thorpe (R-Flagstaff) as committee chairman on behalf Sen. Kelli Ward (R-Lake Havasu City), the amendment prohibits local
authorities and state agencies from using a photo enforcement system to identify red light and speed limit violators. The League opposes the
amendment as it preempts local decision making.
Property Manager Tax Returns
HB 2447 (now) real property managers; consolidated returns
sponsored by Rep. Justin Olson (R-Mesa) passed Senate Finance on Wednesday by a vote of 4-0-1. The bill requires cities and towns that impose a
tax on real property rental to allow a Property Manager to electronically file a single tax return that includes detailed information about all
of their clients and their underlying separate property locations. The bill effectively requires DOR to make the necessary changes to their tax
system to add this capability. Earlier this week the League met with the Governor's office, DOR and an industry representative and tentatively
reached a successful compromise that will allow this transition to occur effective in 2017. Although not ready in time for the Finance
committee, we anticipate an amendment on the floor that resolves the agreed upon issues. This bill now moves to the Senate Rules committee.
On Wednesday, the House Commerce Committee passed the strike everything amendment to
SB 1344, by a vote of 5-3. Sponsored by
Rep. Warren Petersen (R-Gilbert), the amendment states that a public lobbyist or lobbyist contracted by a municipality owes the governing body
of that municipality a fiduciary duty and requires public lobbyists to identify to the legislature during legislative testimony any member of the
council that opposes the position presented by the lobbyist. The League opposes the amendment as it is adverse to a majority form of government
and may run afoul of the Open Meetings Law. The amendment now moves to the Rules Committee.
Customer Refund Claims
SB 1133 TPT; municipalities; customer refund claims
sponsored by Sen. Debbie Lesko (R-Peoria) passed House Ways and Means on Monday by a vote of 6-2-0-1. The bill allows a customer to make a
direct claim for refund to DOR or a non-program city when they believe they overpaid tax to a vendor (taxpayer) on a sale that would have been
exempt if the buyer had presented an exemption certificate at the time of the sale. The bill allows a customer the option of requesting an
assignment and waiver from the vendor, and if the vendor fails or refuses to assign their rights to the claimed refund, the customer can file a
claim directly with DOR or a non-program city. The League is opposed to this bill as it not only opens the door to a significant risk of
fraudulent claims, but it also requires laborious efforts to track and verify information the taxing jurisdictions do not have at their
disposal, and also raises troubling theoretical issues, particularly related to the definition of who is the taxpayer in our Transaction
Privilege Tax system. Passage of this bill would fundamentally change the imposition of TPT in Arizona in myriad ways that have not been
adequately considered. This bill now moves to the House Rules committee.
On Wednesday, the Senate Finance Committee passed a strike-everything amendment to
HB 2383 that provides for an alternative
method of de-annexation if certain conditions are met. The measure was introduced to address a specific problem created by a series of
unfortunate circumstances. The policy it creates is very problematic long term, but we understand its intent and the sponsor agreed to close the
window on its provisions after 2 years. Please contact the League should you require additional information.
HB 2131 tax adjudications; attorney fees
sponsored by Rep. Darin Mitchell (R-Litchfield Park) passed Senate Finance on Wednesday by a vote of 3-1-1. In accordance with last week's
stakeholder meeting, this bill was amended in committee to increase the caps on attorney fees that can be awarded to a successful taxpayer in
tax cases. The hourly rate cap was raised from $175 to $350, and the maximum award per court level was raised from $30,000 to $75,000. The
amendment also indexes the maximum awards to inflation. These changes also apply to the administrative hearing level, which was previously
capped at $20,000. Two key changes were left out of the amendment: reverting from a mandatory award system back to a discretionary one, and
removing the new allowance for contingency fees as an element of attorney fees that can be awarded. It is our understanding that this was
merely an oversight and there will be a floor amendment introduced that will remove both the mandatory and contingency fee elements. This bill
now moves to the Senate Rules committee.
Legislative Bill Monitoring
(All bills being actively monitored by the League
can be found here.)
SB 1192: community college tuition financing districts (S/E: photo radar; prohibition)
SB 1241: AHCCCS; contractors; providers (S/E: energy measuring and reporting; prohibition)
SB 1344: organization of county; private property (S/E: municipal lobbyists; fiduciary duty; disclosure)
HB 2214 notice; attorney general; trial court (NOW: majority vote calculation; municipal elections)
HB 2383: contracting; TPT; land value (S/E: invalid annexation; return procedure)
Legislative Bulletin is published by the League of Arizona Cities and Towns.
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