Legislative Overview

Today marks the 12th day of the 2016 session. This week saw minimal bill action related to municipal concerns. We expect that to change next week as agendas get more fully developed. Last Friday Governor Ducey released his budget proposal which is analyzed further in the article below.

To date there have been 798 bills introduced, with 62 memorials and resolutions. This is ahead of last year's pace, as there were 665 bills introduced, with 39 memorials and resolutions at this time.

Governor's Budget Proposal

The Governor's budget proposal came out last Friday afternoon. There were no specific mentions of any changes that directly affect cities and towns. The Governor is effectively proposing to leave in place the various charges that were in the final budget last year. Here is a brief recap and update on those issues.

Funding the Department of Revenue

An ongoing charge to cities and towns totaling $10,912,898 for DOR operations. This is a permanent charge for administering DOR operations based on the city/town share of all local revenues handled by DOR. The amount is allocated to the cities and towns based on population, so the amounts per municipality will change compared to last year once the revised population figures for cities that had a mid-decade census performed are included in the calculations. Most cities will see a slight reduction, while the census cities will an increase in their share of the total.
A charge of $0.76 per resident to help offset programming costs related to TPT Simplification, billed to any city that is not on the State collection program as of July 31st. This charge will total roughly $2.8 million, assuming DOR will not be ready to take over administration for the 14 remaining self-collecting cities on or before the billing date of July 31, 2016. Again, since this fee is based on population, the final amount due will be somewhat higher than last year for the Non-program cities that performed a mid-decade census.

HURF
The Governor's proposal regarding HURF remains the same as last year: $30 million restoration but with a total diversion of $89 million from local governments to DPS.

This link will take you to all of the Governor's budget documents; then use the "2017" tab: azospb.gov/publications2014newweb.aspx

Census Adjustments

At the League's request, Representative Justin Olson (R-Mesa) has introduced HB2483 (municipal population estimates; use) that will allow municipalities to use the U.S. Census Bureau's annual population estimates to update the population used by the Arizona Department of Revenue for the distribution of shared revenues (HB 2384 municipal population estimates; use). The use of the Census Bureau's estimate as an alternative to conducting a special census will save significant taxpayer dollars in the future while providing the opportunity to update population numbers in real time. This legislation represents a compromise that was reached this summer after a series of meetings with cities and towns throughout the state. We appreciate all of the assistance we received in resolving this issue and will keep you updated on the progress of the bill as it moves through the process.

PSPRS

The League continues to participate in stakeholder workgroups on the issue of PSPRS reform. There has not been a bill dropped yet, but Sen. Debbie Lesko (R-Peoria) and Rep. Justin Olson (R-Mesa) will be the bill's primary sponsors. From the perspective of cities and towns, a number of important points are included that have general consensus including: 50-50 contribution to pension from the employer and employee, pensionable pay cap (to prevent "spiking"), new Board structure and a higher minimum retirement age. These changes will apply to new public safety employees hired after the bill's effective date.

The bill will also include a Constitutional referral that is expected to be on the May Special Election ballot to change the PBI (Pension Benefit Increase) for existing employees and retirees to a more traditional COLA formula. Issues that are still unresolved include the structure for Disability Boards and whether the new system will have a single, pooled rate or maintain the 256 separate ones. The League supports pooling all members together to provide uniformity of contribution rates.

Legislative Bulletin is published by the League of Arizona Cities and Towns.
Forward your comments or suggestions to league@azleague.org.