Legislative Overview

Today is the 117th day of session. It is possible that the legislature could adjourn later today as they are working on a Friday, a rare event. The budget consumed the beginning of the week and early on May the 4th the package of funding bills passed. An analysis of the items pertinent to cities and towns is detailed below.

There are bills of concern for municipalities that are being processed today, and also a handful of bills that went through in the last few days of the session that now await the governor's signature. We will report on those in the next and final edition of The Bulletin, and detail those items in the annual New Laws Report.

State Budget

Although the budget package included over a dozen bills, these are the three that are most germane to municipalities. And, as we reported last week, there are no formula changes to revenue sharing accounts.

HB 2695: general appropriations act; 2016-2017 - The budget sweeps $96 million from HURF (the same amount swept last year). There is a one-time appropriation of approximately $1.3 million for border strike task force local support, $761,700 of which is to be used for local law enforcement officer positions within the task force. Access to these funds requires a 25% local match. The remaining $500,000 is to be used for grants to cities, towns and counties for costs associated with the prosecution and incarceration of crimes related to illegal immigration and other border-related crimes. There is also an appropriation of $1 million from the Automation Projects Fund to ADOA for a feasibility study to replace the tax accounting system at the Department of Revenue.
HB 2708: revenue; budget reconciliation; 2016-2017 - There is a one-time appropriation of $30 million to local governments from the General Fund to cities, towns and counties to be distributed in a manner similar to the HURF formula for FY2017. After applying the formula specified in the bill, this results in an increase of approximately $16 million in new funds to cities and towns. This same distribution is scheduled to occur in FY2018 as well. Also included in this bill is the DOR assessment for TPT administration for local governments, of which approximately $11 million is assessed to cities and towns. The one-time special assessment imposed on self-collecting cities has lapsed.
SB 1527: appropriations; capital outlay; 2016-2017 - There is a $66 million one-time general fund appropriation to the State Highway Fund to offset the remainder of the HURF sweeps. Included in these funds is $25 million to ADOT for acceleration of the SR 189 construction project. (This is a League resolution.) The bill also includes an appropriation of $19 million from the State Aviation Fund for planning, construction, development and improvement of state, county, city or town airports. This represents a significant increase over last year's appropriation.
There are also proposed tax reductions totaling $26 million. The most significant of these is attributed to income tax reductions associated with accelerated depreciation for personal property ($8 million) in HB2697: bonus depreciation; budget reconciliation; 2016-2017 and modifications to the exemptions to the state's portion of utility taxes ($7 million) in HB 2676: utilities; manufacturing; smelting; TPT. The impact to cities and towns of all of these reductions would be negligible.

Legislative Bill Monitoring

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

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