Issue 1 - January 13, 2017

Legislative Overview

On Monday, January 9, the first regular session of Arizona's 53rd Legislature convened. Many mayors, council members and municipal staff attended the Opening Day ceremonies. Governor Doug Ducey delivered the annual State of the State Address. You can find his speech here.

Governor Ducey unveiled his budget today, and we have done a preliminary review of the documents.

The Governor's budget continues the practice of sweeping the Highway User Revenue Fund (HURF). The amount of the sweep remains unchanged from last fiscal year, approximately $96 million shared among municipalities, counties and the State Highway Fund. Unlike last year, when the cities and towns received $14.4 million in onetime monies, there is no similar offset this year in the budget.

The statutory funding for the Department of Revenue provided by cities and counties was not addressed in the Governor's budget. Therefore, we anticipate that this requirement will remain in place.

The Governor's budget also proposes to use state TPT revenues paid by the three state universities to fund bonding for deferred maintenance as well as general operating expenditures. The proposal for general operating expenditures includes the existing shared revenue portion of state TPT. The following is the explanation of this proposal included in the Governor's budget documents:

The aforementioned $1 billion ongoing investment will be supported by redirecting transaction privilege tax (TPT) revenues paid by the universities, which includes an estimated $30.3 million State component and $6.5 million State-shared component.

The Executive recommends that the $30.3 million State component be used for capital investments, including R&D infrastructure and deferred maintenance projects. This ongoing State component, in addition to a university match, will enable universities to bond for approximately $1 billion over 30 years and make substantial investments in R&D infrastructure and deferred maintenance. TPT growth related to the State component is capped at 2 % annually for capital investments. Any TPT revenue growth above 2% annual growth will be provided to universities for general operating expenditures.

In addition to the estimated to the $30.3 million State component, the approximate $6.5 million State-shared component, and all related future TPT revenue growth, will be made available to the universities for general operating expenditures, including resident student costs.

We have serious concerns about this proposal since it compounds the trend of shifting responsibility for funding state services to local governments.

The Governor's budget included a small income tax reduction. It would index the personal exemption for individual income taxes, reducing state revenues by approximately $3 million per year. If any additional tax reduction proposals are made, we will keep you informed.

Here is a link to the Governor's proposal.

HB 2011

HB 2011 was heard Wednesday morning in the House Ways and Means Committee.

Current statute requires a city or town to annually levy a tax on all taxable property within its jurisdiction to pay the annual principal and interest on any issued bonds. The annual levy may not exceed the net amount necessary to make the annual payments of principal and interest, projected payments of principal and interest on new debt planned for the ensuing year, a reasonable delinquency factor, including an amount necessary to correct prior year errors in the levy and any expenses and fees necessary to comply with federal income tax laws. H2011 amends the statute to also require that, after principal and interest have been paid and other requirements listed have been met for the current tax year, that next year's tax levy must be net of any remaining cash from the prior year's levy.

The League expressed several concerns related to how the net of cash policy might create significant rate fluctuations and possible issues with bond ratings.

The bill passed out of committee by a vote of 6-2.

Session Deadlines

On Monday, January 9, the first regular session of Arizona's 53rd Legislature convened. Many mayors, council members and municipal staff attended the Opening Day ceremonies. Governor Doug Every session has deadlines pertaining to bill submissions and hearings. These are established by rule and are subject to change. This year, the schedule is as follows:

January 2017
Monday, the 9th - First day of session
Thursday, the 12th - House 7-bill Introduction Limit Begins (5 p.m.)
Monday, the 30th - Senate Bill Introduction Deadline (5 p.m.)

February 2017
Monday, the 6th - House Bill Introduction Deadline (5 p.m.)
Friday, the 17th - Last day to hear bills in the chamber of origin

March 2017
Friday, the 24th - Last day to hear bills in the opposing chamber

April 2017
Tuesday, the 18th - 100th Day of Session

Monday Legislative Update Calls

The League will continue to host a weekly teleconference to report on the status and impact of various legislative bills in the 2017 session. The calls are scheduled for Monday mornings promptly at 10:00 a.m. However, because of the Martin Luther King, Jr. holiday, next week's call will be held at 10:00 a.m. on Tuesday, January 17. Mayors, managers and other city or town officials and staff who are interested in legislative activities are invited to participate. Call-in numbers and a brief agenda will be sent out prior to the calls. If you would like to receive the Monday agendas, please contact and request to be added to the distribution list for the Monday teleconference.

Legislative Bulletin

The League will electronically distribute the Legislative Bulletin every Friday during the legislative session. The Bulletin serves as a way for the League to communicate to elected officials, staff and other interested parties about activities at the Legislature that are relevant to cities and towns. If you know of any municipal official or staff member that would like to subscribe to the Bulletin please have them send their name and email to and request to be added to the Legislative Bulletin distribution list.

As in the last few years, the Bulletin will highlight the top half-dozen or so topics and bills. Other legislation that the League is actively engaged on will still be monitored and updated; however, that information will be available on our Legislative Bill Monitoring page on the League website. The Bulletin will link to the legislation that has been updated in our Legislative Bill Monitoring Section. This format should make it more convenient for you to keep up to date on the latest legislative activities, while still providing a resource for more detailed information.

Legislative Intern

The League is pleased to welcome Emily Webb as our APS Legislative Intern for the 2017 session. Emily's background is in business and human resources at the Green Bay Packers, Inc. Currently, Emily is a Senior at Arizona State University and will be receiving her bachelor's degree in Interdisciplinary Studies with a focus in Organizational Leadership and Business in May of 2017. Emily will be assisting the League's legislative staff for the duration of the Spring 2017 semester.

Your Voice

The 2017 edition of Your Voice at the Capitol, our listing of state senators and representatives, is available here. Please use this document to access your delegation. Early contact with your legislators is strongly recommended in order to establish a relationship with the elected officials representing your district. Maintaining good communications with your legislators provides them with valuable insight as to how proposed legislation may affect their communities.

Additionally, you can contact our legislative division at (602) 258-5786 or email using the information below:

Patrice Kraus, Legislative Director:

Tom Savage, Legislative Associate:

Alex Vidal, Legislative Associate:

Legislative Bill Monitoring

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

HB2011: bonds; levy; net of cash
Legislative Bulletin is published by the League of Arizona Cities and Towns.
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