State SealARIZONA HOUSE OF REPRESENTATIVES

 

HB 2185: school districts; tax levy; calculation

PRIME SPONSOR: Representative Norgaard, LD 18

BILL STATUS: House Engrossed

            

Legend: PTOC – Property Tax Oversight Commission QTR – Qualifying Tax Rate TRCL – Transportation Revenue Control Limit TSL – Transportation Support Level Amendments – BOLD and Stricken (Committee)

Abstract

☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteRelating to school district tax levy calculations.

Provisions

1.       Requires a school district property tax levy to be equal to the applicable QTR or a levy equal to the district Equalization Assistance Base, subtracted by specified amounts, whichever is less.

o   A school district property tax levy is currently required to equal the QTR or the District Support Level, subtracted by specified amounts, whichever is less (A.R.S. § 15-992). A unified school districts maximum tax rate is the QTR, while common districts and high school districts are capped at 50% of the QTR (A.R.S. § 15-971). (Sec. 2)

2.       Modifies the list of separate tax rates included in a district's property tax levy as follows:

a.       Adds a rate that would result in a levy equaling amounts for a qualifying dropout prevention program.

b.       Clarifies the rate for outstanding cash deficits includes any separately stated cash deficit from the prior FY resulting in a deviation from the property tax roll, including resolutions or judgments relating to property tax appeals or the correction of a property tax error.

i.         Removes the requirement that the county treasurer provide recommendations for this tax rate. (Sec. 2)

3.       Removes the requirement that expected interest earnings, amounts received from the County School Fund and the Special County School Reserve Fund and other revenue source monies be included in county school superintendent budget estimates provided to the PTOC. (Sec. 1)

4.       Allows a school district to tax less than the difference between the TRCL and the TSL. (Sec. 2)

5.       Repeals additional statute requiring the levy of a tax to fund high school districts. (Sec. 3)

6.       Makes technical and conforming changes (Sec. 1, 2)

Current Law

A.R.S. Title 15, Chapter 9 outlines school finance and budgeting. School districts annually determine their budget capacity through a weighted per-student statutory funding formula. A school district will levy a rate against its tax base to receive the amount needed to reach its determined budget capacity. The rate that may be levied for a school district is statutorily capped at the maximum QTR. If a district levies the maximum QTR and has not received sufficient monies to reach its budget capacity, the state provides the remainder as Equalization Assistance. The QTR is subject to Truth in Taxation requirements and in FY 2018 is capped at $2.0234 for high school and elementary districts and $4.0468 for unified districts. Statute provides school districts additional taxation authority outside of the general budget limit for each of the following additional items that are accounted for separately, but summed together within the school district tax levy:

·         The difference between the TRCL and the TSL.

·         Expenses for excess utilities, desegregation, bond issues and registering warrants.

·         The necessary amount for tuition loss.

·         Small school adjustments.

·         Liabilities in excess of the school district budget.

·         Adjacent ways.

·         The amount not captured by QTR due to properties that pay a government property lease excise tax.

·         An amount not levied due to an underestimated average daily membership or a judgement on a property tax appeal.

·         An amount that corrects an outstanding cash deficit.

In order to determine a school district's budget capacity, the county school superintendent is required to prepare an estimate for the PTOC for each district in the county, including each of the following:

·         The school district's student count.

·         The amount the district will receive from the County School Fund and the Special County School Reserve Fund.

·         Expected interest earnings.

·         Other revenue sources (A.R.S. § 15-991).

Laws 1987, Chapter 333 provided a budget-limit exemption for school districts that established a dropout prevention program if certain requirements were met.  The exemption was granted for FY 1988, FY 1989 and FY 1990.  For FY 1991, when the exemption expired, the participating school districts were grandfathered in and authorized to continue to collect taxes to fund their programs at the amount budgeted in 1991.

 

 

 

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Fifty-third Legislature                  HB 2185

Second Regular Session                               Version 3: House Engrossed

 

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