Assigned to ED & FIN FOR
COMMITTEE
Assigned to ED & FIN FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Third Legislature, Second Regular Session
TPT; additional rate; education
Purpose
Establishes an additional 0.6 percent transaction privilege tax (TPT) and use tax beginning July 1, 2021. Contains requirements for enactment and becomes effective on signature of the Governor (Proposition 108).
Background
Proposition 301 was approved by the voters in November 2000 and established a 0.6 percent TPT and use tax distributed as follows: 1) one-twelfth of the annual debt service on outstanding state school improvement revenue bonds; 2) twelve percent of remaining monies to the universities through the Technology and Research Initiative Fund; 3) three percent of remaining monies to the Workforce Development Account developed by each community college district; 4) one-twelfth of the amount a tribal owned community college would receive if it were a community college district for workforce development; 5) $86.3 million to the Arizona Department of Education (ADE) for basic state aid due to added school days; 6) $7.8 million to ADE for school safety and character education; 7) not more than $7.0 million to ADE for accountability measures; 8) $1.5 million to ADE to fund the Failing Schools Tutoring Program; 9) $25 million to the state General Fund (GF) to offset the cost of the income tax credit; and 10) any remaining monies to the Classroom Site Fund for performance based teacher compensation, teacher base compensation and related expenses, and maintenance and operation purposes (A.R.S. § 42-5029).
The 0.6 percent TPT and use tax created by Proposition 301 is set to expire on June 30, 2021.
|
($ in millions) |
|
|
School Facilities Board Debt Service |
$64.1 |
|
Universities |
$72.4 |
|
Community Colleges |
$18.1 |
|
Tribal Colleges |
$0.8 |
|
ADE Added School Days |
$86.3 |
|
ADE School Safety and Character Education |
$8.0 |
|
ADE Accountability |
$7.0 |
|
ADE Failing Schools |
$1.5 |
|
Income Tax Credit |
$25 |
|
Classroom Site Fund |
$384.3 |
|
TOTAL |
$667.5 |
S.B. 1390 extends the TPT and use tax originally imposed by Proposition 301 in 2000. Because of the extension of the 0.6 percent sales tax that was otherwise set to expire in mid‑2021, there will be no negative impact to the state GF.
Provisions
Additional TPT & Use Tax
1. Levies an additional 0.6 percent TPT and use tax beginning July 1, 2021.
2. Requires the Arizona Department of Revenue (DOR) to separately account for the revenues collected.
3. Specifies the additional 0.6 percent TPT is not considered local revenues for expenditure limits for school districts and community college districts.
Distribution of Revenues
4. Distributes the monies monthly as follows:
a) one-twelfth of the annual debt service on outstanding state school improvement revenue bonds, transferred to the school improvement revenue bond debt service fund, the bond principal not to exceed $800 million;
b) twelve percent of remaining monies to the universities through the Technology and Research Initiative Fund;
c) three percent of remaining monies to the Workforce Development Account established by each community college district;
d) one-twelfth of the amount a community college owned, operated or chartered by a qualifying Indian tribe on a reservation would receive if it were a community college district for workforce development;
e) monthly installments of the following annual amounts to ADE:
i. $86.3 million for the increased cost of basic state aid due to added school days and associated teacher salary increases enacted in 2000;
ii. $7.8 million for school safety and $200,000 for the character education matching grant program;
iii. not more than $7.0 million for accountability purposes; and
iv. $1.5 million to the Failing Schools Tutoring Fund.
f) $25 million annually to the state GF for the cost of the income tax credit; and
g) remaining monies to the Classroom Site Fund and allocates:
i. 40 percent for teacher compensation based on performance;
ii. 20 percent for increases in teacher base compensation and employee-related expenses; and
iii. 40 percent for maintenance and operation.
5. Requires the monies collected be distributed in addition to any other appropriation, transfer or other allocation of public or private monies from any other source and prohibits the monies from supplanting, replacing or causing a reduction in other school district, charter school, university or community college funding sources.
Tax Credit
6. Establishes, beginning in Tax Year 2021, a refundable tax credit to mitigate the increased tax rate for a taxpayer who is not claimed as a dependent and whose federal adjusted gross income is:
a) $25,000 or less for a married couple or a single person who is a head of a household; or
b) $12,500 or less for a single person or a married person filing separately.
7. Caps the tax credit at $25 for each Arizona resident eligible for a personal or dependent exemption, not to exceed $100 per household.
8. Deems ineligible for the tax credit a person sentenced for at least 60 days to the custody of the Federal Bureau of Prisons, the State Department of Corrections or a county jail.
9. Requires DOR to make forms available and outlines requirements of the forms or tax returns.
10. Specifies claimants are not required to file an individual income tax return if they have no income tax liability and do not meet certain filing requirements.
Miscellaneous
11. Modifies the Technology and Research Award Program annual report submitted by the Arizona Board of Regents to:
a) specify the report can be submitted before September 1; and
b) remove the Director of the Arizona State Library, Archives and Public Records from receiving the report.
12. Defines terms.
13. Contains a purpose statement.
14. Makes technical and conforming changes.
15. Requires for enactment the affirmative vote of at least two-thirds of the members of each house of the Legislature (Proposition 108).
16. Becomes effective on signature of the Governor.
Prepared by Senate Research
March 20, 2018
BL/lb