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ARIZONA STATE SENATE
Fifty-Fourth Legislature, First Regular Session
ENACTED
AMENDED
FACT SHEET FOR h.B. 2756/S.B. 1555
revenue; budget reconciliation; 2019-2020.
Purpose
Makes statutory and session law changes relating to general revenues necessary to implement the FY 2020 state budget.
Background
The Arizona Constitution prohibits substantive law from being included in the general appropriations, capital outlay appropriations and supplemental appropriations bills. However, it is often necessary to make statutory and session law changes to effectuate the budget. Thus, separate bills called budget reconciliation bills (BRBs) are introduced to enact these provisions. Because BRBs contain substantive law changes, the Arizona Constitution provides that they become effective on the general effective date, unless an emergency clause is enacted.
H.B. 2756 contains the budget reconciliation provisions for changes relating to general revenues.
Provisions
Minimum Wage
1. Specifies that the head of each budget unit shall provide in its budget estimate, the cost to the budget unit in the next fiscal year attributable to a county’s, city’s or town’s establishment of a minimum wage if that minimum wage exceeds the minimum wage established by the state.
2. Allows the Legislature to allocate, and the Arizona Department of Administration (ADOA) to assess and collect from a county, city or town, an amount to reimburse the state for any excess cost to the state.
3. Requires the ADOA to assess the amounts no later than July 31 of each year.
4. Specifies that these amounts are payable immediately on assessment.
5. Requires the ADOA, if the county, city or town does not pay the amount allocated on or before December 31 of the year of the allocation, to notify the State Treasurer, who shall subtract the amount owed from any payments made for state shared revenue, retroactive to the first day the amount was due.
6. Requires the State Treasurer, if the amount of state shared revenue is insufficient, to withhold from any other monies payable to that county, city or town from whatever state funding source is available an amount necessary to fulfill the requirement.
7. Requires that the paid assessments shall be credited to the funds in the amounts prescribed in the estimates.
Office of Manufactured Housing (OMH)
8. Redefines terms relating to OMH open and closed construction.
Public Safety Interoperability Fund
9. Establishes the Public Safety Interoperability Fund consisting of monies appropriated to the Fund by the Legislature.
10. Requires the Department of Public Safety to administer the Public Safety Interoperability Fund.
11. Specifies that monies in the Public Safety Interoperability Fund may be used only for interoperable communication systems.
Nonresident Real Estate Transactions
12. Requires a licensed escrow agent to file with the Arizona Department of Revenue (ADOR) an information return of sales of real property located in Arizona that are reported pursuant to federal reporting requirements:
a) on or before the 31st day of March with respect to sales of real property located in Arizona that are closed on or before December 31 of the preceding calendar year; and
b) using the same form and format of the return filed with the U.S. Internal Revenue Service (U.S. IRS).
13. Requires ADOR to report to the Joint Legislative Budget Committee (JLBC) and the Governor's Office on Strategic Planning and Budgeting (OSPB) on the estimated amount of capital gains tax paid by nonresidents of Arizona on real estate transactions from the most recent year before tax year 2019 based on available data from the U.S. IRS, on or before June 30, 2020.
14. Requires ADOR, on or before June 30 of each year, to estimate and report to the JLBC and OSPB the amount of revenue collected from the sale of real estate by nonresidents that is attributed to the information return in the prior tax year.
Sales Factor
(Retroactive to January 1, 2019)
15. Expands the definition of multistate service providers used to determine the allocation of the sales of services for corporate income tax purposes to include a taxpayer with more than 2,000 employees in Arizona and that derives more than 85 percent of its sales from support services provided to a regionally accredited institution of higher education.
Arizona Department of Gaming (ADG)
16. Continues to require the ADG, in FY 2020, to establish and collect a regulatory assessment from each commercial racing permittee, payable from amounts deducted from pari-mutuel pools, in addition to amounts already authorized.
Department of Insurance (DOI)
17. Continues to suspend the requirement that fees collected by DOI be between 95 percent and 110 percent of the DOI appropriation.
Arizona Department of Agriculture (AZDA)
18. Continues to allow AZDA to continue, increase or lower existing fees from FY 2018 and FY 2019 in FY 2020.
19. Limits additional revenues generated by the above AZDA fees as follows:
a) $218,000 to the state General Fund;
b) $113,000 to the Pesticide Trust Fund; and
c) $26,000 to the Dangerous Plants, Pests and Diseases Fund.
20. Exempts AZDA from rulemaking requirements for the purpose of establishing fees until July 1, 2020.
Counties
21. Continues to allow counties with a population less than 250,000 persons to use any source of county revenue, up to $1,250,000, to meet any county fiscal obligation in FY 2019.
22. Continues to require a county using the flexible authority to report the following to the Director of the JLBC by October 1, 2019:
a) whether the county used a revenue source for purposes other than the purposes of the revenue source to meet a county fiscal obligation; and
b) the specific source and amount of revenues that the county intends to use in FY 2020.
Arizona Department of Revenue (ADOR)
23. Continues the legislative intent statement that local fees to fund ADOR are not to exceed $20,755,835 in any fiscal year and are to be allocated between cities and towns, counties, the Maricopa Association of Governments and the Pima Association of Governments based on the prorated share of all revenues distributed, excluding the Highway User Revenue Fund.
Miscellaneous
24. Becomes effective on the general effective date, with delayed and retroactive effective dates as noted.
Amendments Adopted by Committee of the Whole
1. Specifies that the head of each budget unit shall provide in its budget estimate, the cost to the budget unit in the next fiscal year attributable to a county’s, city’s or town’s establishment of a minimum wage if that minimum wage exceeds the minimum wage established by the state.
2. Requires the ADOA to assess the amounts not later than July 31 of each year.
3. Specifies that these amounts are payable immediately on assessment.
4. Requires that the paid assessments shall be credited to the funds in the amounts prescribed in the estimates.
5. Redefines terms relating to OMH.
6. Establishes the Public Safety Interoperability Fund consisting of monies appropriated to the Fund by the Legislature.
7. Requires ADOR to report to the JLBC and OSPB on the estimated amount of capital gains tax paid by nonresidents of Arizona on real estate transactions and the amount of revenue collected.
8. Clarifies the definition of multistate service provider.
House Action Senate Action
APPROP 5/22/19 DP 7-4-0-0 APPROP 5/22/19 DP 6-4-0
3rd Read 5/24/19 31-29-0 3rd Read 5/27/19 16-13-1
(H.B.
2756 was substituted for S.B. 1555 on
3rd Read)
Signed by the Governor 5/31/19
Chapter 272
Prepared by Senate Research
June 5, 2019
CS/kja