HB2899 - 542R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 3, chapter 19, article 3, Arizona Revised Statutes, is amended by adding section 3-3438, to read:

START_STATUTE3-3438. Standards; retail dispensing; natural gas

A. Within one hundred eighty days after the effective date of this section, the division shall adopt rules requiring the retail sale of compressed natural gas and liquefied natural gas that are used as a motor vehicle fuel to be dispensed in the manner prescribed in this section.

b. Compressed natural gas shall be dispensed either in gasoline gallon equivalent units or diesel gallon equivalent units. A gasoline gallon equivalent of compressed natural gas shall initially be set at 5.660 pounds and shall remain at that level unless changed pursuant to rule. A diesel gallon equivalent of compressed natural gas shall initially be set at 6.384 pounds and shall remain at that level unless changed pursuant to rule.

C. Liquefied natural gas shall be dispensed in diesel gallon equivalent units. A diesel gallon equivalent of Liquefied natural gas shall initially be set at 6.059 pounds and shall remain at this level unless changed pursuant to rule.

D. Taxes imposed on compressed natural gas and liquefied natural gas are presumed to be direct taxes on the consumer or user but shall be collected and remitted to the department of transportation by suppliers for the purpose of convenience and facility only. Compressed natural gas and liquefied natural gas taxes that a supplier collects and pays to the department of transportation are considered to be advance payments, shall be added to the price of compressed natural gas and liquefied natural gas and shall be recovered from the consumer.

E. The division shall establish procedures to carry out this section. Before making necessary revisions resulting from changes in the energy contents of motor fuels, including compressed natural gas or liquefied natural gas, the division shall take into consideration whether the national institute of standards and technology prescribes standards for dispensing compressed natural gas and liquefied natural gas and whether those standards use different values for gasoline gallon equivalent and diesel gallon equivalent units or allow sales in different units. If the national institute of standards and technology develops or adopts different standards than prescribed by subsection B of this section for gasoline gallon equivalent and diesel gallon equivalent units, the national institute of standards and technology standards shall be adopted for this state unless good cause is shown otherwise. END_STATUTE

Sec. 2. Title 28, chapter 2, article 1, Arizona Revised Statutes, is amended by adding section 28-308, to read:

START_STATUTE28-308. Periodic plan and review of road use fees; potential termination of road use fees

A. The state transportation board, in consultation with county and municipal governments, and regional transportation planning agencies shall immediately develop a comprehensive plan for the use of anticipated monies in the Arizona road use account established by section 28‑6535 over the next twenty years.

B. Periodically, but not less frequently than every five years, the state transportation board, in consultation with county and city governments, and regional transportation planning agencies shall update the prior comprehensive plan for the use of anticipated monies in the Arizona road use account over the next twenty years. The plan shall include specific proposed projects for constructing, preserving and maintaining streets, roads and highways in this state to be funded from the Arizona road use account.

C. The state transportation board and regional planning agencies shall submit the plan to the governor, the president of the senate and the speaker of the house of representatives and provide a copy of the plan to the secretary of state. The president of the senate and the speaker of the house of representatives shall direct the appropriate standing committees to review the plan and conduct thorough public hearings on the plan and the proposed specific plans and projects in the plan.

D. After review of the plan and the public hearings on the plan, the appropriate standing legislative committees may recommend the termination of all fees and other charges imposed by section 28-5606.01 or 28-5606.02 that provide monies for the Arizona road use account and the repeal of the account. END_STATUTE

Sec. 3. Title 28, chapter 16, article 1, Arizona Revised Statutes, is amended by adding sections 28-5606.01 and 28-5606.02, to read:

START_STATUTE28-5606.01. Imposition of additional motor fuel taxes; conditional enactment

A. In addition to the taxes imposed by section 28-5606, subsection A, the following taxes shall be imposed at the rates provided in this section in the same manner as the taxes imposed by section 28-5606, subsection A:

1. For motor vehicle fuel, the rate per gallon is:

(a) For fiscal year 2020-2021, $.24.

(b) For fiscal year 2021-2022, $.30.

(d) For fiscal year 2023-2024 and each year thereafter, the rate prescribed in subdivision (c) of this paragraph shall be adjusted annually to reflect the change in the gross domestic product implicit price deflator reported by the United States department of commerce from January 1, 2020 to December 31 of the prior year.

2. For natural gas, the rate per gasoline gallon equivalent is:

(a) For fiscal year 2020-2021, $.24.

(b) For fiscal year 2021-2022, $.30.

3. For propane, the rate per gallon is:

(a) For fiscal year 2020-2021, $.18.

(b) For fiscal year 2021-2022, $.23.

4. For electricity, the rate per kilowatt is:

(a) For fiscal year 2020-2021, $.02.

(b) for fiscal year 2021-2022, $.02.

B. In addition to the taxes imposed by section 28-5606, subsection B, the following taxes shall be imposed at the rates provided in this section in the same manner as the taxes imposed by section 28-5606, subsection B:

1. For light class motor vehicles, at the same rate and in the same manner as prescribed in subsection A of this section.

2. For use class motor vehicles, at the following rates:

(a) For use fuel, the rate per gallon is:

(i) For fiscal year 2020-2021, $.32.

(ii) For fiscal year 2021-2022, $.38.

(iii) For fiscal year 2022-2023, $.44.

(iv) For fiscal year 2023-2024 and each year thereafter, the rate prescribed in item (iii) of this subdivision shall be adjusted annually to reflect the change in the gross domestic product implicit price deflator reported by the United States department of commerce from January 1, 2020 to December 31 of the prior year.

(b) For natural gas, the rate per diesel gallon equivalent is:

(i) For fiscal year 2020-2021, $32.

(ii) FOR FISCAL YEAR 2021-2022, $38.

(iii) For fiscal year 2022-2023, $44.

(i) For fiscal year 2020-2021, $22.

(ii) For fiscal year 2021-2022, $26.

(iii) For fiscal year 2022-2023, $30.

(iv) For fiscal year 2023-2024 and each year thereafter, the rate prescribed in item (iii) of this subdivision shall be adjusted to reflect the change in the gross domestic product implicit price deflator reported by the United States department of commerce from January 1, 2020 to December 31 of the prior year.

(d) For electricity, the rate per kilowatt is:

(i) For fiscal year 2020-2021, $.02.

(ii) For fiscal year 2021-2022, $.02.

(iii) For fiscal year 2022-2023, $.03.

c. This section is effective only if section 28‑5606.02 is repealed.END_STATUTE

START_STATUTE28-5606.02. Electric and hybrid vehicles tax

In addition to all other taxes provided by law, a tax is imposed on a vehicle that accesses a street or highway and that is propelled by electricity or by a combination of electricity and any fuel that is taxed pursuant to section 28-5606 as follows:

1. For a vehicle that is propelled only by electricity:

(a) For fiscal year 2020-2021, $111 per year.

(b) For fiscal year 2021-2022, $139 per year.

(d) For fiscal year 2023-2024 and in each fiscal year thereafter, the rate provided in subdivision (c) of this paragraph shall be adjusted annually to reflect the change in the gross domestic product implicit price deflator reported by the United States department of commerce from January 1, 2020 to December 31 of the prior year.

2. For a vehicle that is propelled by a combination of electricity and other fuels:

(a) For fiscal year 2020-2021, $45 per year.

(b) For fiscal year 2021-2022, $56 per year.

Sec. 4. Section 28-6533, Arizona Revised Statutes, is amended to read:

START_STATUTE28-6533. Arizona highway user revenue fund; reports

A. The officer collecting all highway user revenues, as defined in section 28‑6501 and in article IX, section 14, Constitution of Arizona, and all fees, penalties and fines collected under sections 28‑1101, 28‑1103, 28‑1105 and 28‑1521 shall transfer the revenues to the department. After the deduction of all exemptions and refunds and after taking actions required under subsection C of this section, the department shall immediately deposit, pursuant to sections 35‑146 and 35‑147, the revenues in a fund designated as the Arizona highway user revenue fund except that the revenues collected pursuant to section 28-5606.01 or 28‑5606.02 shall be DEPOSITED in the Arizona road use account established by section 28‑6535.

B. The revenues in the Arizona highway user revenue fund shall only be spent for the purposes prescribed in article IX, section 14, Constitution of Arizona. Counties and incorporated cities and towns shall not spend highway user revenue fund monies distributed to them pursuant to this article for enforcement of traffic laws or administration of traffic safety programs. If the auditor general reports to the state treasurer after conducting a performance audit pursuant to section 41‑1279.03, subsection A, paragraph 7 that a jurisdiction has not used revenues as required by this subsection, the state treasurer shall withhold the noncomplying jurisdiction's revenues until the noncomplying jurisdiction presents evidence that is satisfactory to the auditor general and that shows that the jurisdiction has spent monies for purposes prescribed in this subsection from another general revenue source equal to the amount of the revenues diverted from the uses prescribed in this subsection.

C. If there is any default, the department shall deduct all amounts required by law or any resolution authorizing the issuance of bonds of the board to be placed in the principal funds, interest funds, reserve funds or sinking funds or any other funds established to service bonds issued or to be issued by the board before the revenues are deposited in the Arizona highway user revenue fund.

D. A county receiving monies pursuant to section 28‑6538 shall publish an annual financial report for the prior fiscal year of funds received from motor vehicle fuel and use fuel taxes. The financial report shall contain budgeted and actual expenditures for the preceding fiscal year and shall be prepared and distributed by December 31 by the county. END_STATUTE

Sec. 5. Title 28, chapter 18, article 2, Arizona Revised Statutes, is amended by adding section 28-6535, to read:

START_STATUTE28-6535. Arizona road use account

A. The arizona road use account is established in the Arizona highway user revenue fund. The department shall administer the account. Monies in the account are CONTINUOUSLY appropriated.

B. Monies in the account shall be derived from:

1. Fees and other charges on fuels or any other energy source used for the propulsion of vehicles on the public streets, roads and highways in this state imposed by section 28-5606.01 or 28-5606.02.

2. Any other monies appropriated by the legislature.

C. Monies in the account shall be used exclusively for maintaining, preserving and constructing streets, road and highways and administering such activities. Monies in the account may not be used for any law enforcement activities, except enforcement of vehicle weight and vehicle safety laws by the department.

D. The department shall monthly release monies in the account to the general Arizona highway user revenue fund and these monies shall be distributed in the same manner as other monies in that fund except that monies from the Arizona road use account:

1. May not be used for the economic strength project fund pursuant to section 28-6534 or for highway patrol costs pursuant to section 28‑6537.

2. Shall be distributed exclusively to the department, counties and cities in the same manner as other monies in the arizona highway user revenue fund pursuant to this article. END_STATUTE

Sec. 6. Electric and hybrid vehicles tax report; delayed repeal

A. The department of transportation shall study the feasibility of converting from a flat tax rate for electric vehicles to a kilowatt per mile, or egallon, as defined by the United States department of energy, tax rate or equivalent. On or before December 31, 2025, the department of transportation shall submit a report to the governor, the president of the senate and the speaker of the house of representatives and provide a copy of this report to the secretary of state. The report shall outline the effectiveness of the electric and hybrid vehicles tax established in section 28-5606.02, Arizona Revised Statutes, as added by this act. The department of transportation shall consult with representatives from the electric car industry, a statewide trucking association, an international registration plan, an international fuel tax agreement and other relevant stakeholders in developing the report. The report shall include any proposed legislation that may be required to implement the recommendations of the department of transportation.

B. This section is repealed from and after December 31, 2025.

Sec. 7. Legislative findings

The Legislature finds that:

1. Arizona's street, road and highway maintenance, preservation and construction are significantly underfunded. Statewide road use fees for Arizona's streets, roads and highways have not been significantly increased since the early 1980s, except for a $.01 increase in the fuel taxes in 1991.

2. The maintenance backlog for the cities, towns and counties and state highway system deficit is tens of billions of dollars and is increasing by more than $1,000,000,000 per year.

3. Arizona's economy and people rely on a safe, efficient and adequate statewide network of streets, roads and highways. Without long‑term, ongoing funding, that system is in jeopardy and with it this state's future.

Sec. 8. Requirements for enactment; two-thirds vote

Pursuant to article IX, section 22, Constitution of Arizona, this act is effective only on the affirmative vote of at least two-thirds of the members of each house of the legislature and is effective immediately on the signature of the governor or, if the governor vetoes this act, on the subsequent affirmative vote of at least three-fourths of the members of each house of the legislature.