 |
ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
REVISED
property tax levy; calculation; federal monies
Purpose
Requires, retroactive to January 1, 2022, a county, city or town (local government) that received Coronavirus Local Fiscal Recovery Funds Program (Fund Program) monies to reduce the primary property tax levy for TYs 2022 and 2023 based on the Fund Program monies received and requires the Property Tax Oversight Commission (PTOC) to review the primary property tax levy calculations to determine if there is a violation of the reduction requirement.
Background
Primary property tax is levied by the governing body of each local government to pay for maintenance and operation. The total amount of property tax levied, plus all other sources of revenue and all unencumbered balances from the preceding fiscal year, must be equal to the total amount in the local government's proposed budget for the current fiscal year. To compute the primary property tax rate, the required property tax levy is divided by the final assessed value determined for the taxing jurisdiction. Within three days after the final levies are determined, the chief county fiscal officer must notify the PTOC of the amount of the primary property tax levied (A.R.S. §§ 42-17151 and 42-17152).
The federal American Rescue Plan Act was enacted on March 11, 2021, which included the Fund Program. The Fund Program provides funds to counties, cities and towns for the response to and recovery from the COVID-19 public health emergency. Program Fund monies may be spent: 1) to support the COVID-19 public health and economic response, including assistance to households, small businesses and nonprofits; 2) to respond to workers performing essential work by providing premium pay to eligible workers or by providing grants to employers with eligible workers; 3) to pay for government services in an amount equal to the reduction in revenue relative to revenues collected in the most recent full fiscal year prior to the COVID-19 public health emergency; and 4) to make necessary investments in water, sewer or broadband infrastructure (U.S. Treasury).
There is no anticipated fiscal impact to the state General Fund associated with this legislation. The Joint Legislative Budget Committee fiscal note estimates that the impact on local governments cannot be determined in advance of the adoption of their FY 2023budgets (JLBC fiscal note).
Provisions
1. Requires a local government that received Program Fund monies, if their proposed primary property tax levy, excluding amounts attributable to new construction, is greater than the amount levied in TY 2021, to use the Program Fund monies to reduce the proposed primary property tax levy for TY 2022 so that the levy does not exceed the TY 2021 amount.
2. Requires a local government that received Program Fund monies, if their proposed primary property tax levy, excluding amounts attributable to new construction, is greater than the amount that would have been levied in TY 2022 if the local government had not reduced the levy as required, to use the Program Fund monies to reduce the proposed primary property tax levy for TY 2023 so that the levy does not exceed the amount that would have been levied in TY 2022.
3. Allows a local government to spend any Program Fund monies that exceed the amount needed to reduce the primary property tax levy at the end of each tax year at the local government's discretion.
4. Allows a local government to disregard any Program Fund monies for TY 2024 and calculate the primary property tax levy as if those monies were not included to reduce the primary property tax levy for the preceding two tax years.
5. Requires the PTOC to review the primary property tax levy calculations for each local government to determine if there is a violation of the reduction requirement.
6. Defines amount attributable to new construction.
7. Repeals the primary property tax levy reduction requirements on January 1, 2027.
8. Designates this legislation as the Local Tax Cut Act of 2021.
9. Makes technical changes.
10. Becomes effective on the general effective date, retroactive to January 1, 2022.
Revisions
· Updates the fiscal impact statement.
Prepared by Senate Research
February 18, 2022
MG/slp