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ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
REVISED
state debt; limit; restrictions; prohibitions
Purpose
Subject to voter approval, constitutionally defines debt as specified bonds and obligations of the State of Arizona that are paid with state General Fund monies.
Background
The Arizona Constitution grants the state the power to contract debts to supply casual deficits or failures in revenues or to meet otherwise unprovided-for expenses. The total amount of contract debts may not exceed $350,000. The monies created from such debts must be used for the outlined purpose. The state may borrow money to: 1) repel invasion; 2) suppress insurrection; or 3) defend the state during a time of war. Monies may not be paid from the state treasury except as provided by law (Ariz. Const. art. 9 § 5).
By June 30 of each year, the Arizona Department of Administration (ADOA) must ascertain and record all issues of bonds, certificates of participation or other securities issued for a term longer than one year by the state, a county, city or town or other political subdivision. The record must contain outlined information, including the amount of any constitutional or statutory limitation on the issuance of bonds or securities of the type issued. ADOA must provide an annual report of outstanding indebtedness to the Governor, President of the Senate and Speaker of the House of Representatives by December 15 of each year. The annual report of outstanding indebtedness must include an analysis of any outstanding indebtedness of each jurisdiction and the relationship of the indebtedness to the appropriate constitutional or statutory debt limitation. If ADOA determines that a jurisdiction's indebtedness exceeds the appropriate debt limit, ADOA must notify the Governor, President of the Senate and Speaker of the House of Representatives (A.R.S. § 35-501).
The Joint Legislative Budget Committee fiscal note indicates that S.C.R. 1033 would effectively prohibit future debt financing paid with state General Fund monies and would apply the constitutional debt limit to deferred obligations of the state. The state currently enacts an annual $800.7 million K-12 rollover. According to Legislative Council, if S.C.R. 1033 is approved by the voters it would prohibit the continuation of the K-12 rollover, which would require the K-12 rollover to be paid in the subsequent budget, resulting in a onetime state General Fund spending increase of $800.7 million in FY 2026 (JLBC fiscal note).
Provisions
1. Defines debt as the following state obligations paid with state General Fund monies:
a) general obligation bonds;
b) long-term notes and obligations;
c) revenue bonds;
d) certificates of participation and other obligations pursuant to any lease-purchase agreement; and
e) obligations of the state in one fiscal year that are deferred in whole or in part to another fiscal year.
2. Makes technical changes.
3. Requires the Secretary of State to submit the proposition to the voters at the next general election.
4. Becomes effective if approved by the voters and on proclamation of the Governor.
Revisions
· Updates the fiscal impact statement.
Prepared by Senate Research
March 3, 2023
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