SB1505 - 562R

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

Section 1. Section 12-262, Arizona Revised Statutes, is amended to read:

START_STATUTE12-262. Submission of plan; use of monies; report

A. The presiding judge of the superior court in each county desiring to improve, maintain or expand juvenile probation services, or to achieve or maintain the average adult probation case supervision requirement prescribed in section 12-251, may prepare a plan in accordance with guidelines issued by the supreme court. The plan shall be submitted to the state supreme court. The supreme court guidelines shall require that the plan include:

1. That funds monies received under this article shall be used primarily for payment of paying salaries of probation officers supervising adults or juveniles on probation to the superior, justice or municipal court.

2. That the funds monies provided by the this state for this purpose will be used to supplement county funds provided for probation services.

3. The proposed budget necessary to implement the plan, including the amount currently budgeted for that county's probation program.

B. If a county is subject to section 12-269, the following apply:

1. Beginning in fiscal year 2006-2007, the county's contribution to the hospitalization and medical care of the indigent sick, to the nonfederal portion of providing long-term care and for the administrative costs of implementing sections 36-2901.01 and 36-2901.04 shall be reduced pursuant to section 11-292, subsection Q.

2. The economic estimates commission shall increase the county's base expenditure limit beginning in the fiscal year that the county assumes funding responsibility pursuant to section 41-563, subsection D C.

C. The supreme court shall report to the joint legislative budget committee all amounts provided to any county pursuant to this article for adult probation services or juvenile probation services. END_STATUTE

Sec. 2. Repeal

Section 15-911, Arizona Revised Statutes, is repealed.

Sec. 3. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 15-1285, Arizona Revised Statutes, is amended to read:

START_STATUTE15-1285. Budgetary, expenditure or revenue control limits; exemption

Notwithstanding any other law, monies received by school districts and career technical education districts pursuant to this chapter:

1. Are not considered local revenues for the purposes of article IX, section 21, Arizona constitution.

2. are exempt from any budgetary, expenditure or revenue control limit that would limit the ability of school districts or career technical education districts to accept or expend those monies.END_STATUTE

Sec. 4. Section 17-266, Arizona Revised Statutes, is amended to read:

START_STATUTE17-266. Construction by employees or force account

Notwithstanding sections 41-2535 and 41-2572, the commission may build, alter, repair, improve or demolish a structure or other improvement by employees or force account if the project cost does not exceed thirty-five thousand dollars $35,000. This exemption does not apply to an office or residence building or to storage facilities for equipment and supplies. In fiscal year 1986-1987, and each fiscal year thereafter, the maximum project cost for which construction by employees or force account is authorized shall be adjusted by the annual percentage change in the GDP price deflator as defined in section 41-563, subsection E. END_STATUTE

Sec. 5. Section 22-117, Arizona Revised Statutes, is amended to read:

START_STATUTE22-117. Payment of compensation and expenses

A. Justices of the peace shall be allowed by the board of supervisors, as a county charge, the following:

1. Space.

2. Equipment.

3. Supplies.

B. In a county with a population of less than one million five hundred thousand persons, the state shall pay forty percent of the compensation and employee-related expenditures of a justice of the peace, and the county shall pay sixty percent of the compensation and employee-related expenditures of a justice of the peace, except that the county shall pay the full amount of the employer contribution of the state retirement system or plan or any county health plan.

C. If a county is subject to subsection B of this section, the state treasurer shall remit the compensation and employee-related expenditures payable by the state to the county treasurer, and the county shall disburse the monies to the justice of the peace.

D. In a county with a population of one million five hundred thousand persons or more, the county shall pay one hundred percent of the compensation and employee-related expenditures of a justice of the peace.

E. If a county is subject to subsection D of this section, the following apply:

1. The county's contribution to the hospitalization and medical care of the indigent sick and for the administrative costs of implementing sections 36-2901.01 and 36-2901.04 shall be reduced pursuant to section 11-292, subsection R in an amount that is equal to the difference between the total costs that the county paid pursuant to subsection D of this section and the amount that the county would have paid if the county were subject to subsection B of this section.

2. Pursuant to section 41-563, subsection D C, the economic estimates commission shall increase the county's base expenditure limit in an amount that is equal to the difference between the total costs that the county paid pursuant to subsection D of this section and the amount that the county would have paid if the county were subject to subsection B of this section.

F. The total amount that may be expended in any fiscal year by the state treasurer for justice of the peace compensation and employee related expenditures reimbursement shall not exceed the amount appropriated in the general appropriation act for this purpose, together with additional amounts appropriated by any special legislative appropriation for justices of the peace. END_STATUTE

Sec. 6. Section 41-563, Arizona Revised Statutes, is amended to read:

START_STATUTE41-563. Expenditure limitations; determination by the commission; definitions

A. For political subdivisions, the commission shall:

1. Determine the base limit level of political subdivisions for each political subdivision subject to an expenditure limitation pursuant to article IX, section 20, Constitution of Arizona. For the purposes of this subsection and subsection D C of this section, the "base limit" of each political subdivision means the amount of actual payments of local revenues by such political subdivision in fiscal year 1979-1980 as used to determine the expenditure limitation pursuant to paragraph 4 of this subsection.

2. Determine and report to the governing board of each political subdivision subject to an expenditure limitation pursuant to article IX, section 20, Constitution of Arizona, prior to before February 1 of each year, the following:

(a) The total of the estimated population of each such political subdivision as of July 1 of the prior year and the estimated population of any areas annexed by such political subdivisions thereafter, based on the population estimates developed by the department of economic security office of economic opportunity. The population of any areas annexed thereafter must be estimated as of July 1 of the prior year.

(b) The estimated change in the GDP price deflator used to determine the expenditure limitation for the following fiscal year over the GDP price deflator used to determine the expenditure limitation for the current fiscal year.

3. Determine and report to the governing board of each political subdivision subject to an expenditure limitation pursuant to article IX, section 20, Constitution of Arizona, prior to before April 1 of each year, the following:

(a) The total of the population of each such political subdivision as of July 1 of the prior year and the population of any areas annexed by such political subdivisions thereafter. The population of any areas annexed thereafter must be estimated as of July 1 of the prior year.

4. Determine the expenditure limitation for each political subdivision subject to an expenditure limitation pursuant to article IX, section 20, Constitution of Arizona, as follows:

(a) Determine the population of the political subdivision as of July 1, 1978.

(b) Determine the total population of the political subdivision as required by paragraph 3, subdivision (a) of this subsection.

(c) Divide the population determined in subdivision (b) of this paragraph by the population determined in subdivision (a) of this paragraph.

(d) Determine the estimated or actual GDP price deflator for the 1978 calendar year.

(e) Determine the estimated GDP price deflator for the calendar year immediately preceding the fiscal year for which the expenditure limitation is being determined.

(f) Divide the GDP price deflator determined in subdivision (e) of this paragraph by the GDP price deflator determined in subdivision (d) of this paragraph.

(g) Multiply the amount determined in paragraph 1 of this subsection for the political subdivision by the quotient determined in subdivision (c) of this paragraph and multiply the resulting product by the quotient determined in subdivision (f) of this paragraph.

5. If any annexation, consolidation or change in the boundaries of a political subdivision occurs after the determination and report required by paragraph 3 of this subsection but before July 1 of the current year, the commission, as promptly as feasible, shall redetermine the total population, calculated in paragraph 4, subdivision (b) of this subsection, of the political subdivisions affected by the annexation, consolidation or change in boundaries. The commission shall determine respective amended expenditure limitations based on the amended population, which shall be promptly reported to the governing board of each of the affected political subdivisions. The political subdivisions affected shall use the revised expenditure limitation if it is received before the annual financial statement and estimate of expenses is prepared as required by section 42-17101.

6. In the event of the creation of a new city or town, the base limit of the new city or town shall be determined by multiplying the average amount of actual fiscal year 1979-1980 per capita payments of local revenues for all cities and towns within the county in which the new city or town is located by the population of the new city or town.

7. In the event of the division of a county into two or more new counties, determine the expenditure limitation for each of the new counties or the consolidation of counties, pursuant to article IX, section 20, Constitution of Arizona, using one of the following two methods. The board of supervisors of each new county upon on the affirmative vote of two-thirds of the members of the board of supervisors, on or before February 1 following the county's establishment, shall adopt one of the expenditure limitations determined:

(a) Method one:

(i) Determine the existing county which that has a population closest to the population of the new county as of July 1 for the fiscal year preceding the fiscal year for which the expenditure limit is being determined.

(ii) Determine the per capita expenditure limit for the existing county determined in item (i) of this subdivision based on the amount determined in paragraph 3, subdivision (c) of this subsection for the first full fiscal year following the establishment of the new county government.

(iii) Multiply the per capita amount determined in item (ii) of this subdivision by the population of the new county as of July 1 in the fiscal year in which the new county government is established. The amount thus determined is the expenditure limit for the new county for the first full fiscal year following its establishment.

(iv) Determine a base limit for the new county which that will yield the new expenditure limit determined in item (iii) of this subdivision for the first full fiscal year following the establishment of the new county government.

(b) Method two:

(i) Determine the per capita expenditure limit of the old county or counties for the last full fiscal year prior to before the establishment of the new county government based upon on the amount determined in paragraph 3, subdivision (c) of this subsection.

(ii) Multiply the per capita amount determined in item (i) of this subdivision by the population of the new county as of July 1 in the fiscal year in which the new county government is established. The amount thus determined is the expenditure limit for the new county for the first full fiscal year following its establishment.

(iii) Determine a base limit for the new county which that will yield the new expenditure limit determined in item (ii) of this subdivision for the first full fiscal year following the establishment of the new county government.

8. If the governing board of a political subdivision authorizes expenditures in excess of the expenditure limitation determined pursuant to paragraph 4 of this subsection as provided in article IX, section 20, subsection (2), paragraph (b), subdivision (i), Constitution of Arizona, the expenditure limitation for such that political subdivision for the following fiscal year shall be reduced by the amount of expenditures in excess of the limitation, unless the governing board has held an election as provided in article IX, section 20, subsection (2), paragraph (b), subdivision (ii), Constitution of Arizona, and the excess expenditure has been approved by a majority of the qualified electors voting in such an election.

9. If the citizens of a political subdivision approve an increase or decrease in the expenditure limitation as provided in article IX, section 20, subsection (6), Constitution of Arizona, the base limit of a political subdivision shall be adjusted by the commission such so that the expenditure limitation of the political subdivision for the fiscal year following approval reflects the approved increase or decrease.

B. For community college districts, the commission shall:

1. Determine the base limit of each community college district subject to an expenditure limitation pursuant to article IX, section 21, Constitution of Arizona. For the purposes of this subsection and subsection D C of this section, the "base limit" of each community college district means the amount of expenditures of local revenues in fiscal year 1979-1980 as used to determine the expenditure limitation pursuant to paragraph 4 of this subsection.

2. Determine and report to the governing board of each community college district, prior to before February 1 of each year, the following:

(a) The estimated student population, utilizing using the procedure prescribed in section 15-1466.01, of each community college district for the following fiscal year.

(b) The estimated change in the GDP price deflator as prescribed in subsection A, paragraph 2, subdivision (b) of this section.

(d) The modified expenditure limitation as prescribed in section 15-1471, if applicable.

3. Determine and report to the governing board of each community college district, prior to before April 1 of each year, the following:

(a) The student population, utilizing using the procedure prescribed in section 15-1466.01, of each community college district for the following fiscal year.

(b) The estimated change in the GDP price deflator as prescribed in subsection A, paragraph 2, subdivision (b) of this section.

(d) The modified expenditure limitation as prescribed in section 15-1471, if applicable.

4. Determine the expenditure limitation for each community college district, as follows:

(a) Determine the student population of each community college district for fiscal year 1979-1980 using the definition of full-time equivalent student in section 15-1401 in 1979-1980, except that if a redefinition of full-time equivalent student changes the number of semester credit units per semester from fifteen units, the student population for the 1979-1980 base year shall be recalculated using the new number of units.

(b) Determine the estimated student population of each community college district for the fiscal year for which the expenditure limitation is being determined using the definition of full-time equivalent student in section 15-1401.

(c) Divide the student population determined in subdivision (b) of this paragraph by the student population determined in subdivision (a) of this paragraph.

(d) Determine the estimated or actual GDP price deflator for the 1978 calendar year.

(e) Determine the estimated GDP price deflator for the calendar year immediately preceding the fiscal year for which the expenditure limitation is being determined.

(f) Divide the GDP price deflator determined in subdivision (e) of this paragraph by the GDP price deflator determined in subdivision (d) of this paragraph.

(g) Multiply the amount determined in paragraph 1 of this subsection for the community college district by the quotient determined in subdivision (c) of this paragraph and multiply the resulting product by the quotient determined in subdivision (f) of this paragraph.

5. In the event of an annexation, creation of a new community college district or a consolidation or change in the boundaries of a community college district, the base limit of a community college district shall be adjusted by the commission according to the following guidelines:

(a) In the event of the creation of a new community college district, the base limit of the community college district shall be determined by multiplying the average amount of 1979-1980 per capita expenditures of local revenues for all community college districts within the this state by the student population of the new community college district. The expenditure limit of the county in which the new community college district is located shall be reduced by the amount paid to other community college districts for tuition in the fiscal year preceding the fiscal year in which the new community college district is created.

(b) In the case of an annexation, consolidation or change in the boundaries of a community college district, the base limit of a community college district shall be adjusted by the commission to reflect the change by increasing the base limit of the community college district gaining the newly included territory and decreasing the base limit of the community college district losing the territory.

(c) If an existing community college district consolidates with a contiguous county that is not part of a community college district, the commission shall:

(i) Increase the base limit of the existing community college district by an amount equal to the amount of revenue which that would have been generated by applying the primary property tax rate of the existing community college district in the immediately prior year to the limited assessed valuation of the contiguous county in the immediately prior year.

(ii) Decrease the base limit of the contiguous county by the amount of reimbursement prescribed by section 15-1469, subsection B, paragraph 1, paid by such that county in the 1979-1980 base year, except that no a decrease shall not be made to the base limit of such that county if the reimbursement prescribed by section 15-1469, subsection B, paragraph 1 in the immediately prior year was paid by the this state pursuant to section 15-1469.01.

(d) In the case of a decrease in service boundaries of a community college district, the base limit of the community college district shall be reduced by the commission to reflect the amount attributable to the service area in fiscal year 1979-1980, and the base student population of the community college district shall be reduced by the commission to reflect fiscal year 1979-1980 student population attributable to the service area. The adjusted base limit and the adjusted fiscal year 1979-1980 student population shall be used in determining the expenditure limitation for the community college district in the first year in which the service boundaries are diminished and in each subsequent year.

C. For school districts the commission shall:

1. Determine the base limit of school districts subject to the expenditure limitation prescribed by article IX, section 21, subsection (2), Constitution of Arizona. For the purposes of this subsection and subsection D of this section, "base limit" means the total amount of expenditures of local revenues of all school districts in fiscal year 1979-1980 as used to determine the expenditure limitation pursuant to paragraph 4 of this subsection.

2. Determine and report to the legislature prior to March 1 of each year the following:

(a) The estimated total student population of all school districts for the current year.

(b) The estimated change in the GDP price deflator as prescribed in subsection A, paragraph 2, subdivision (b) of this section.

3. Determine and report to the legislature, prior to May 1 of each year, the following:

(a) The total student population of all school districts for the current year.

(b) The estimated change in the GDP price deflator as prescribed in subsection A, paragraph 2, subdivision (b) of this section.

4. Determine the aggregate expenditure limitation for all school districts as follows:

(a) Determine the aggregate student population of all school districts for the school year 1978-1979.

(b) Determine the total student population of all school districts for the current year.

(c) Divide the aggregate student population determined in subdivision (b) of this paragraph by the aggregate student population in subdivision (a) of this paragraph.

(d) Determine the estimated or actual GDP price deflator for the 1978 calendar year.

(e) Determine the estimated GDP price deflator for the calendar year immediately preceding the fiscal year for which the aggregate expenditure limitation is being determined.

(f) Divide the GDP price deflator determined in subdivision (e) of this paragraph by the GDP price deflator determined in subdivision (d) of this paragraph.

(g) Multiply the amount determined in paragraph 1 of this subsection by the quotient determined in subdivision (c) of this paragraph and multiply the resulting product by the quotient determined in subdivision (f) of this paragraph.

D. C. In the case of a transfer of all or any part of the cost of providing a governmental function, pursuant to article IX, section 20, subsection (4), Constitution of Arizona, or article IX, section 21, subsection (5) (3), Constitution of Arizona, the commission shall adjust the base limit of political subdivisions, or community college districts or school districts, whichever is applicable, shall be adjusted by the commission to reflect the transfer by increasing the base limit of the political subdivision, or community college district or school district to which the cost is transferred and decreasing the base limit of the political subdivision, or community college district or school district from which the cost is transferred by the amount of the cost of the transferred governmental function.

E. D. For the purposes of this section:

1. "Commission" means the economic estimates commission.

2. "GDP price deflator" means the average of the four implicit price deflators for the gross domestic product reported by the United States department of commerce for the four quarters of the calendar year.

3. "Political subdivision" means any county, city, including any charter city, or town.

4. "Population" shall be defined pursuant to article IX, section 20, subsection (3), paragraph (f), Constitution of Arizona.

5. "Student population" shall be defined pursuant to article IX, section 21, subsection (4) (2), paragraph (e) (d), Constitution of Arizona. END_STATUTE

Sec. 7. Subject to the requirements of article IV, part 1, section 1, Constitution of Arizona, section 42-5010, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5010. Rates; distribution base

A. The tax imposed by this article is levied and shall be collected at the following rates:

1. Five percent of the tax base as computed for the business of every person engaging or continuing in this state in the following business classifications described in article 2 of this chapter:

(a) Transporting classification.

(b) Utilities classification.

(d) Pipeline classification.

(e) Private car line classification.

(f) Publication classification.

(g) Job printing classification.

(h) Prime contracting classification.

(i) Amusement classification.

(j) Restaurant classification.

(k) Personal property rental classification.

(l) Retail classification and amounts equal to retail transaction privilege tax due pursuant to section 42-5008.01.

2. Five and one-half percent of the tax base as computed for the business of every person engaging or continuing in this state in:

(a) The transient lodging classification described in section 42-5070.

(b) The online lodging marketplace classification described in section 42-5076 who has entered into an agreement with the department to register for, or has otherwise obtained from the department, a license to collect tax pursuant to section 42-5005, subsection L.

3. Three and one-eighth percent of the tax base as computed for the business of every person engaging or continuing in this state in the mining classification described in section 42-5072.

4. Zero percent of the tax base as computed for the business of every person engaging or continuing in this state in the commercial lease classification described in section 42-5069.

B. Except as provided by subsection J of this section, twenty percent of the tax revenues collected at the rate prescribed by subsection A, paragraph 1 of this section from persons on account of engaging in business under the business classifications listed in subsection A, paragraph 1, subdivisions (a) through (h) of this section is designated as distribution base for the purposes of section 42-5029.

C. Forty percent of the tax revenues collected at the rate prescribed by subsection A, paragraph 1 of this section from persons on account of engaging in business under the business classifications listed in subsection A, paragraph 1, subdivisions (i) through (l) of this section is designated as distribution base for the purposes of section 42-5029.

D. Thirty-two percent of the tax revenues collected from persons on account of engaging in business under the business classification listed in subsection A, paragraph 3 of this section is designated as distribution base for the purposes of section 42-5029.

E. Fifty-three and one-third percent of the tax revenues collected from persons on account of engaging in business under the business classification listed in subsection A, paragraph 4 of this section is designated as distribution base for the purposes of section 42-5029.

F. Fifty percent of the tax revenues collected from persons on account of engaging in business under the business classification listed in subsection A, paragraph 2 of this section is designated as distribution base for the purposes of section 42-5029.

G. In addition to the rates prescribed by subsection A of this section, if approved by the qualified electors voting at a statewide general election, an additional rate increment is imposed and shall be collected through June 30, 2021. The taxpayer shall pay taxes pursuant to this subsection at the same time and in the same manner as under subsection A of this section. The department shall separately account for the revenues collected with respect to the rates imposed pursuant to this subsection and the state treasurer shall distribute all of those revenues in the manner prescribed by section 42-5029, subsection E. The rates imposed pursuant to this subsection shall not be considered local revenues for purposes of article IX, section 21, Constitution of Arizona. The additional tax rate increment is levied at the rate of six-tenths of one per cent percent of the tax base of every person engaging or continuing in this state in a business classification listed in subsection A, paragraph 1 of this section.

H. Any increase in the rate of tax that is imposed by this chapter and that is enacted by the legislature or by a vote of the people does not apply with respect to contracts entered into by prime contractors or pursuant to written bids made by prime contractors on or before the effective date of the legislation or the date of the election enacting the increase. To qualify for the exemption under this subsection, the prime contractor must maintain sufficient documentation, in a manner and form prescribed by the department, to verify the date of the contract or written bid.

I. For taxpayers that are taxable under this chapter other than prime contractors taxable pursuant to section 42-5075:

1. Any increase in the rate of tax that is levied by this article or article 2 of this chapter enacted by the legislature or by a vote of the people does not apply for a period of one hundred twenty days from after the date of the tax rate increase to the gross proceeds of sales or gross income from the business of the taxpayer with respect to written contracts entered into before the effective date of the tax rate increase unless the taxpayer has entered into a contract that contains a provision that entitles the taxpayer to recover from the purchaser the amount of the additional tax levied.

2. The provisions of this subsection apply without regard to the accounting method used by the taxpayer to report the taxes imposed under article 2 of this chapter.

3. The provisions of this subsection shall not be considered in determining the rate of tax imposed under chapter 6, article 3 of this title.

J. Zero percent of the tax revenues that are collected at the rate prescribed by subsection A, paragraph 1 of this section from persons on account of engaging in business under the business classification listed in subsection A, paragraph 1, subdivision (h) of this section, and that are subject to any distribution required by section 42-5032.02, is designated as distribution base for the purposes of section 42-5029 until the total amount subject to distribution pursuant to section 42-5032.02 has reached the maximum amount prescribed by section 42-5032.02, subsection C. Thereafter, twenty percent of the remaining tax revenues is designated as distribution base for the purposes of section 42-5029 as provided by subsection B of this section. END_STATUTE

Sec. 8. Section 42-5010.01, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5010.01. Transaction privilege tax; additional rate increment

A. From and after June 30, 2021 through June 30, 2041, in addition to the rates prescribed by section 42-5010, subsection A, an additional rate increment is imposed and shall be collected. The additional tax rate increment is levied at the rate of six-tenths of one percent of the tax base of every person engaging or continuing in this state in a business classification listed in section 42-5010, subsection A, paragraph 1.

B. The taxpayer shall pay taxes pursuant to this section at the same time and in the same manner as under section 42-5010, subsection A. The department shall separately account for the revenues collected with respect to the rates imposed by this section, and the state treasurer shall distribute all of those revenues in the manner prescribed by section 42-5029.02. The rates imposed by this section are not considered local revenues for purposes of article IX, section 21, Constitution of Arizona. END_STATUTE

Sec. 9. Conditional exactment; applicability

This act does not become effective unless the Constitution of Arizona is amended by a vote of the people at the next general election by passage of Senate Concurrent Resolution ____, fifty-sixth legislature, second regular session, relating to expenditure limitations and applies to fiscal years beginning from and after June 30, 2025.

Sec. 10. Requirements for enactment; three-fourths vote

Pursuant to article IV, part 1, section 1, Constitution of Arizona, sections 15-1285 and 42-5010, Arizona Revised Statutes, as amended by this act, are effective only on the affirmative vote of at least three-fourths of the members of each house of the legislature.