Bill Text: AZ HB2534 | 2024 | Fifty-sixth Legislature 2nd Regular | Introduced
Bill Title: Native American tribes; TPT collection
Spectrum: Moderate Partisan Bill (Democrat 7-1)
Status: (Introduced - Dead) 2024-01-22 - House read second time [HB2534 Detail]
Download: Arizona-2024-HB2534-Introduced.html
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REFERENCE TITLE: Native American tribes; TPT collection |
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State of Arizona House of Representatives Fifty-sixth Legislature Second Regular Session 2024
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HB 2534 |
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Introduced by Representatives Tsosie: Contreras L, Cook, De Los Santos, Seaman, Sun, Terech, Travers
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An Act
amending section 42-5001, Arizona Revised Statutes; amending title 42, chapter 5, article 1, Arizona Revised Statutes, by adding section 42-5045; Amending section 42-5029, Arizona Revised Statutes, as amended by Laws 2021, chapter 411, section 2; amending section 42-5029, Arizona Revised Statutes, as amended by Laws 2023, chapter 204, section 6; amending sections 42-5031.01 and 42-5033, Arizona Revised Statutes; amending title 42, chapter 5, article 3.1, Arizona Revised Statutes, by adding section 42-5124; relating to transaction privilege and use tax.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 42-5001, Arizona Revised Statutes, is amended to read:
42-5001. Definitions
In this article and article 2 of this chapter, unless the context otherwise requires:
1. "Business" includes all activities or acts, personal or corporate, that are engaged in or caused to be engaged in with the object of gain, benefit or advantage, either directly or indirectly, but does not include either:
(a) Casual activities or sales.
(b) The transfer of electricity from a solar photovoltaic generation system to an electric utility distribution system.
2. "Distribution base" means the portion of the revenues derived from the tax levied by this article and articles 5 and 8 of this chapter designated for distribution to counties, municipalities, consenting Indian tribes as defined in section 42-5045 and other purposes according to section 42-5029, subsection D.
3. "Engaging", when used with reference to engaging or continuing in business, includes the exercise of corporate or franchise powers.
4. "Gross income" means the gross receipts of a taxpayer derived from trade, business, commerce or sales and the value proceeding or accruing from the sale of tangible personal property or service, or both, and without any deduction on account of losses.
5. "Gross proceeds of sales" means the value proceeding or accruing from the sale of tangible personal property without any deduction on account of the cost of property sold, expense of any kind or losses, but cash discounts allowed and taken on sales are not included as gross income.
6. Gross income and gross proceeds of sales do not include goods, wares or merchandise, or the value thereof, returned by customers if the sale price is refunded either in cash or by credit, or the value of merchandise traded in on the purchase of new merchandise when the trade-in allowance is deducted from the sales price of the new merchandise before completion of the sale.
7. "Gross receipts" means the total amount of the sale, lease or rental price, as the case may be, of the retail sales of retailers, including any services that are a part of the sales, valued in money, whether received in money or otherwise, including all receipts, cash, credits and property of every kind or nature, and any amount for which credit is allowed by the seller to the purchaser without any deduction from the amount on account of the cost of the property sold, materials used, labor or service performed, interest paid, losses or any other expense. Gross receipts do not include cash discounts allowed and taken or the sale price of property returned by customers if the full sale price is refunded either in cash or by credit.
8. "Marketplace" means a physical or electronic place, platform or forum, including a store, booth, internet website, catalog or dedicated sales software application, where products, including tangible personal property, are offered for sale.
9. "Marketplace facilitator":
(a) Means a person that facilitates a retail sale by a marketplace seller by listing or advertising for sale by the marketplace seller in a marketplace tangible personal property and, either directly or indirectly, through agreements or arrangements with third parties collecting payment from the purchaser and transmitting that payment to the marketplace seller, regardless of whether the marketplace facilitator receives compensation for the marketplace facilitator's services.
(b) Does not include a payment processor business that is appointed to handle payment transactions from various channels, such as charge cards, credit cards and debit cards, and whose sole activity with respect to marketplace sales is to handle transactions between two parties.
10. "Marketplace seller" means a person that makes retail sales through any physical or electronic marketplace that is operated by a marketplace facilitator.
11. "Person" or "company" includes an individual, firm, partnership, joint venture, association, corporation, estate, trust, marketplace facilitator or remote seller, this state, any county, city, town, district, other than a school district, or other political subdivision and any other group or combination acting as a unit, and the plural as well as the singular number.
12. "Qualifying community health center":
(a) Means an entity that is recognized as nonprofit under section 501(c)(3) of the United States internal revenue code, that is a community-based, primary care clinic that has a community-based board of directors and that is either:
(i) The sole provider of primary care in the community.
(ii) A nonhospital affiliated clinic that is located in a federally designated medically underserved area in this state.
(b) Includes clinics that are being constructed as qualifying community health centers.
13. "Qualifying health care organization" means an entity that is recognized as nonprofit under section 501(c) of the United States internal revenue code and that uses, saves or invests at least eighty percent of all monies that it receives from all sources each year only for health and medical related educational and charitable services, as documented by annual financial audits prepared by an independent certified public accountant, performed according to generally accepted auditing standards and filed annually with the department. Monies that are used, saved or invested to lease, purchase or construct a facility for health and medical related education and charitable services are included in the eighty percent requirement.
14. "Qualifying health sciences educational institution" means an entity that is recognized as nonprofit under section 501(c) of the United States internal revenue code and that solely provides graduate and postgraduate education in the health sciences. For the purposes of this paragraph, "health sciences" includes medicine, nursing, physician's assistant studies, pharmacy, physical therapy, occupational therapy, biomedical sciences, podiatry, clinical psychology, cardiovascular science, nurse anesthesia, dentistry, optometry and veterinary medicine.
15. "Qualifying hospital" means any of the following:
(a) A licensed hospital that is organized and operated exclusively for charitable purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual.
(b) A licensed nursing care institution or a licensed residential care institution or a residential care facility operated in conjunction with a licensed nursing care institution or a licensed kidney dialysis center that provides medical services, nursing services or health related services and that is not used or held for profit.
(c) A hospital, nursing care institution or residential care institution that is operated by the federal government, this state or a political subdivision of this state.
(d) A facility that is under construction and that on completion will be a facility under subdivision (a), (b) or (c) of this paragraph.
16. "Remote seller" means a person that sells products for delivery into this state and that does not have a physical presence or other legal requirement to obtain a transaction privilege tax license in this state other than because the person's business exceeds the threshold provided in section 42-5044.
17. "Retailer" includes every person engaged in the business classified under the retail classification pursuant to section 42-5061 and, when in the opinion of the department it is necessary for the efficient administration of this article, includes dealers, distributors, supervisors, employers and salesmen, representatives, peddlers or canvassers as the agents of the dealers, distributors, supervisors or employers under whom they operate or from whom they obtain the tangible personal property sold by them, whether in making sales on their own behalf or on behalf of the dealers, distributors, supervisors or employers.
18. "Sale" means any transfer of title or possession, or both, exchange, barter, lease or rental, conditional or otherwise, in any manner or by any means whatever, including consignment transactions and auctions and transactions facilitated by a marketplace facilitator on behalf of a marketplace seller, of tangible personal property or other activities taxable under this chapter, for a consideration, and includes:
(a) Any transaction by which the possession of property is transferred but the seller retains the title as security for the payment of the price.
(b) Fabricating tangible personal property for consumers who furnish either directly or indirectly the materials used in the fabrication work.
(c) Furnishing, preparing or serving for a consideration any tangible personal property consumed on the premises of the person furnishing, preparing or serving the tangible personal property.
19. "Solar daylighting" means a device that is specifically designed to capture and redirect the visible portion of the solar beam, while controlling the infrared portion, for use in illuminating interior building spaces in lieu of artificial lighting.
20. "Solar energy device" means a system or series of mechanisms that are designed primarily to provide heating, to provide cooling, to produce electrical power, to produce mechanical power, to provide solar daylighting or to provide any combination of the foregoing by means of collecting and transferring solar generated energy into such uses either by active or passive means, including wind generator systems that produce electricity. Solar energy systems may also have the capability of storing solar energy for future use. Passive systems shall clearly be designed as a solar energy device, such as a trombe wall, and not merely as a part of a normal structure, such as a window.
21. "Tangible personal property" means personal property that may be seen, weighed, measured, felt or touched or that is in any other manner perceptible to the senses.
22. "Taxpayer" means any person who is liable for any tax imposed by this article.
23. "Tax year" or "taxable year" means either the calendar year or the taxpayer's fiscal year, if permission is obtained from the department to use a fiscal year as the tax period instead of the calendar year.
24. "Wholesaler" or "jobber" means any person who sells tangible personal property for resale and not for consumption by the purchaser.
Sec. 2. Title 42, chapter 5, article 1, Arizona Revised Statutes, is amended by adding section 42-5045, to read:
42-5045. Consent to taxation; Indian tribes; definitions
A. The department shall levy and collect the taxes under this chapter on the gross proceeds of sales or gross income from the business of every affiliated Indian on the Indian reservation of a consenting Indian tribe engaging or continuing in a business taxed under this chapter if both of the following occur:
1. Congress and the governing body of the Indian tribe consent by resolution to the administration, enforcement and collection of the state tax on the gross proceeds of sales or gross income from the business of every affiliated Indian on that Indian reservation engaging or continuing in a business taxed under this chapter.
2. The consenting Indian tribe delivers the resolution to the governor of this state and a copy of the resolution to the department.
B. The department shall cooperate with the consenting Indian tribe to educate taxpayers about licensing and reporting requirements.
C. For The purposes of this section:
1. "Affiliated Indian" has the same meaning prescribed in section 42-5121.
2. "Consenting Indian tribe" means an organized nation, band or community that both:
1. Is recognized as an Indian tribe by the United States department of the interior, including any entity formed under the laws of the indian tribe.
2. Has obtained the consent of Congress and the governing body of the Indian tribe by resolution to the administration, enforcement and collection of a tax on the gross proceeds of sales or gross income from the business of every affiliated Indian on that indian reservation engaging or continuing in a business taxed under this chapter.
3. "Indian reservation" has the same meaning prescribed in section 42-5121.
Sec. 3. Section 42-5029, Arizona Revised Statutes, as amended by Laws 2021, chapter 411, section 2, is amended to read:
42-5029. Remission and distribution of monies; withholding; definitions
A. The department shall deposit, pursuant to sections 35-146 and 35-147, all revenues collected under this article and articles 4, 5 and 8 of this chapter pursuant to section 42-1116, separately accounting for:
1. Payments of estimated tax under section 42-5014, subsection D.
2. Revenues collected pursuant to section 42-5070.
3. Revenues collected under this article and article 5 of this chapter from and after June 30, 2000 from sources located on Indian reservations in this state that are not the indian reservation of a consenting Indian tribe.
4. Revenues collected pursuant to section 42-5010, subsection G and section 42-5155, subsection D.
5. Revenues collected pursuant to section 42-5010.01 and section 42-5155, subsection E.
B. The department shall credit payments of estimated tax to an estimated tax clearing account and each month shall transfer all monies in the estimated tax clearing account to a fund designated as the transaction privilege and severance tax clearing account. The department shall credit all other payments to the transaction privilege and severance tax clearing account, separately accounting for the monies designated as distribution base under sections 42-5010, 42-5164 and 42-5205. Each month the department shall report to the state treasurer the amount of monies collected pursuant to this article and articles 4, 5 and 8 of this chapter.
C. On notification by the department, the state treasurer shall distribute the monies deposited in the transaction privilege and severance tax clearing account in the manner prescribed by this section and by sections 42-5164 and 42-5205, after deducting warrants drawn against the account pursuant to sections 42-1118 and 42-1254.
D. Of the monies designated as distribution base, the department shall:
1. Pay twenty-five percent to the various incorporated municipalities in this state in proportion to their population to be used by the municipalities for any municipal purpose.
2. Pay 38.08 percent to the counties and consenting Indian tribes in this state by averaging the following proportions:
(a) The proportion that the population of each county or consenting Indian tribe bears to the total state population.
(b) The proportion that the distribution base monies collected during the calendar month in each county and consenting indian tribe under this article, section 42-5164, subsection B and section 42-5205, subsection B bear to the total distribution base monies collected under this article, section 42-5164, subsection B and section 42-5205, subsection B throughout the state for the calendar month.
3. Pay an additional 2.43 percent to the counties and consenting indian tribes in this state as follows:
(a) Average the following proportions:
(i) The proportion that the assessed valuation used to determine secondary property taxes of each county or consenting indian tribe, after deducting that part of the assessed valuation that is exempt from taxation at the beginning of the month for which the amount is to be paid, bears to the total assessed valuations used to determine secondary property taxes of all the counties and consenting indian tribe after deducting that portion of the assessed valuations that is exempt from taxation at the beginning of the month for which the amount is to be paid. Property of a city or town that is not within or contiguous to the municipal corporate boundaries and from which water is or may be withdrawn or diverted and transported for use on other property is considered to be taxable property in the county or consenting indian tribe for the purposes of determining assessed valuation in the county or consenting indian tribe under this item.
(ii) The proportion that the distribution base monies collected during the calendar month in each county or consenting indian tribe under this article, section 42-5164, subsection B and section 42-5205, subsection B bear to the total distribution base monies collected under this article, section 42-5164, subsection B and section 42-5205, subsection B throughout the state for the calendar month.
(b) If the proportion computed under subdivision (a) of this paragraph for any county or consenting indian tribe is greater than the proportion computed under paragraph 2 of this subsection, the department shall compute the difference between the amount distributed to that county or consenting indian tribe under paragraph 2 of this subsection and the amount that would have been distributed under paragraph 2 of this subsection using the proportion computed under subdivision (a) of this paragraph and shall pay that difference to the county or consenting indian tribe from the amount available for distribution under this paragraph. Any monies remaining after all payments under this subdivision shall be distributed among the counties and consenting indian tribes according to the proportions computed under paragraph 2 of this subsection.
4. After any distributions required by sections 42-5030, 42-5030.01, 42-5031, 42-5032, 42-5032.01 and 42-5032.02, and after making any transfer to the water quality assurance revolving fund as required by section 49-282, subsection B, credit the remainder of the monies designated as distribution base to the state general fund. From this amount the legislature shall annually appropriate to:
(a) The department of revenue sufficient monies to administer and enforce this article and articles 5 and 8 of this chapter.
(b) The department of economic security monies to be used for the purposes stated in title 46, chapter 1.
(c) The firearms safety and ranges fund established by section 17-273, fifty thousand dollars derived from the taxes collected from the retail classification pursuant to section 42-5061 for the current fiscal year.
E. If approved by the qualified electors voting at a statewide general election, all monies collected pursuant to section 42-5010, subsection G and section 42-5155, subsection D shall be distributed each fiscal year pursuant to this subsection. The monies distributed pursuant to this subsection are in addition to any other appropriation, transfer or other allocation of public or private monies from any other source and shall not supplant, replace or cause a reduction in other school district, charter school, university or community college funding sources. The monies shall be distributed as follows:
1. If there are outstanding state school facilities revenue bonds pursuant to title 15, chapter 16, article 7, each month one-twelfth of the amount that is necessary to pay the fiscal year's debt service on outstanding state school improvement revenue bonds for the current fiscal year shall be transferred each month to the school improvement revenue bond debt service fund established by section 15-2084. The total amount of bonds for which these monies may be allocated for the payment of debt service shall not exceed a principal amount of eight hundred million dollars exclusive of refunding bonds and other refinancing obligations.
2. After any transfer of monies pursuant to paragraph 1 of this subsection, twelve per cent of the remaining monies collected during the preceding month shall be transferred to the technology and research initiative fund established by section 15-1648 to be distributed among the universities for the purpose of investment in technology and research-based initiatives.
3. After the transfer of monies pursuant to paragraph 1 of this subsection, three per cent of the remaining monies collected during the preceding month shall be transferred to the workforce development account established in each community college district pursuant to section 15-1472 for the purpose of investment in workforce development programs.
4. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one-twelfth of the amount a community college that is owned, operated or chartered by a qualifying Indian tribe on its own Indian reservation would receive pursuant to section 15-1472, subsection D, paragraph 2 if it were a community college district shall be distributed each month to the treasurer or other designated depository of a qualifying Indian tribe. Monies distributed pursuant to this paragraph are for the exclusive purpose of providing support to one or more community colleges owned, operated or chartered by a qualifying Indian tribe and shall be used in a manner consistent with section 15-1472, subsection B. For the purposes of this paragraph, "qualifying Indian tribe" has the same meaning as defined in section 42-5031.01, subsection D.
5. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one-twelfth of the following amounts shall be transferred each month to the department of education for the increased cost of basic state aid under section 15-971 due to added school days and associated teacher salary increases enacted in 2000:
(a) In fiscal year 2001-2002, $15,305,900.
(b) In fiscal year 2002-2003, $31,530,100.
(c) In fiscal year 2003-2004, $48,727,700.
(d) In fiscal year 2004-2005, $66,957,200.
(e) In fiscal year 2005-2006 and each fiscal year thereafter, $86,280,500.
6. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, seven million eight hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments, to the department of education to be used for school safety as provided in section 15-154 and two hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments to the department of education to be used for the character education matching grant program as provided in section 15-154.01.
7. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, no more than seven million dollars may be appropriated by the legislature each fiscal year to the department of education to be used for accountability purposes as described in section 15-241 and title 15, chapter 9, article 8.
8. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one million five hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments, to the failing schools tutoring fund established by section 15-241.
9. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, twenty-five million dollars shall be transferred each fiscal year to the state general fund to reimburse the general fund for the cost of the income tax credit allowed by section 43-1072.01.
10. After the payment of monies pursuant to paragraphs 1 through 9 of this subsection, the remaining monies collected during the preceding month shall be transferred to the classroom site fund established by section 15-977. The monies shall be allocated as follows in the manner prescribed by section 15-977:
(a) Forty per cent shall be allocated for teacher compensation based on performance.
(b) Twenty per cent shall be allocated for increases in teacher base compensation and employee related expenses.
(c) Forty per cent shall be allocated for maintenance and operation purposes.
F. The department shall credit the remainder of the monies in the transaction privilege and severance tax clearing account to the state general fund, subject to any distribution required by section 42-5030.01.
G. Notwithstanding subsection D of this section, if a court of competent jurisdiction finally determines that tax monies distributed under this section were illegally collected under this article or articles 5 and 8 of this chapter and orders the monies to be refunded to the taxpayer, the department shall compute the amount of such monies that was distributed to each city, town and county under this section. Each city's, town's and county's proportionate share of the costs shall be based on the amount of the original tax payment each municipality and county received. Each month the state treasurer shall reduce the amount otherwise distributable to the city, town and county under this section by one thirty-sixth of the total amount to be recovered from the city, town or county until the total amount has been recovered, but the monthly reduction for any city, town or county shall not exceed ten percent of the full monthly distribution to that entity. The reduction shall begin for the first calendar month after the final disposition of the case and shall continue until the total amount, including interest and costs, has been recovered.
H. On receiving a certificate of default from the greater Arizona development authority pursuant to section 41-2257 or 41-2258 and to the extent not otherwise expressly prohibited by law, the state treasurer shall withhold from the next succeeding distribution of monies pursuant to this section due to the defaulting political subdivision the amount specified in the certificate of default and immediately deposit the amount withheld in the greater Arizona development authority revolving fund. The state treasurer shall continue to withhold and deposit the monies until the greater Arizona development authority certifies to the state treasurer that the default has been cured. In no event may the state treasurer withhold any amount that the defaulting political subdivision certifies to the state treasurer and the authority as being necessary to make any required deposits then due for the payment of principal and interest on bonds of the political subdivision that were issued before the date of the loan repayment agreement or bonds and that have been secured by a pledge of distributions made pursuant to this section.
I. Except as provided by sections 42-5033 and 42-5033.01, the population of a county, city or town as determined by the most recent United States decennial census plus any revisions to the decennial census certified by the United States bureau of the census shall be used as the basis for apportioning monies pursuant to subsection D of this section.
J. Except as otherwise provided by this subsection, on notice from the department of revenue pursuant to section 42-6010, subsection B, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city or town the amount of the penalty for business location municipal tax incentives provided by the city or town to a business entity that locates a retail business facility in the city or town. The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount of the penalty has been withheld. The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section. The state treasurer shall not withhold any amount that the city or town certifies to the department of revenue and the state treasurer as being necessary to make any required deposits or payments for debt service on bonds or other long-term obligations of the city or town that were issued or incurred before the location incentives provided by the city or town.
K. On notice from the auditor general pursuant to section 9-626, subsection D, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city the amount computed pursuant to section 9-626, subsection D. The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount specified in the notice has been withheld. The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section.
L. Except as otherwise provided by this subsection, on notice from the attorney general pursuant to section 41-194.01, subsection B, paragraph 1 that an ordinance, regulation, order or other official action adopted or taken by the governing body of a county, city or town violates state law or the Constitution of Arizona, the state treasurer shall withhold the distribution of monies pursuant to this section to the affected county, city or town and shall continue to withhold monies pursuant to this subsection until the attorney general certifies to the state treasurer that the violation has been resolved. The state treasurer shall redistribute the monies withheld pursuant to this subsection among all other counties, cities and towns in proportion to their population as provided by subsection D of this section. The state treasurer shall not withhold any amount that the county, city or town certifies to the attorney general and the state treasurer as being necessary to make any required deposits or payments for debt service on bonds or other long-term obligations of the county, city or town that were issued or incurred before committing the violation.
M. For the purposes of this section: ,
1. "Community college district" means a community college district that is established pursuant to sections 15-1402 and 15-1403 and that is a political subdivision of this state and, unless otherwise specified, includes a community college tuition financing district established pursuant to section 15-1409.
2. "Consenting indian tribe" has the same meaning prescribed in section 42-5045.
Sec. 4. Section 42-5029, Arizona Revised Statutes, as amended by Laws 2023, chapter 204, section 6, is amended to read:
42-5029. Remission and distribution of monies; withholding; definitions
A. The department shall deposit, pursuant to sections 35-146 and 35-147, all revenues collected under this article and articles 4, 5 and 8 of this chapter pursuant to section 42-1116, separately accounting for:
1. Payments of estimated tax under section 42-5014, subsection D.
2. Revenues collected pursuant to section 42-5070.
3. Revenues collected under this article and article 5 of this chapter from and after June 30, 2000 from sources located on Indian reservations in this state that are not the indian reservation of a consenting Indian tribe.
4. Revenues collected pursuant to section 42-5010, subsection G and section 42-5155, subsection D.
5. Revenues collected pursuant to section 42-5010.01 and section 42-5155, subsection E.
6. Revenues collected pursuant to section 42-5061 from a remote seller.
B. The department shall credit payments of estimated tax to an estimated tax clearing account and each month shall transfer all monies in the estimated tax clearing account to a fund designated as the transaction privilege and severance tax clearing account. The department shall credit all other payments to the transaction privilege and severance tax clearing account, separately accounting for the monies designated as distribution base under sections 42-5010, 42-5164 and 42-5205. Each month the department shall report to the state treasurer the amount of monies collected pursuant to this article and articles 4, 5 and 8 of this chapter.
C. On notification by the department, the state treasurer shall distribute the monies deposited in the transaction privilege and severance tax clearing account in the manner prescribed by this section and by sections 42-5164 and 42-5205, after deducting warrants drawn against the account pursuant to sections 42-1118 and 42-1254.
D. Of the monies designated as distribution base, the department shall:
1. Pay twenty-five percent to the various incorporated municipalities in this state in proportion to their population to be used by the municipalities for any municipal purpose, except a municipality shall use monies paid from revenues separately accounted for pursuant to subsection A, paragraph 6 of this section and paid pursuant to this paragraph for public safety before any other municipal purpose.
2. Pay 38.08 percent to the counties and consenting Indian tribes in this state by averaging the following proportions:
(a) The proportion that the population of each county or consenting Indian tribe bears to the total state population.
(b) The proportion that the distribution base monies collected during the calendar month in each county and consenting Indian tribe under this article, section 42-5164, subsection B and section 42-5205, subsection B bear to the total distribution base monies collected under this article, section 42-5164, subsection B and section 42-5205, subsection B throughout the state for the calendar month.
3. Pay an additional 2.43 percent to the counties and consenting Indian tribes in this state as follows:
(a) Average the following proportions:
(i) The proportion that the assessed valuation used to determine secondary property taxes of each county or consenting Indian tribe, after deducting that part of the assessed valuation that is exempt from taxation at the beginning of the month for which the amount is to be paid, bears to the total assessed valuations used to determine secondary property taxes of all the counties and consenting Indian tribes after deducting that portion of the assessed valuations that is exempt from taxation at the beginning of the month for which the amount is to be paid. Property of a city or town that is not within or contiguous to the municipal corporate boundaries and from which water is or may be withdrawn or diverted and transported for use on other property is considered to be taxable property in the county or consenting Indian tribe for the purposes of determining assessed valuation in the county or consenting Indian tribe under this item.
(ii) The proportion that the distribution base monies collected during the calendar month in each county or consenting Indian tribe under this article, section 42-5164, subsection B and section 42-5205, subsection B bear to the total distribution base monies collected under this article, section 42-5164, subsection B and section 42-5205, subsection B throughout this state for the calendar month.
(b) If the proportion computed under subdivision (a) of this paragraph for any county or consenting Indian tribe is greater than the proportion computed under paragraph 2 of this subsection, the department shall compute the difference between the amount distributed to that county or consenting Indian tribe under paragraph 2 of this subsection and the amount that would have been distributed under paragraph 2 of this subsection using the proportion computed under subdivision (a) of this paragraph and shall pay that difference to the county or consenting Indian tribe from the amount available for distribution under this paragraph. Any monies remaining after all payments under this subdivision shall be distributed among the counties and consenting Indian tribes according to the proportions computed under paragraph 2 of this subsection.
4. After any distributions required by sections 42-5030, 42-5030.01, 42-5031, 42-5032, 42-5032.01 and 42-5032.02, and after making any transfer to the water quality assurance revolving fund as required by section 49-282, subsection B, credit the remainder of the monies designated as distribution base to the state general fund. From this amount the legislature shall annually appropriate to:
(a) The department of revenue, sufficient monies to administer and enforce this article and articles 5 and 8 of this chapter.
(b) The department of economic security, monies to be used for the purposes stated in title 46, chapter 1.
(c) The firearms safety and ranges fund established by section 17-273, $50,000 derived from the taxes collected from the retail classification pursuant to section 42-5061 for the current fiscal year.
E. If approved by the qualified electors voting at a statewide general election, all monies collected pursuant to section 42-5010, subsection G and section 42-5155, subsection D shall be distributed each fiscal year pursuant to this subsection. The monies distributed pursuant to this subsection are in addition to any other appropriation, transfer or other allocation of public or private monies from any other source and shall not supplant, replace or cause a reduction in other school district, charter school, university or community college funding sources. The monies shall be distributed as follows:
1. If there are outstanding state school facilities revenue bonds pursuant to title 15, chapter 16, article 7, each month one-twelfth of the amount that is necessary to pay the fiscal year's debt service on outstanding state school improvement revenue bonds for the current fiscal year shall be transferred each month to the school improvement revenue bond debt service fund established by section 15-2084. The total amount of bonds for which these monies may be allocated for the payment of debt service shall not exceed a principal amount of eight hundred million dollars exclusive of refunding bonds and other refinancing obligations.
2. After any transfer of monies pursuant to paragraph 1 of this subsection, twelve per cent of the remaining monies collected during the preceding month shall be transferred to the technology and research initiative fund established by section 15-1648 to be distributed among the universities for the purpose of investment in technology and research-based initiatives.
3. After the transfer of monies pursuant to paragraph 1 of this subsection, three per cent of the remaining monies collected during the preceding month shall be transferred to the workforce development account established in each community college district pursuant to section 15-1472 for the purpose of investment in workforce development programs.
4. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one-twelfth of the amount a community college that is owned, operated or chartered by a qualifying Indian tribe on its own Indian reservation would receive pursuant to section 15-1472, subsection D, paragraph 2 if it were a community college district shall be distributed each month to the treasurer or other designated depository of a qualifying Indian tribe. Monies distributed pursuant to this paragraph are for the exclusive purpose of providing support to one or more community colleges owned, operated or chartered by a qualifying Indian tribe and shall be used in a manner consistent with section 15-1472, subsection B. For the purposes of this paragraph, "qualifying Indian tribe" has the same meaning as defined in section 42-5031.01, subsection D.
5. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one-twelfth of the following amounts shall be transferred each month to the department of education for the increased cost of basic state aid under section 15-971 due to added school days and associated teacher salary increases enacted in 2000:
(a) In fiscal year 2001-2002, $15,305,900.
(b) In fiscal year 2002-2003, $31,530,100.
(c) In fiscal year 2003-2004, $48,727,700.
(d) In fiscal year 2004-2005, $66,957,200.
(e) In fiscal year 2005-2006 and each fiscal year thereafter, $86,280,500.
6. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, seven million eight hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments, to the department of education to be used for school safety as provided in section 15-154 and two hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments to the department of education to be used for the character education matching grant program as provided in section 15-154.01.
7. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, no more than seven million dollars may be appropriated by the legislature each fiscal year to the department of education to be used for accountability purposes as described in section 15-241 and title 15, chapter 9, article 8.
8. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, one million five hundred thousand dollars is appropriated each fiscal year, to be paid in monthly installments, to the failing schools tutoring fund established by section 15-241.
9. After transferring monies pursuant to paragraphs 1, 2 and 3 of this subsection, twenty-five million dollars shall be transferred each fiscal year to the state general fund to reimburse the general fund for the cost of the income tax credit allowed by section 43-1072.01.
10. After the payment of monies pursuant to paragraphs 1 through 9 of this subsection, the remaining monies collected during the preceding month shall be transferred to the classroom site fund established by section 15-977. The monies shall be allocated as follows in the manner prescribed by section 15-977:
(a) Forty per cent shall be allocated for teacher compensation based on performance.
(b) Twenty per cent shall be allocated for increases in teacher base compensation and employee related expenses.
(c) Forty per cent shall be allocated for maintenance and operation purposes.
F. The department shall credit the remainder of the monies in the transaction privilege and severance tax clearing account to the state general fund, subject to any distribution required by section 42-5030.01.
G. Notwithstanding subsection D of this section, if a court of competent jurisdiction finally determines that tax monies distributed under this section were illegally collected under this article or articles 5 and 8 of this chapter and orders the monies to be refunded to the taxpayer, the department shall compute the amount of such monies that was distributed to each city, town and county under this section. Each city's, town's and county's proportionate share of the costs shall be based on the amount of the original tax payment each municipality and county received. Each month the state treasurer shall reduce the amount otherwise distributable to the city, town and county under this section by 1/36 of the total amount to be recovered from the city, town or county until the total amount has been recovered, but the monthly reduction for any city, town or county shall not exceed ten percent of the full monthly distribution to that entity. The reduction shall begin for the first calendar month after the final disposition of the case and shall continue until the total amount, including interest and costs, has been recovered.
H. On receiving a certificate of default from the greater Arizona development authority pursuant to section 41-2257 or 41-2258 and to the extent not otherwise expressly prohibited by law, the state treasurer shall withhold from the next succeeding distribution of monies pursuant to this section due to the defaulting political subdivision the amount specified in the certificate of default and immediately deposit the amount withheld in the greater Arizona development authority revolving fund. The state treasurer shall continue to withhold and deposit the monies until the greater Arizona development authority certifies to the state treasurer that the default has been cured. In no event may the state treasurer withhold any amount that the defaulting political subdivision certifies to the state treasurer and the authority as being necessary to make any required deposits then due for the payment of principal and interest on bonds of the political subdivision that were issued before the date of the loan repayment agreement or bonds and that have been secured by a pledge of distributions made pursuant to this section.
I. Except as provided by sections 42-5033 and 42-5033.01, the population of a county, city or town as determined by the most recent United States decennial census plus any revisions to the decennial census certified by the United States bureau of the census shall be used as the basis for apportioning monies pursuant to subsection D of this section.
J. Except as otherwise provided by this subsection, on notice from the department of revenue pursuant to section 42-6010, subsection B, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city or town the amount of the penalty for business location municipal tax incentives provided by the city or town to a business entity that locates a retail business facility in the city or town. The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount of the penalty has been withheld. The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section. The state treasurer shall not withhold any amount that the city or town certifies to the department of revenue and the state treasurer as being necessary to make any required deposits or payments for debt service on bonds or other long-term obligations of the city or town that were issued or incurred before the location incentives provided by the city or town.
K. On notice from the auditor general pursuant to section 9-626, subsection D, the state treasurer shall withhold from the distribution of monies pursuant to this section to the affected city the amount computed pursuant to section 9-626, subsection D. The state treasurer shall continue to withhold monies pursuant to this subsection until the entire amount specified in the notice has been withheld. The state treasurer shall credit any monies withheld pursuant to this subsection to the state general fund as provided by subsection D, paragraph 4 of this section.
L. Except as otherwise provided by this subsection, on notice from the attorney general pursuant to section 41-194.01, subsection B, paragraph 1 that an ordinance, regulation, order or other official action adopted or taken by the governing body of a county, city or town violates state law or the Constitution of Arizona, the state treasurer shall withhold the distribution of monies pursuant to this section to the affected county, city or town and shall continue to withhold monies pursuant to this subsection until the attorney general certifies to the state treasurer that the violation has been resolved. The state treasurer shall redistribute the monies withheld pursuant to this subsection among all other counties, cities and towns in proportion to their population as provided by subsection D of this section. The state treasurer shall not withhold any amount that the county, city or town certifies to the attorney general and the state treasurer as being necessary to make any required deposits or payments for debt service on bonds or other long-term obligations of the county, city or town that were issued or incurred before committing the violation.
M. For the purposes of this section: ,
1. "Community college district" means a community college district that is established pursuant to sections 15-1402 and 15-1403 and that is a political subdivision of this state and, unless otherwise specified, includes a community college tuition financing district established pursuant to section 15-1409.
2. "Consenting indian tribe" has the same meaning prescribed in section 42-5045.
Sec. 5. Section 42-5031.01, Arizona Revised Statutes, is amended to read:
42-5031.01. Distribution of revenues for Indian tribal postsecondary educational institutions; compact; definition
A. Subject to the limit prescribed in subsection C of this section, each month the state treasurer shall transmit to the treasurer or other designated depository of each qualifying Indian tribe the amount of transaction privilege tax revenues received pursuant to this article in the preceding month from all sources located on the Indian reservation established for the qualifying Indian tribe as determined pursuant to section 42-5029, subsection A, paragraph 3.
B. The monies distributed pursuant to this section are for the exclusive purpose of supporting the maintenance, renewal and capital expenses of one or more community college campuses in this state that are owned, operated or chartered by each qualifying Indian tribe on its own Indian reservation. Before receiving any monies under this section, a qualifying Indian tribe shall enter into an initial compact with this state on or before September 1, 2017, signed by the governor, to account for the use of monies distributed pursuant to this section. The compact shall:
1. Be for a term of at least twenty years. After a hearing and review of the compact by the joint legislative budget committee held during the fourth year prior to the expiration of before the compact's term expires, a the compact may be amended and renewed for an additional term of at least twenty years with the consent of this state, signed by the governor, and the qualifying Indian tribe, signed by the chairman, president or governor of the qualifying Indian tribe.
2. Require the monies to be used primarily for capital needs, including maintenance and renewal of existing facilities at designated community college campuses on the qualifying Indian tribe's own reservation in this state.
3. Provide for audits by the auditor general of the use of the monies. The auditor general shall submit copies of each audit to the joint legislative budget committee.
4. If necessary, provide for reimbursement to the department of revenue of costs associated with implementing this section, not to exceed one hundred fifty thousand dollars $150,000, from revenues that would otherwise be paid to the qualifying Indian tribe pursuant to this section.
C. Notwithstanding subsection A of this section, the state treasurer shall not transmit under this section in any fiscal year more than the sum of the following amounts:
1. With respect to a single community college, one million seven hundred fifty thousand dollars $1,750,000 or more than ten percent of transaction privilege tax revenues received pursuant to this article from all sources located on the reservation, whichever is less.
2. With respect to an additional technical college located on the same Indian reservation, eight hundred seventy-five thousand dollars $875,000 or more than five percent of transaction privilege tax revenues received pursuant to this article from all sources located on the reservation, whichever is less.
D. A qualifying Indian tribe that has entered into an initial compact with this state on or before September 1, 2017, that is signed by the governor and that is a consenting Indian tribe as defined in section 42-5045 is not eligible to receive monies distributed pursuant to this section. The qualifying Indian tribe shall use the monies distributed to the consenting Indian tribe pursuant to section 42-5029, subsection D to meet the funding requirements of the compact.
D. E. For the purposes of this section, "qualifying Indian tribe" means an Indian tribe that owns, operates and charters any community college or postsecondary educational institution located on its own reservation in this state.
Sec. 6. Section 42-5033, Arizona Revised Statutes, is amended to read:
42-5033. Special census
A. During the fifth year following the decennial census, a county, consenting indian tribe as defined in section 42-5045, city or town may cause to be taken by the United States bureau of the census a special census of the population of the county, consenting Indian tribe, city or town. The results of the special census may be certified by the director. Beginning July 1 in the sixth year following the decennial census, the special census plus any revisions to the special census certified by the United States bureau of the census shall be used as the basis of apportionment of the taxes under section 42-5029, subsection D until the next federal decennial census, except that a city or town may elect to use either the results of the special census or the most recent population estimates from the United States bureau of the census as provided under section 42-5033.01. A city or town may use the results of the special census for only one year, and beginning on July 1 in the second year after the special census, the city or town shall use the most recent population estimates from the United States bureau of the census as provided under section 42-5033.01 as the basis for the apportionment of monies pursuant to this article.
B. Notwithstanding any of the provisions of section 42-5029, any municipality that is initially incorporated subsequent to the decennial census or July 1 of the fifth year thereafter and that has caused a special census of the population within the municipal limits to be taken by the United States census bureau may cause the result of such the special census to be certified to the director. Commencing on July 1 following the completion of such a special census, the city or town may use the results of the special census or the most recent population estimates from the United States bureau of the census as the basis of apportionment of the taxes collected under this article in determining the amount payable to that municipality as provided under section 28-6532. The city or town may use the results of the special census for only one year, and beginning on July 1 in the second year after the special census, the city or town shall use the most recent population estimates from the United States bureau of the census as provided under section 42-5033.01 as the basis for the apportionment of monies pursuant to this article.
Sec. 7. Title 42, chapter 5, article 3.1, Arizona Revised Statutes, is amended by adding section 42-5124, to read:
42-5124. Applicability
This article does not apply to a consenting Indian tribe as defined in section 42-5045.
Sec. 8. Effective date
Section 42-5029, Arizona Revised Statutes, as amended by Laws 2023, chapter 204, section 6 and this act, is effective from and after December 31, 2024.
