Bill Text: AZ HB2735 | 2023 | Fifty-sixth Legislature 1st Regular | Introduced
Bill Title: TPT; services; tuition surcharge
Spectrum: Partisan Bill (Democrat 17-0)
Status: (Introduced - Dead) 2023-02-14 - House read second time [HB2735 Detail]
Download: Arizona-2023-HB2735-Introduced.html
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REFERENCE TITLE: TPT; services; tuition surcharge |
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State of Arizona House of Representatives Fifty-sixth Legislature First Regular Session 2023
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HB 2735 |
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Introduced by Representatives Sandoval: Aguilar, Bravo, Contreras P, De Los Santos, Hernandez A, Hernandez C, Hernandez L, Hernandez M, Longdon, Pawlik, Peshlakai, Quiñonez, Seaman, Stahl Hamilton, Travers, Tsosie
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An Act
amending sections 15-977 and 15-1642, Arizona Revised Statutes; amending title 15, chapter 13, article 2, Arizona Revised Statutes, by adding section 15-1642.01; amending title 15, chapter 13, article 6, Arizona Revised Statutes, by adding section 15-1705; amending title 41, chapter 1, article 4, Arizona Revised Statutes, by adding section 41-181; repealing section 41-194.01, Arizona Revised Statutes, as amended by Laws 2021, chapter 403, section 18; amending section 41-194.01, Arizona Revised Statutes, as added by Laws 2016, chapter 35, section 1; amending sections 42-5010 and 42-5029, Arizona Revised Statutes; amending title 42, chapter 5, article 2, Arizona Revised Statutes, by adding section 42-5077; amending section 42-6010, Arizona Revised Statutes; appropriating monies; relating to state revenues.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 15-977, Arizona Revised Statutes, is amended to read:
15-977. Classroom site fund; definitions
A. The classroom site fund is established consisting of monies transferred to the fund pursuant to section 37-521, subsection B, section 42-5029, subsection E, paragraph 10, section 42-5029, subsection F, paragraph 1 and section 42-5029.02, subsection A. The department of education shall administer the fund. School districts and charter schools may not supplant existing school site funding with revenues from the fund. All monies distributed from the fund are intended for use at the school site. Teacher compensation distributed pursuant to this section shall supplement, and not supplant, teacher compensation monies from any other sources. The school district or charter school shall notify each school principal of the amount available to the school by April 15 of each year. The district or charter school shall request from the school's principal each school's priority for the allocation of the funds available to the school for each program listed under subsection H of this section. The amount budgeted by the school district or charter school pursuant to this section shall not be included in the allowable budget balance carryforward calculated pursuant to section 15-943.01.
B. A school district governing board must adopt a performance based compensation system at a public hearing to allocate funding from the classroom site fund pursuant to subsection A of this section. Individual teacher performance shall be a component of allocation for teacher compensation.
C. A school district governing board shall vote on a performance based compensation system that includes the following elements:
1. School district performance and school performance.
2. Individual teacher performance.
3. Measures of academic progress toward the academic standards adopted by the state board of education.
4. Other measures of academic progress.
5. Dropout or graduation rates.
6. Attendance rates.
7. Ratings of school quality by parents.
8. Ratings of school quality by students.
9. The input of teachers and administrators.
10. Approval of the performance based compensation system based on an affirmative vote of at least seventy percent of the teachers eligible to participate in the performance based compensation system.
11. An appeals process for teachers who have been denied performance based compensation.
12. Regular evaluation for effectiveness.
D. A performance based compensation system shall include teacher professional development programs that are aligned with the elements of the performance based compensation system.
E. A school district governing board may modify the elements contained in subsection C of this section and consider additional elements when adopting a performance based compensation system. A school district governing board shall adopt any modifications or additional elements and specify the criteria used at a public hearing.
F. Until December 31, 2009, each school district shall develop an assessment plan for its performance based compensation system and submit the plan to the department of education by December 31 of each year. A copy of the performance based compensation system and assessment plan adopted by the school district governing board shall be included in the report submitted to the department of education.
G. Monies in the fund are continuously appropriated, are exempt from the provisions of section 35-190 relating to lapsing of appropriations and shall be distributed as follows:
1. By March 30 of each year, the staff of the joint legislative budget committee shall determine a per pupil amount from the fund for the budget year using the estimated statewide weighted count for the current year pursuant to section 15-943, paragraph 2, subdivision (a) and based on estimated available resources in the classroom site fund for the budget year adjusted for any prior year carryforward or shortfall.
2. The allocation to each charter school and school district for a fiscal year shall equal the per pupil amount established in paragraph 1 of this subsection for the fiscal year multiplied by the weighted student count for the school district or charter school for the fiscal year pursuant to section 15-943, paragraph 2, subdivision (a). For the purposes of this paragraph, the weighted student count for a school district that serves as the district of attendance for nonresident pupils shall be increased to include nonresident pupils who attend school in the school district.
H. Monies distributed from the classroom site fund shall be spent for the following purposes:
1. Class size reduction.
2. Teacher compensation, including a base pay and performance pay component.
3. Assessment intervention programs.
4. Teacher development.
5. Dropout prevention programs.
6. Teacher liability insurance premiums.
7. Student support services.
I. The district governing board or charter school shall allocate the classroom site fund monies to include, if possible, the priorities identified by the principals of the schools while ensuring that the monies maximize classroom opportunities and conform to the authorized expenditures identified in subsection A of this section.
J. School districts and charter schools that receive monies from the classroom site fund shall submit a report by November 15 of each year to the superintendent of public instruction that provides an accounting of the expenditures of monies distributed from the fund during the previous fiscal year and a summary of the results of district and school programs funded with monies distributed from the fund. The department of education in conjunction with the auditor general shall prescribe the format of the report under this subsection.
K. School districts and charter schools that receive monies from the classroom site fund shall receive these monies monthly in an amount not to exceed one-twelfth of the monies estimated pursuant to subsection G of this section, except that if there are insufficient monies in the fund that month to make payments, the distribution for that month shall be prorated for each school district or charter school. The department of education may make an additional payment in the current month for any prior month or months in which school districts or charter schools received a prorated payment if there are sufficient monies in the fund that month for the additional payments. The state is not required to make payments to a school district or charter school classroom site fund if the state classroom site fund revenue collections are insufficient to meet the estimated allocations to school districts and charter schools pursuant to subsection G of this section.
L. The state education system for committed youth shall receive monies from the classroom site fund in the same manner as school districts and charter schools. The Arizona state schools for the deaf and the blind shall receive monies from the classroom site fund in an amount that corresponds to the weighted student count for the current year pursuant to section 15-943, paragraph 2, subdivision (b) for each pupil enrolled in the Arizona state schools for the deaf and the blind. Except as otherwise provided in this subsection, the Arizona state schools for the deaf and the blind and the state education system for committed youth are subject to this section in the same manner as school districts and charter schools.
M. Each school district and charter school, including school districts that unify pursuant to section 15-448 or consolidate pursuant to section 15-459, shall establish a local level classroom site fund to receive allocations from the state level classroom site fund. The local level classroom site fund shall be a budgetary controlled account. Interest charges for any registered warrants for the local level classroom site fund shall be a charge against the local level classroom site fund. Interest earned on monies in the local level classroom site fund shall be added to the local level classroom site fund as provided in section 15-978. This state shall not be required to make payments to a school district or charter school local level classroom site fund that are in addition to monies transferred to the state level classroom site fund pursuant to section 37-521, subsection B, section 42-5029, subsection E, paragraph 10 and section 42-5029.02, subsection A.
N. Monies distributed from the classroom site fund for class size reduction, assessment intervention and dropout prevention programs shall only be used for instructional purposes in the instruction function as defined in the uniform system of financial records, except that monies shall not be used for school-sponsored athletics.
O. For the purposes of this section:
1. "Assessment intervention" means summer programs, after school programs, before school programs or tutoring programs that are specifically designed to ensure that pupils meet the Arizona academic standards as measured by the statewide assessment prescribed by section 15-741.
2. "Class size reduction" means any maintenance and operations expenditure that is designed to reduce the ratio of pupils to classroom teachers, including the use of persons who serve as aides to classroom teachers.
3. "Student support services" means any expenditure in the student support services function as defined in the uniform system of financial records.
Sec. 2. Section 15-1642, Arizona Revised Statutes, is amended to read:
15-1642. Financial aid trust fund; aid to students with verifiable financial need; endowment; report
A. The Arizona board of regents may establish a financial aid trust fund for the purposes of providing immediate aid to students with verifiable financial need, including students who are underrepresented in the population of university students or who by virtue of their special circumstances present unique needs for financial aid, and creating an endowment for future financial aid. Subject to the limits provided in subsection B, paragraph 3 of this section, the board may assess a surcharge on registration fees paid by students for deposit in the fund. The fund shall also consist of monies deposited pursuant to this section and section 15-1670, subsection F and monies transferred pursuant to section 42-5029, subsection F, paragraph 2.
B. The board shall adopt rules to govern the financial aid trust fund, including the following:
1. Twenty-five percent of the monies received each year shall be placed in the trust fund as a permanent endowment. The remaining monies received shall be used for immediate aid for students with verifiable financial need. At least fifty percent of the immediate aid monies shall be used for grant aid.
2. The immediate aid monies shall be distributed to the universities on a pro rata basis based on relative student contributions to the fund.
3. The surcharge on student registration shall not exceed one percent of the registration fee for students taking more than six credit surcharge hours. The surcharge hours for students taking fewer than seven credit hours shall equal one-half the surcharge assessed students taking more than six credit hours.
C. Each dollar raised pursuant to the surcharge on student registration shall be matched by $2 appropriated by the legislature.
D. The board shall report every three years to the legislature on the status of the financial aid trust fund. The report shall include the use to which the monies have been put and the impact of such use.
E. Fund monies shall only be used in university assistance programs approved by the board, and such monies shall be in addition to, and not in replacement of, existing state or institutional financial aid monies. Assistance may be provided to full-time or part-time students. Monies appropriated by this state shall not be used to provide assistance to students who are not residents of this state.
Sec. 3. Title 15, chapter 13, article 2, Arizona Revised Statutes, is amended by adding section 15-1642.01, to read:
15-1642.01. Surcharge on out-of-state students; transfer
The arizona board of regents shall assess a surcharge of $300 each year on TUITION paid by each student who is not a resident of this state. Monies collected pursuant to this section shall be deposited, pursuant to sections 35-146 and 35-147, in the arizona higher education financial aid program fund established by section 41-181.
Sec. 4. Title 15, chapter 13, article 6, Arizona Revised Statutes, is amended by adding section 15-1705, to read:
15-1705. Arizona higher education financial aid program; requirements; distribution fund; rules
A. The Arizona board of regents shall establish the Arizona higher education financial aid program.
B. The Board shall establish application, evaluation and approval procedures and criteria for persons to apply to participate in the Arizona higher education financial aid program.
C. The Arizona higher education financial aid program distribution fund is established consisting of legislative appropriations and monies deposited pursuant to section 41-181. The board shall administer the fund. Monies in the fund are continuously appropriated. The board may annually retain up to five percent of the monies in the fund for administrative purposes. The board shall distribute monies in the fund to qualifying students as provided in this section.
D. In order to qualify for distributions from the Arizona higher education financial aid program distribution fund, a person must meet at least all of the following criteria:
1. Be a resident of this state.
2. Be currently enrolled in or accepted for enrollment in either:
(a) a UNIVERSITY under the jurisdiction of the arizona board of regents.
(b) A community college under the JURISDICTION of a community college district GOVERNING board.
3. Maintain a grade point average of at least 2.0 on a 4.0 scale, or the equivalent, at the university or community college where the student is enrolled. If the grade point average of an otherwise qualifying student falls below 2.0 on a 4.0 scale, the student is no longer eligible for a distribution from the fund until that student meets the grade point requirement prescribed in this paragraph.
E. Beginning in 2024, the board shall distribute monies from the Arizona higher education financial aid program distribution fund on or before August 1 of each year to qualifying students to cover the full amount of each qualifying student's tuition and fees at the university or community college where the qualifying student is enrolled. If there are insufficient monies available in the Arizona higher education financial aid program distribution fund during any fiscal year to cover the tuition and fees of all qualifying students, the board shall distribute the monies in the fund to qualifying students on a first-come, first-served basis.
F. The board shall adopt rules to carry out the purposes of this section.
Sec. 5. Title 41, chapter 1, article 4, Arizona Revised Statutes, is amended by adding section 41-181, to read:
41-181. Arizona higher education financial aid program fund
A. The arizona higher education financial aid program fund is established consisting of monies transferred pursuant to section 42-5029, subsection F, paragraph 4. The state treasurer shall administer the fund. Monies in the fund are CONTINUOUSLY appropriated. The state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.
B. Beginning in 2024, the state treasurer shall transfer on or before August 1 of each year monies in the arizona higher education financial aid program fund to the Arizona board of regents for deposit in the Arizona higher education financial aid program distribution fund established by section 15-1705.
Sec. 6. Repeal
Section 41-194.01, Arizona Revised Statutes, as amended by Laws 2021, chapter 403, section 18, is repealed.
Sec. 7. Section 41-194.01, Arizona Revised Statutes, as added by Laws 2016, chapter 35, section 1, is amended to read:
41-194.01. Violations of state law by counties, cities and towns; attorney general investigation; report; withholding of state shared revenues; notice of violation
A. At the request of one or more members of the legislature, the attorney general shall investigate any ordinance, regulation, order or other official action adopted or taken by the governing body of a county, city or town or any written policy, written rule or written regulation adopted by any agency, department or other entity of the county, city or town that the member alleges violates state law or the Constitution of Arizona.
B. The attorney general shall make a written report of findings and conclusions as a result of the investigation within thirty days after receipt of the request and shall provide a copy of the report to the governor, the president of the senate, the speaker of the house of representatives, the member or members of the legislature making the original request and the secretary of state. If the attorney general concludes that the ordinance, regulation, order, written policy, written rule or other action under investigation:
1. Violates any provision of state law or the Constitution of Arizona, the attorney general shall provide notice to the county, city or town, by certified mail, of the violation and shall indicate that the county, city or town has thirty days to resolve the violation. If the attorney general determines that the county, city or town has failed to resolve the violation within thirty days, the attorney general shall:
(a) Notify the state treasurer who shall withhold and redistribute state shared monies from the county, city or town as provided by section 42-5029, subsection L M and from the city or town as provided by section 43-206, subsection F.
(b) Continue to monitor the response of the governing body, and when the offending ordinance, regulation, order or action is repealed or the violation is otherwise resolved, the attorney general shall notify:
(i) The governor, the president of the senate, the speaker of the house of representatives and the member or members of the legislature making the original request that the violation has been resolved.
(ii) The state treasurer to restore the distribution of state shared revenues to the county, city or town.
2. May violate a provision of state law or the Constitution of Arizona, the attorney general shall file a special action in the supreme court to resolve the issue, and the supreme court shall give the action precedence over all other cases. The court shall require the county, city or town to post a bond equal to the amount of state shared revenues paid to the county, city or town pursuant to sections 42-5029 and 43-206 in the preceding six months.
3. Does not violate any provision of state law or the Constitution of Arizona, the attorney general shall take no further action pursuant to this section.
C. Before a member of the legislature may request an investigation by the attorney general of any written policy, written rule or written regulation adopted by any agency, department or other entity of a county, city or town pursuant to subsection A of this section, the member of the legislature shall first provide a written notification of the alleged violation of state law or the Constitution of Arizona to the chief executive officer or governing body of the county, city or town. If the county, city or town does not repeal or otherwise resolve the violation within sixty days after receiving the notification, the member or members of the legislature may request an investigation by the attorney general pursuant to this section.
Sec. 8. Section 42-5010, Arizona Revised Statutes, is amended to read:
42-5010. 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.
(c) Telecommunications 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. One percent of the tax base as computed for the business of every person engaging or continuing in this state in the services classification described in section 42-5077.
4. 5. 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 5 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 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 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:
1. 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.
2. Subsection A, paragraph 4 of this section is designated as distribution base for the purposes of section 42-5029, subsection D, but the state treasurer shall distribute all of those revenues in the manner prescribed by section 42-5029, subsection F.
Sec. 9. Section 42-5029, Arizona Revised Statutes, is amended to read:
42-5029. Remission and distribution of monies; withholding; definition
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.
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 in this state by averaging the following proportions:
(a) The proportion that the population of each county bears to the total state population.
(b) The proportion that the distribution base monies collected during the calendar month in each county 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 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, 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 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 for purposes of determining assessed valuation in the county under this item.
(ii) The proportion that the distribution base monies collected during the calendar month in each county 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 this state for the calendar month.
(b) If the proportion computed under subdivision (a) of this paragraph for any county 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 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 from the amount available for distribution under this paragraph. Any monies remaining after all payments under this subdivision shall be distributed among the counties 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 $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. All monies collected pursuant to section 42-5010, subsection A, paragraph 4, section 42-5010, subsection J, paragraph 2 and section 42-5077 shall be distributed each fiscal year pursuant to this subsection as follows:
1. Twenty-five percent of the monies collected each month shall be transferred to the classroom site fund established by section 15-977 for the purpose of teacher compensation increases.
2. Twenty-five percent of the monies collected each month shall be transferred to the financial aid trust fund established pursuant to section 15-1642 for the purpose of providing financial aid to resident students at the universities under the jurisdiction of the arizona board of regents.
3. Twenty-five percent of the monies collected each month shall be transferred to the public safety personnel retirement fund established pursuant to title 38, chapter 5, article 4 for the purpose of paying the unfunded accrued liability under the public safety personnel retirement system.
4. Twenty-five percent of the monies collected each month shall be transferred to the Arizona higher education financial aid program fund established by section 41-181.
F. G. 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. H. 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 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. I. 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. J. 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. k. 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. L. 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. M. 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. N. For the purposes of this section, "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.
Sec. 10. Title 42, chapter 5, article 2, Arizona Revised Statutes, is amended by adding section 42-5077, to read:
42-5077. Services classification
A. The services classification includes the following businesses that are not otherwise classified for taxation under this article:
1. Legal services.
2. Architecture, landscape architecture, engineering, engineering design and land surveyor services.
3. Home inspection services.
4. Building and property alarm agencies and security guards and agencies.
5. Investigation and security services.
6. Structural, property and agricultural pest control services.
7. Other services to buildings, dwellings and real estate.
8. Real estate agencies, agents and brokers.
9. Real estate appraisers and property tax agents.
10. Barber services.
11. Beauty and cosmetic salon services, including cosmetologists, aestheticians and nail technicians.
12. Other personal care services.
13. Accounting, tax preparation and bookkeeping services.
14. Medical, osteopathic medicine, chiropractic, podiatric, naturopathic, homeopathic, dental, optometric, optician and otology services.
15. Acupuncture therapists and practitioners.
16. Behavioral and mental health practitioner services.
17. Physical, occupational and speech therapy and rehabilitation services.
18. Hospital and urgent care services.
19. Ambulance and other medical or disability transportation services.
20. Other health practitioner services.
21. Outpatient care services.
22. Radiology services.
23. Medical diagnostic lab services.
24. Home health services.
25. Other ambulatory health services.
26. Nursing and residential care facility services.
27. Athletic and physical fitness trainers and massage therapists.
28. Individual and family psychology and social services.
29. Funeral, embalmer, crematory, cemetery and other death care services.
30. Veterinary services.
31. Pet care services that are not considered veterinary services.
32. Community food, emergency housing and homeless relief services.
33. Computer system design and related services.
34. Management, scientific and technical consulting services.
35. Market research and polling services.
36. Photographic services.
37. Collection, REPOSSESSION and recovery agencies.
38. Property and business management services.
39. Administrative and support services.
40. Business support services.
41. Management of companies.
42. Other support services.
43. Waste management services.
44. Dry cleaning and laundry services.
45. Parking lot and garage services.
46. Business, computer and management training.
47. Private for-profit postsecondary university, Technical and trade schools.
48. Dance schools.
49. Examination preparation services.
50. Driving school services.
51. Other miscellaneous school services.
52. Automotive repair and maintenance services.
53. Electronic and precision repair and maintenance services.
54. Commercial and industrial machinery repair and maintenance services.
55. Personal and household goods and jewelry repair and maintenance services.
B. The tax base for the services classification is the gross proceeds of sales or gross income derived from the business.
Sec. 11. Section 42-6010, Arizona Revised Statutes, is amended to read:
42-6010. Retail business location municipal tax incentives; prohibition; penalty; exceptions; definitions
A. If at least sixty-five per cent percent of the land area within a city's or town's exterior boundaries is located within the exterior boundary of a metropolitan statistical area having a population of more than two million persons, the city or town shall not offer or provide a tax incentive to a business entity as an inducement or in exchange for locating or relocating a retail business facility in the city or town.
B. A city or town that violates this section is subject to a penalty equal to the amount of the incentive realized by the taxpayer, extended over a period of sixty months. The department of revenue shall notify the state treasurer to withhold the amount of the penalty from monies otherwise payable to the city or town as provided by section 42-5029, subsection J K.
C. The city or town shall report to the department of revenue the value of any tax incentive used as an inducement or in exchange for locating or relocating a retail business facility in the city or town. For the purposes of this subsection, the value includes all negotiated amounts, in any form and whether actual, realized or contingent, over the term of the incentive agreement.
D. This section does not apply with respect to:
1. Municipal services and benefits generally afforded by ordinance to all new businesses in the city or town, having no direct affect effect on municipal tax levies.
2. Tax incentives that are afforded to all existing retail business facilities in the city or town.
3. Tax incentives for locating retail business facilities in an area designated as a redevelopment project pursuant to title 36, chapter 12, article 3 where the average household income is less than the average city household income as determined by the United States census bureau.
4. Incentives consisting of reimbursement for public infrastructure dedicated to and accepted and controlled upon on completion of the project by the city or town, county, or state or a private utility where no other political subdivision provides such the utility for transportation, water, sewer, electrical, drainage, the fair market value of real property necessary for the public infrastructure and other necessary public infrastructure. This paragraph does not apply to parking lots, parking structures or parking facilities or other structures or amenities that are owned or controlled by a private entity.
5. Incentives that are offered for the purpose of preserving historical buildings and other structures.
6. Incentives that are offered for cleanup or other remediation activities at a brownfields site under title 49, chapter 2, article 1.1 or the comprehensive environmental response, compensation, and liability act of 1980 (P.L. 96-510, 94 Stat. 2767; 42 United States Code sections 9601 through 9657), commonly known as "superfund".
E. To qualify as exempt from the penalty, an incentive under subsection D of this section that is offered in exchange for expenses incurred by the business entity must be in the form of a reimbursement of the expenses and may not exceed or otherwise be disproportional to the actual cost incurred.
F. This section does not apply to tax incentives that were referred to a vote of the qualified electors of the city or town before July 1, 2007 and approved by the qualified electors of the city or town.
G. For the purposes of this section:
1. "Metropolitan statistical area" means a geographical geographic area consisting of cities, towns and other populated areas defined for federal statistical and census purposes by the United States office of management and budget with technical assistance from the United States census bureau of the census.
2. "Retail business facility" means a store, warehouse or other improvement to real estate where at least one-half of the business conducted on the premises consists of retail sales of tangible personal property to the ultimate consumer, measured by either the number of employees assigned to retail sales or the square footage of the facility used for retail sales. For the purposes of this paragraph, retail sales do not include:
(a) Sales of food and beverage for consumption on the premises of the facility.
(b) The distribution without charge of promotional products that display the company logo or trademark.
(c) Sales solely to company employees.
3. "Tax incentive" means any waiver, exemption, deduction, credit, rebate, discount, deferral or other abatement or reduction of the normal municipal tax liability of an individual taxpayer that otherwise applies to similar existing taxpayers and properties in the city or town, however denominated, computed or applied, and that is generally understood as to be an inducement for the taxpayer to locate a business facility or other operation in the city or town.
Sec. 12. Conforming legislation
The legislative council staff shall prepare proposed legislation conforming the Arizona Revised Statutes to the provisions of this act for consideration in the fifty-sixth legislature, second regular session.
Sec. 13. Applicability
This act applies to taxable periods beginning on or after the first day of the month following the effective date of this act.
Sec. 14. Appropriation; Arizona higher education financial aid program distribution fund; exemption
A. The sum of $500,000 is appropriated from the state general fund in fiscal year 2023-2024 to the Arizona higher education financial aid program distribution fund established by section 15-1705, Arizona Revised Statutes, as added by this act, for the purposes of this act.
B. The appropriation made in subsection A of this section is exempt from the provisions of section 35-190, Arizona Revised Statutes, relating to lapsing of appropriations.
Sec. 15. Requirements for enactment; two-thirds vote
Pursuant to article IX, section 22, Constitution of Arizona, this act is effective only on the affirmative vote of at least two-thirds of the members of each house of the legislature and is effective immediately on the signature of the governor or, if the governor vetoes this act, on the subsequent affirmative vote of at least three-fourths of the members of each house of the legislature.
