Bill Text: AZ HB4165 | 2026 | Fifty-seventh Legislature 2nd Regular | Engrossed
Bill Title: Revenue; 2026-2027
Sponsorship: Partisan Bill (Republican 5)
Status: (Enrolled) 2026-06-11 - Transmitted to Governor [HB4165 Detail]
Download: Arizona-2026-HB4165-Engrossed.html
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House Engrossed
revenue; 2026-2027 |
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State of Arizona House of Representatives Fifty-seventh Legislature Second Regular Session 2026
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HOUSE BILL 4165 |
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AN ACT
amending sections 42-5029.02 and 42-5041, Arizona Revised Statutes; amending laws 2022, chapter 321, section 3; relating to taxation.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 42-5029.02, Arizona Revised Statutes, is amended to read:
42-5029.02. Distribution of revenues for education; definitions
A. All monies collected pursuant to section 42-5010.01 and section 42-5155, subsection E 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 may 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. $64,100,000 is appropriated each fiscal year, to be paid in monthly installments, to the superintendent of public instruction for basic state aid.
2. After any transfer of monies pursuant to paragraph 1 of this subsection, twelve percent 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 under the jurisdiction of the Arizona board of regents 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 percent 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 the transfer of 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 the qualifying Indian tribe. Monies distributed pursuant to this paragraph are for the exclusive purpose of providing support to one or more community colleges that are owned, operated or chartered by a qualifying Indian tribe and shall be used in a manner consistent with section 15-1472, subsection B.
5. After the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, one-twelfth of $86,280,500 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 that were enacted in 2000.
6. After the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, $7,800,000 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 $200,000 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 the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, the legislature may not appropriate more than $7,000,000 each fiscal year to the department of education to be used for accountability purposes as described in section 15-241.02 and title 15, chapter 9, article 8.
8. After the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, $1,500,000 is appropriated each fiscal year, to be paid in monthly installments, to the failing schools tutoring fund established by section 15-241.
9. After the transfer of monies pursuant to paragraphs 1, 2 and 3 of this subsection, $25,000,000 shall be transferred each fiscal year to the state general fund to reimburse the state general fund for the cost of the income tax credit allowed by section 43-1072.02.
10. From and after June 30, 2022 through June 30, 2028 2030, after the transfer of monies pursuant to paragraphs 1 through 9 of this subsection, an amount determined by the director pursuant to section 42-5041 shall be transferred to the department of revenue integrated tax system project fund established by section 42-5041.
11. After the transfer of monies pursuant to paragraphs 1 through 10 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 in the manner prescribed by section 15-977.
B. 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. "Qualifying Indian tribe" has the same meaning as defined in section 42-5031.01.
Sec. 2. Section 42-5041, Arizona Revised Statutes, is amended to read:
42-5041. Assessment of fees; integrated tax system modernization project; fund
A. From and after June 30, 2022 through June 30, 2028 2030, the department shall assess and collect fees from counties, cities, towns, councils of governments and regional transportation authorities as determined by the director and as provided by this section to implement an integrated tax system modernization project at the department.
B. From and after June 30, 2022 through June 30, 2028 2030, a fee is assessed to each county, city and town that receives state shared revenues pursuant to section 42-5029 or 43-206, to each council of governments that receives revenues pursuant to section sections 42-6105 and 42-6105.01 and to each regional transportation authority located in a county with a population of more than eight hundred thousand persons that receives revenues pursuant to section 42-6106.
C. The department shall assess the fees under subsection subsections A and B of this section not later than October 31 each year, and the fees are payable immediately on assessment. If a county, city, town, council of governments or regional transportation authority fails to pay the fees in full on or before December 31, the department shall notify the state treasurer who shall withhold the delinquent amount from the distribution of monies to the affected county, city or town pursuant to sections 42-5029 and 43-206, from the distribution of monies to the affected council of governments pursuant to section sections 42-6105 and 42-6105.01 and from the distribution of monies to the affected regional transportation authority pursuant to section 42-6106, and who shall continue to withhold monies until the entire amount of the assessment has been satisfied.
D. Counties, cities and towns may meet their cost sharing obligation from any source of county, city or town revenue designated by the appropriate county, city or town. The county sources may include monies of any countywide special taxing jurisdiction in which the board of supervisors serves as the board of directors.
E. From and after June 30, 2022 through June 30, 2028 2030, pursuant to section 42-5029.02, the department shall transfer an amount from monies collected pursuant to section 42-5010.01 and section 42-5155, subsection E as determined by the director to implement the integrated tax system modernization project at the department. The amount transferred pursuant to this subsection shall be the actual reasonable costs incurred by the department for integrated tax system modernization upgrades related to the taxes authorized and levied pursuant to section 42-5010.01 and section 42-5155, subsection E.
F. From and after June 30, 2022 through June 30, 2028 2030, pursuant to section 36-2856, subsection B, paragraph 2, the state treasurer shall transfer an amount from monies collected pursuant to section 42-5452 as determined by the director to implement the integrated tax system modernization project at the department. The amount transferred pursuant to this subsection shall be the actual reasonable costs incurred by the department for integrated tax system modernization upgrades related to the tax authorized and levied by section 42-5452.
G. All monies paid to the department or withheld by the state treasurer for the fees assessed pursuant to subsection B of this section or transferred pursuant to subsections E and F of this section shall be credited to the department of revenue integrated tax system project fund established by subsection H of this section.
H. The department of revenue integrated tax system project fund is established consisting of monies deposited in or transferred to the fund pursuant to this section.� The director shall administer the fund.� Monies in the fund are subject to legislative appropriation.� The director shall use monies in the fund solely for the administrative, development and other operating costs incurred in implementing the integrated tax system modernization project at the department.
Sec. 3. Laws 2022, chapter 321, section 3 is amended to read:
Sec. 3. Repeal
Section 42-1009, Arizona Revised Statutes, as added by this act, is repealed from and after December 31, 2029 2031.
Sec. 4. Legislative intent
The legislature intends:
1. That in fiscal year 2026-2027 the fee prescribed in section 42-5041, subsection B, Arizona Revised Statutes, as amended by this act, be assessed and collected pursuant to the following guidelines:
(a) The total amount of fees for all counties, cities, towns, councils of governments and regional transportation authorities may not exceed $1,273,800 in fiscal year 2026-2027.
(b) The share of fees assessed to all counties pursuant to subdivision (a) of this� paragraph shall be in proportion to the aggregate amount of monies distributed to counties for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42-6103, 42-6107, 42-6108, 42-6108.01, 42-6109, 42-6109.01, 42-6110, 42-6111 and 42-6112, Arizona Revised Statutes, as a percentage of aggregate distributions to all counties, cities, towns, councils of governments and regional transportation authorities located in a county with a population of more than eight hundred thousand persons for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42-6001, 42-6103, 42-6105, 42-6105.01, 42-6106, 42-6107, 42-6108, 42-6108.01, 42-6109, 42-6109.01, 42-6110, 42-6111, 42-6112 and 43-206, Arizona Revised Statutes.
(c) The share of fees assessed to all cities and towns pursuant to subdivision (a) of this paragraph shall be in proportion to the aggregate amount of monies distributed to cities and towns for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42-6001 and 43-206, Arizona Revised Statutes, as a percentage of aggregate distributions to all counties, cities, towns, councils of governments and regional transportation authorities located in a county with a population of more than eight hundred thousand persons for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42-6001, 42-6103, 42-6105, 42-6105.01, 42-6106, 42-6107, 42-6108, 42-6108.01, 42-6109, 42-6109.01, 42-6110, 42-6111, 42-6112 and 43-206, Arizona Revised Statutes.
(d) The share of fees assessed to all councils of governments pursuant to subdivision (a) of this paragraph shall be in proportion to the aggregate amount of monies distributed to all councils of governments for the fiscal year two years preceding the current fiscal year pursuant to section 42-6105, Arizona Revised Statutes, as a percentage of aggregate distributions to all counties, cities, towns, councils of governments and regional transportation authorities located in a county with a population of more than eight hundred thousand persons for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42-6001, 42-6103, 42-6105, 42-6105.01, 42-6106, 42-6107, 42-6108, 42-6108.01, 42-6109, 42-6109.01, 42-6110, 42-6111, 42-6112 and 43-206, Arizona Revised Statutes.
(e) The share of fees assessed to all regional transportation authorities located in a county with a population of more than eight hundred thousand persons pursuant to subdivision (a) of this paragraph shall be in proportion to the aggregate amount of monies distributed to all regional transportation authorities located in a county with a population of more than eight hundred thousand persons for the fiscal year two years preceding the current fiscal year pursuant to section 42-6106, Arizona Revised Statutes, as a percentage of aggregate distributions to all counties, cities, towns, councils of governments and regional transportation authorities located in a county with a population of more than eight hundred thousand persons for the fiscal year two years preceding the current fiscal year pursuant to sections 42-5029, 42-6001, 42-6103, 42-6105, 42-6105.01, 42-6106, 42-6107, 42-6108, 42-6108.01, 42-6109, 42-6109.01, 42-6110, 42-6111, 42-6112 and 43-206, Arizona Revised Statutes.
(f) Except as provided by sections 42-5033 and 42-5033.01, Arizona Revised Statutes, the population of a county as determined by the most recent United States decennial census plus any revision to the decennial census certified by the United States census bureau shall be used as the basis for apportioning monies pursuant to subdivision (b) of this paragraph.
(g) Except as provided by sections 42-5033 and 42-5033.01, Arizona Revised Statutes, the population of a city or town as determined by the most recent United States decennial census plus any revision to the decennial census certified by the United States census bureau shall be used as the basis for apportioning monies pursuant to subdivision (c) of this paragraph.
2. That in fiscal year 2026-2027 the transfer prescribed in section 42-5041, subsection E, Arizona Revised Statutes, as amended by this act, not exceed $154,500.
3. That in fiscal year 2026-2027 the transfer prescribed in section 42-5041, subsection F, Arizona Revised Statutes, as amended by this act, not exceed $34,400.
