State SealARIZONA HOUSE OF REPRESENTATIVES

 

HB 2158: TPT; additional rate; education

PRIME SPONSOR: Representative Coleman, LD 16

BILL STATUS: Ways & Means

                ED: DPA 9-1-0-1

Legend: ABOR – Arizona Board of Regents ADE – Arizona Department of Education ADOR – Arizona Department of Revenue GF – State General Fund TPT – Transaction Privilege Tax TY – Tax Year Amendments – BOLD and Stricken (Committee)

Abstract

☐ Prop 105 (45 votes) ☒ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal NoteRelating to a TPT revenue for educational institutions.

Provisions

TPT and Use Tax

1.       Establishes an additional 0.6% TPT and use tax, beginning July 1, 2021. (Sec. 11, 15)

2.       Stipulates that the additional 0.6% TPT is not considered local revenues for the purpose of expenditure limits for school districts and community college districts. (Sec. 11)

3.       Instructs ADOR to separately account for the revenues collected under the 0.6% TPT and use tax. (Sec. 11, 12, 15)

Distribution of Revenues

4.       Instructs the State Treasurer to distribute the revenues each month as follows:

a.       1/12 of the annual debt service on outstanding state school improvement revenue bonds to the School Improvement Revenue Bond Debt Service Fund;

i.         Limits the principal amount for state school improvement revenue bonds to $800 million.

b.       12% of remaining monies to the Technology and Research Initiative Fund, to be distributed among universities under the jurisdiction of ABOR;

c.        3% of remaining monies to the Workforce Development Account in each community college district;

d.       1/12 of the amount a community college owned, operated or chartered by a qualifying Indian Tribe on its own Indian Reservation would receive if it were a community college district for workforce development and job training programs. (Sec. 14)

5.       Appropriates the following annual amounts from the revenues to ADE, to be distributed monthly:

a.       $86,280,500 for the increased cost of basic state aid for additional school days and teacher salary increases that were enacted in 2000;

b.       $7,800,000 for school safety;

c.        $200,000 for the Character Education Matching Grant Program

d.       Up to $7 million for accountability purposes; and

e.       $1.5 million for the Failing Schools Tutoring Fund. (Sec. 14)

6.       Requires any remaining monies to be transferred to the Classroom Site Fund and distributed as follows:

a.       40% for teacher compensation based on performance;

b.       40% for maintenance and operations; and

c.        20% 100% for increases in teacher base compensation and employee-related expenses. (Sec. 14) (ED)

7.       Transfers $25 million to the GF for the cost of the income tax credit established to mitigate the increased tax rates. (Sec. 14)

8.       Prohibits the monies distributed from the additional 0.6% TPT and use tax from supplanting, replacing or causing a reduction in other funding sources for school districts, charter schools, universities or community colleges. (Sec. 14)

Tax Credit

9.       Establishes a refundable tax credit, beginning in TY 2021, to mitigate the increased TPT and use tax for a taxpayer who is not claimed as a dependent and whose federal adjusted gross income:

a.       Is up to $25,000 for a married couple or single person who is head of a household; or

b.       Is up to $12,500 for a single person or a married person filing separately. (Sec. 18)

10.   Limits the tax credit to $25 for each Arizona resident eligible for a personal or dependent exemption, up to $100 per household. (Sec. 18)

11.   Prohibits a person who was sentenced to incarceration for 60 days or more of the TY from receiving the tax credit. (Sec. 18)

12.   Describes the administrative duties of ADOR. (Sec. 17,18)

Miscellaneous

13.   Removes the requirement that ABOR submit a copy of the report on the Technology and Research Award Program to the Arizona State Library, Archives and Public Records. (Sec. 8)

14.   Permits ABOR to submit the report on the Technology and Research Award Program to the Governor and Legislature before September 1. (Sec. 8)

15.   Defines community college district and qualifying Indian Tribe. (Sec. 14)

16.   Makes technical and conforming changes. (Sec. 1-10, 12-13, 15-17, 19)

Current Law

Laws 2000, Fifth Special Session, Chapter 1 referred what became Proposition 301 to the ballot. The proposal established a TPT and use tax rate of 0.6% to fund educational programs including school facility debt services and designated programs as well as a tax credit for low-income households. The authorization for the additional TPT & use tax expires June 30, 2021.

Additional Information

The distribution of Proposition 301 revenues in FY 2016 was as follows (JLBC):

 

 

 

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Fifty-third Legislature                  HB 2158

Second Regular Session                               Version 2: Ways & Means

 

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