HB2425 - 532R

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

Section 1. Section 41-194.01, Arizona Revised Statutes, is amended to read:

START_STATUTE41-194.01. Violations of state law by counties, cities and towns; attorney general investigation; report; withholding of state shared revenues

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 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 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to monitor the response of the governing body, and when the offending ordinance, regulation, order or action is repealed or the violation is otherwise resolved, the attorney general shall notify: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 revenue paid to the county, city or town pursuant to section 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. END_STATUTE

Sec. 2. Section 42-5010, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5010. Rates; distribution base

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

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

(a) Transporting classification.

(b) Utilities classification.

(d) Pipeline classification.

(e) Private car line classification.

(f) Publication classification.

(g) Job printing classification.

(h) Prime contracting classification.

(i) Amusement classification.

(j) Restaurant classification.

(k) Personal property rental classification.

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

(m) Digital goods classification.

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

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

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

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

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

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

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

K. In addition to the rates prescribed by subsection A of this section, an additional rate increment is imposed and shall be collected from persons engaging or continuing in this state in business under the digital goods classification described in section 42‑5077. 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 pursuant to this subsection, and the state treasurer shall credit those revenues to the state general fund pursuant to section 42‑5029, subsection I. The rates imposed pursuant to this subsection are not considered local revenues for the purposes of article IX, section 21, Constitution of Arizona. The additional tax rate increment is levied at the rate of 0.01 percent of the tax base of every person engaging or continuing in this state in business under the digital goods classification described in section 42‑5077.END_STATUTE

Sec. 3. Section 42-5029, Arizona Revised Statutes, is amended to read:

START_STATUTE42-5029. 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, subsection K.

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, and subject to the requirements of section 42‑5041, 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 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 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.

(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.

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 per cent 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. All monies collected pursuant to section 42‑5010, subsection K shall be credited to, and separately accounted in, the state general fund and appropriated each year as follows:

1. fifty percent of the revenues shall be appropriated for public education purposes.

2. Fifty percent of the revenues shall be appropriated for public safety purposes.

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. END_STATUTE

Sec. 4. Title 42, chapter 5, article 2, Arizona Revised Statutes, is amended by adding section 42-5077, to read:

START_STATUTE42-5077. Digital goods classification; definitions

A. The digital goods classification is comprised of the business of remotely selling, installing, maintaining, servicing or repairing digital goods to locations in this state. The tax base for the digital goods classification is the gross proceeds of sales or gross income derived by the remote seller from sales of digital goods to locations in this state.

B. The digital goods classification does not include remote sellers that had gross annual receipts in total remote sales of digital goods in the United States in the preceding calendar year of less than one million dollars. For the purposes of determining whether the threshold prescribed in this subsection is met, the gross annual receipts from remote sales of two or more persons shall be aggregated if the persons either:

1. Are related to the remote seller within the meaning of section 267(b) and (c) or section 707(b)(1) of the internal revenue code.

2. Have one or more ownership relationships and those relationships were designed with a principal purpose of avoiding this section.

C. The tax pursuant to the digital GOODS classification applies with respect to transactions involving electronic delivery at an address in this state. If the DIGITAL GOODS ARE not received by the purchaser at the purchaser's address in this state, the transaction is subject to the tax if either the seller's business records or the address provided by the purchaser during the sale indicates a billing address in this state.

d. For the purposes of this section:

1. "Digital goods":

(a) means any combination of digital sounds, images, data, facts or information, including digital audio and audiovisual works and digital books, that are transmitted electronically or accessed remotely.

(b) Does not include:

(i) Telecommunications services THAT ARE subject to section 42-5064.

(ii) Services that are ancillary to telecommunications services.

(iii) The internet and internet access as defined in section 42‑5064.

(iv) Computer software.

2. "remote sale" means a transfer of digital files for consideration to a location in this state from a seller located outside this state. END_STATUTE

Sec. 5. Section 42-6010, Arizona Revised Statutes, is amended to read:

START_STATUTE42-6010. 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 completion of the project by the city or town, county, state or a private utility where no other political subdivision provides such 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 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 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 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.

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 generally understood as an inducement for the taxpayer to locate a business facility or other operation in the city or town. END_STATUTE

Sec. 6. 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.