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ARIZONA STATE SENATE
Fifty-Sixth Legislature, First Regular Session
REVISED
public infrastructure improvements; reimbursement
Purpose
Eliminates the $100,000,000 aggregate cap on the amount of state prime contracting transaction privilege tax (TPT) revenues that must be paid to cities, towns and counties for public infrastructure improvements for the benefit of a manufacturing facility.
Background
TPT is imposed on the gross receipts of taxable businesses, with the exception of prime contractors. The tax base for the prime contracting classification is 65 percent of the gross proceeds of sales or gross income derived from the business and certain amounts must be deducted before computing the tax base. The TPT rate for prime contracting is 5.6 percent of the tax base (A.R.S. §§ 42-5010; 42-5010.01; and 42-5075).
From October 1, 2013, through September 30, 2033, the State Treasurer must pay a city, town or county the total amount of state prime contracting TPT revenues derived from contracts to construct buildings and associated improvements for the benefit of a manufacturing facility for the purpose of funding up to 80 percent of the cost of the public infrastructure improvements. The aggregate amount of state prime contracting TPT revenues paid to all cities, towns and counties for public infrastructure improvements may not exceed $100,000,000. In order for a city, town or county to qualify for state prime contracting TPT revenue distributions, the manufacturing facility must agree to make a capital investment of at least: 1) $500,000,000 in a county with a population of more than 800,000 persons; or 2) $50,000,000 in a county with a population fewer than 800,000 persons (A.R.S. § 42-5032.02).
The Joint Legislative Budget Committee fiscal note estimates that H.B. 2809 would have a state General Fund cost of at least $106.9 million relative to current law. The cost estimate will very likely increase for at least two reasons: 1) existing intergovernmental Agreements (IGAs) can be amended through September 30, 2033; and 2) additional IGAs between other cities or counties and the Arizona Department of Revenue can be made through September 30, 2033 (JLBC fiscal note).
Provisions
1. Eliminates the $100,000,000 aggregate cap on the amount of state prime contracting TPT revenues that must be paid to cities, towns and counties for public infrastructure improvements for the benefit of a manufacturing facility.
2. Makes technical changes.
3. Becomes effective on the general effective date.
Revisions
ˇ Updates the fiscal impact statement.
House Action
COM 2/14/23 DP 10-0-0-0
3rd Read 3/7/23 60-0-0
Prepared by Senate Research
March 28, 2023
JT/FB/sr