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ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
AMENDED
tax; distribution; county stadium district
Purpose
Redirects specified city, county and state transaction privilege tax (TPT) revenues to the Maricopa County Stadium District Fund (District Fund). Caps the total amount of TPT diversions at $500 million and requires the cap to be annually adjusted for inflation. Requires the TPT diversions to cease being transferred to the District Fund if the professional baseball franchise organization domiciled in Arizona before the general effective date (Arizona Diamondbacks) leave the facility before 2055 and prescribes penalties for leaving before 2035, 2045 or 2050.
Background
The Maricopa County Stadium District was formed through action of the Maricopa County Board of Supervisors in September 1991 and is governed by a board of directors consisting of the five members of the Maricopa County Board of Supervisors. The Maricopa County Stadium District has the same boundaries as Maricopa County and owns Chase Field, home of the Arizona Diamondbacks, which opened in 1998 (MCSD). The Maricopa County Stadium District must maintain the District Fund consisting of all monies received by the district. District Fund monies may be used for any lawful district purpose (A.R.S. § 48-4231).
TPT is a tax on vendors for the privilege of doing business in Arizona. The state TPT rate for most classifications is 5.6 percent consisting of the state portion of 5 percent plus an additional 0.6 percent for education. City and town TPT rates vary by category and jurisdiction. In 2024, Maricopa County voters approved a countywide transportation excise tax levied at a rate of up to 10 percent of the state TPT (one-half cent transportation tax). Revenues from the one-half cent transportation tax are used for transportation projects. The Arizona Department of Revenue (ADOR) transmits TPT revenues to the State Treasurer, separately accounting for certain categories with dedicated uses. A portion of TPT is designated for distribution to counties, incorporated municipalities and the state General Fund and is referred to as the distribution base (A.R.S. Title 42, Chapter 5, Articles 2 and 4).
The Joint Legislative Budget Committee (JLBC) fiscal note estimates that the House Engrossed version of H.B. 2704 would reduce state General Fund revenue by $9.2 million annually beginning in FY 2027. The local government impact would be an annual revenue loss of $5.8 million. The result is a combined state and local revenue loss of $15 million annually (JLBC fiscal note).
Provisions
City and Town TPT Distributions
1. Requires a city or town to transmit to the District Fund the first 2 percent of TPT, sales, use, franchise or any other similar tax or fee collected on behalf of the city or town from persons engaged in the following business activities at, or with respect to events held at, a Major League Baseball (MLB) facility or an adjacent owned building:
a) selling tangible personal property at retail;
b) operating or conducting theaters, movies, operas, shows of any type or nature, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, billiard or pool parlors, bowling alleys, public dances, dance halls, boxing and wrestling matches, skating rinks, tennis courts, video games, pinball machines or sports events or any other business charging admission or user fees for exhibition, amusement or entertainment;
c) operating a restaurant, dining car, dining room, lunchroom, mobile food unit, lunch stand, soda fountain, catering service or similar establishment where articles of food or drink are sold for consumption on or of the premises; and
d) prime contracting.
2. Requires ADOR to separately account for the first 2 percent of TPT, sales, use, franchise or other similar tax or fee revenues collected from the businesses prescribed above on the premises of an MLB facility or an owned adjacent building.
3. Repeals the TPT, sales, use, franchise or other similar tax or fee distribution and accounting requirements on January 1, 2056.
County Tax Distributions
4. Requires Maricopa County to transmit to the District Fund the total amount of the one-half cent transportation tax collected from persons engaged in the following business activities at, or with respect to events held at, an MLB facility or an adjacent owned building:
a) selling tangible personal property at retail;
b) operating or conducting theaters, movies, operas, shows of any type or nature, exhibitions, concerts, carnivals, circuses, amusement parks, menageries, fairs, races, contests, games, billiard or pool parlors, bowling alleys, public dances, dance halls, boxing and wrestling matches, skating rinks, tennis courts, video games, pinball machines or sports events or any other business charging admission or user fees for exhibition, amusement or entertainment;
c) operating a restaurant, dining car, dining room, lunchroom, mobile food unit, lunch stand, soda fountain, catering service or similar establishment where articles of food or drink are sold for consumption on or of the premises; and
d) prime contracting.
5. Requires ADOR to separately account for one-half cent transportation tax revenues collected from the businesses prescribed above on the premises of an MLB facility or an owned adjacent building.
6. Requires ADOR to transmit to the District Fund, from the monies to be paid to Maricopa County from the distribution base, an amount equal to the difference between the city's TPT portion transmitted to the District Fund and the amount of the one-half cent transportation tax collected from persons engaged in specified business activities at, or with respect to events held at, an MLB facility or an adjacent owned building.
7. Repeals the Maricopa County one-half cent transportation tax distribution and accounting requirements on January 1, 2056.
State TPT Distributions
8. Requires the State Treasurer to transmit to the District Fund, from the amount designated as the TPT distribution base, the state TPT revenues received from persons conducting retail, amusement, restaurant and prime contracting business at, or with respect to events held at, an MLB facility or an adjacent owned building.
TPT Diversion Cap
9. Caps the total amount of TPT diversions at $500 million.
10. Requires the District Treasurer to annually adjust the cap, to the nearest whole dollar, according to the average annual change in the Metropolitan Phoenix Consumer Price Index and prohibits the adjusted amount from being revised below the cap in the prior year.
11. Requires the District Treasurer to notify the State Treasurer, the city in which the MLB facility is located and ADOR if the cap is met and requires, on receipt of the notice, each entity to stop transmitting TPT monies until the following year after the cap is adjusted for inflation.
12. Requires the State Treasurer, the city in which the MLB facility is located and ADOR to resume transmitting TPT monies beginning the month that the cap is adjusted and until the adjusted limit is met.
13. Requires the District Treasurer to return any TPT monies transmitted over the cap to the appropriate taxing jurisdiction.
Notice and Penalty for Leaving the MLB Facility
14. Stipulates that, if the Arizona Diamondbacks leave the MLB facility, the district treasurer must:
a) notify the State Treasurer and ADOR that the Arizona Diamondbacks left the facility; and
b) return any remaining tax distribution monies that are unexpended and unencumbered to the taxing jurisdiction from which the monies were generated.
15. Prohibits the State Treasurer and the city in which the MLB facility is located, on receiving the notice that the Diamondbacks left the MLB facility, from continuing to transmit the TPT distributions and requires the State Treasurer to assess a penalty against the Diamondbacks in the following amounts:
a) $10 million, if the Diamondbacks leave on or before October 1, 2035;
b) $5 million, if the Diamondbacks leave on or before October 1, 2045; or
c) $1 million, if the Diamondbacks leave on or before October 1, 2050.
16. Requires the State Treasurer to deposit 50 percent of the assessed penalty in the state General Fund and distribute 25 percent each to the county and city in which the MLB facility is located.
17. Requires ADOR to stop separately accounting for tax revenues that were subject to transmission, on receiving the notice that the Arizona Diamondbacks left the MLB facility.
18. Prohibits ADOR, on receiving the notice that the Arizona Diamondbacks left the MLB facility, from continuing to transmit monies to the District Fund from the monies to be paid to Maricopa County from the distribution base.
19. Repeals the notice and penalty requirements on January 1, 2056.
County Stadium District Fund
20. Adds, to the authorized purposes for which county stadium district fund monies may be used, reconstructing, equipping, repairing, maintaining or improving an MLB facility or the adjacent buildings owned by the district and operated by the district or the professional baseball franchise organization that occupies the facility or adjacent buildings.
21. Subjects any individual, including an employee of a professional baseball franchise organization to statutes governing conflicts of interest for state officers and employees for the purposes of spending the TPT distributions.
22. Adds, to the county stadium district fund sources, monies transmitted from the prescribed:
a) state TPT collections;
b) Maricopa County one-half cent transportation excise tax collections; and
c) 2 percent of city or town TPT collections.
Maricopa County Stadium District Board
23. Requires the Maricopa County Stadium District Board, by November 1 each year through 2055, to report to JLBC and the Governor's Office of Strategic Planning and Budgeting (OSPB) regarding all new projects for reconstructing, equipping, repairing, maintaining or improving an MLB facility or adjacent buildings that are paid for by the district from the District Fund.
24. Requires the report to JLBC and OSPB to indicate which projects the professional baseball franchise organization contributed monies toward and the amount of the contribution.
Miscellaneous
25. Specifies that the TPT distributions to the District Fund begin on the first day of the month after the general effective date and continue each month thereafter until December 31, 2055.
26. States that the Legislature finds that the professional baseball franchise organization that occupies the MLB facility and adjacent buildings owned by the county stadium district or professional baseball organization will contribute at least $250 million of the organization's own monies for the purposes of reconstructing, equipping, repairing, maintaining or improving the MLB facility and the adjacent buildings.
27. Requires ADOR, beginning the first day of the month after the general effective date and each month thereafter until December 31, 2055, to separately account for the following revenues:
a) for the purposes of distributing revenues for city or town infrastructure improvements related to manufacturing facilities, prime contracting TPT revenues from any prime contractor engaged in constructing any buildings and associated improvements for the benefit of an MLB facility or an owned adjacent building;
b) restaurant revenues collected from businesses operating restaurants, dining rooms, lunchrooms, lunch stands, soda fountains, catering services or similar establishments on the premises of an MLB facility or an owned adjacent building;
c) for the purposes of distributing state TPT revenues to the Maricopa County Stadium District, amusement revenues collected from the sales of admissions to an MLB facility owned by a county stadium district and operated by the district or the professional baseball franchise organization that occupies the facility or adjacent building; and
d) retail revenues from businesses selling tangible personal property at retail on the premises of an MLB facility or an owned adjacent building.
28. Requires the Arizona Diamondbacks to provide ADOR the federal taxpayer identification number for each employee who rendered services in Arizona for the organization during the tax year and to pay a $5 civil penalty for each number that the organization fails to provide.
29. Defines adjacent building.
30. Makes technical and conforming changes.
31. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Removes the diversion of income tax.
2. Caps the total amount of TPT diversions at $500 million and requires the cap to be adjusted for inflation annually.
3. Requires TPT diversions to cease once the cap is met and allows the diversions to resume after the cap is adjusted for inflation.
4. Establishes a calculation that requires the county TPT diversion to match the city TPT diversion by requiring amounts above the county half-cent transportation tax to be paid from the county's portion of the distribution base.
5. Includes one-half cent transportation tax monies from 2025 in the monies that Maricopa County must transmit to the District Fund.
6. Makes technical and conforming changes.
House Action Senate Action
COM 2/4/25 DPA 8-1-1-0 FIN 3/24/25 DPA 4-3-0
3rd Read 2/26/25 35-25-0 APPROP W/D
Prepared by Senate Research
June 16, 2025
MG/ci