HB4044 - 572R

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

Section 1. Section 13-4315, Arizona Revised Statutes, is amended to read:

START_STATUTE13-4315. Allocation of forfeited property; definition

A. Any property, including all interests in property, forfeited to the state under this title shall be transferred as requested by the attorney for the state to the seizing agency or to the agency or political subdivision employing the attorney for the state, which may do any of the following:

1. Sell, lease, lend or transfer the property to any local or state government entity or agency or political subdivision, any law enforcement agency or prosecutorial agency or any federal law enforcement agency that operates within this state for official federal, state or political subdivision use within this state, with expenses for keeping and transferring such property to be paid by the recipient. Property may not be allocated for official use if the fair market value of the property substantially exceeds the agency's probable cost of purchasing other property equally suited for the intended official use. Property that is allocated for official use may not be assigned for use by any person who supervised or exercised discretion in its forfeiture unless the use is approved in writing by the head of the agency.

2. Sell forfeited property by public or otherwise commercially reasonable sale with expenses of keeping and selling the property and the amount of all valid interests established by claimants paid out of the proceeds of the sale with the balance paid into the anti-racketeering revolving fund of the state or of the county in which the political subdivision seizing the property or prosecuting the action is located. A sale of forfeited property may not be made to any employee of the seizing agency, any person who participated in the forfeiture, any employee of a contractor selling the property on behalf of the seizing agency or any member of the immediate family of any of these employees or persons.

3. Sell a forfeited digital asset by public or otherwise commercially reasonable sale with the expenses of keeping and selling the digital asset and the amount of all valid interests established by claimants, including any restitution that was ordered by a court, paid out of the proceeds of the sale. The first $300,000 of the proceeds of the sale of any forfeited digital asset shall be deposited, pursuant to sections 35-146 and 35-147, in the anti-racketeering revolving fund established by section 13-2314.01. If the proceeds of the sale of the forfeited digital asset is more than $300,000, the remaining balance shall be divided up by depositing, pursuant to sections 35-146 and 35-147, fifty PERCENT in the anti-racketeering revolving fund established by section 13-2314.01 and depositing, pursuant to sections 35-146 and 35-147, the remaining fifty percent in the public safety parity fund established by section 41-1610.02. Digital assets must be sold through state-approved cryptocurrency exchanges or other secure platforms to ensure accurate valuation and transparency. A digital asset may remain in its native form. A digital asset that is seized pursuant to this chapter must be stored in a state-approved, secure digital wallet system that is managed by authorized personnel to prevent loss, theft or unauthorized access. This paragraph applies to a forfeiture that involves only digital assets that are forfeited by THE office of the attorney general.

3. 4. Destroy or use for investigative purposes any illegal or controlled substances or other contraband at any time more than twenty days after seizure, on written approval of the attorney for the state, preserving only such material as may be necessary for evidence.

4. 5. Sell, use or destroy all raw materials, products and equipment of any kind used or intended for use in manufacturing, compounding or processing a controlled substance.

5. 6. Compromise and pay claims against property forfeited pursuant to any provision of this section.

6. 7. Make any other disposition of forfeited property authorized by law for the disposition of property of the state, government entity, agency or political subdivision.

B. Notwithstanding subsection A of this section or any other law to the contrary:

1. If the property forfeited is money, and a law enforcement agency can specifically identify monies as being from its investigative funds or as being exchanged for property from its investigative property, the monies shall be remitted to the investigative fund. If there are additional forfeited monies or monies tendered on satisfaction by an interest holder that cannot be specifically identified, the court shall order the monies returned to each law enforcement agency that makes a showing of costs or expenses that it incurred in connection with the investigation and prosecution of the matter and shall order all excess monies remaining after such returns deposited in the anti-racketeering revolving fund of this state or of the county in which the political subdivision seizing the monies or prosecuting the action is located, established pursuant to section 13-2314.01 or 13-2314.03.

2. If the property declared forfeited is an interest in a vehicle, the court shall order it forfeited to the local, state or other law enforcement agency seizing the vehicle for forfeiture or to the seizing agency.

C. Monies in any anti-racketeering revolving fund established pursuant to this title may be used, in addition to any other lawful use, for:

1. The payment of any expenses necessary to seize, detain, appraise, inventory, protect, maintain, preserve the availability of, advertise or sell property that is subject to forfeiture and that is seized, detained or forfeited pursuant to this title or of any other necessary expenses incident to the seizure, detention, preservation or forfeiture of the property. The payments may include payments for contract services and payments to reimburse any federal, state or local agency for any expenditures made to perform the investigative, storage and maintenance functions associated with the property held by the seizing agency.

2. The payment of awards for information or assistance leading to a civil or criminal proceeding under this title.

3. The payment of compensation from forfeited property to injured persons as provided in section 13-4310, subsection P, paragraph 3.

D. Each attorney for the state shall submit a copy of each forfeiture judgment, including each order of forfeiture, to the Arizona criminal justice commission within sixty days after the forfeiture judgment becomes final or after the conclusion of appellate review, if any.

E. For the purposes of this section, "digital asset" means either of the following that confers economic, proprietary or access rights or powers:

1. Virtual currency.

2. Cryptocurrency. END_STATUTE

Sec. 2. Section 35-144, Arizona Revised Statutes, is amended to read:

START_STATUTE35-144. Budget stabilization fund; definitions

A. The budget stabilization fund is established consisting of monies transferred from the state general fund pursuant to subsection B of this section. The state treasurer shall administer the budget stabilization fund, and invest and divest monies in the budget stabilization fund as provided by sections 35-313 and 35-314.02, and deposit, pursuant to sections 35-146 and 35-147, monies earned from investment shall be credited to the budget stabilization fund in the public safety parity fund established by section 41-1610.02. Except as provided by this section:

1. Monies in the budget stabilization fund are exempt from the provisions of section 35-190 relating to the reversion of monies to the state general fund.

2. The monies in the fund are separate monies to be used only for the purposes of the fund.

3. An amount sufficient to pay claims certified by the state forester pursuant to section 37-1305, subsection E, paragraph 4 is continuously appropriated from the fund to the state treasurer for payment of the certified claims. Not more than $20,000,000 in unreimbursed claims may be outstanding from the fund at any time from the monies appropriated pursuant to this paragraph.

B. In a calendar year in which the annual growth rate exceeds the trend growth rate, the excess growth when multiplied by total general fund revenue of the fiscal year ending in the calendar year determines the amount to be appropriated by the legislature to the budget stabilization fund in the fiscal year in which the calendar year ends.

C. In a calendar year in which the annual growth rate is both less than two percent and less than the trend growth rate, the difference between the annual growth rate and the trend growth rate when multiplied by the total general fund revenue of the fiscal year ending in the calendar year determines the amount to be transferred by the legislature from the budget stabilization fund to the state general fund at the end of the fiscal year in which the calendar year ends. The transfer calculated pursuant to this subsection shall not exceed the available balance in the budget stabilization fund, nor shall the legislature transfer an amount that exceeds the amount sufficient to balance the state general fund budget.

D. The legislature shall pass a bill that contains the emergency clause if the legislature either:

1. Reduces the amount for appropriation to the budget stabilization fund under subsection B of this section.

2. Increases the amount for transfer to the state general fund under subsection C of this section.

E. The annual budget recommendations of the governor and the joint legislative budget committee shall include estimates of appropriations or transfers required under subsection B or C of this section.

F. A final determination of the amount to be appropriated to or transferred from the budget stabilization fund shall be made using personal income and price deflator estimates as reported in the second calendar quarter for the preceding calendar year. The economic estimates commission shall determine the annual growth rate, the trend growth rate and the required appropriation to or transfer from the budget stabilization fund at its first meeting following the second calendar quarter report of the United States department of commerce, but not later than June 1. The commission shall certify and report its findings to the governor, the state treasurer, the president of the senate, the speaker of the house of representatives and the joint legislative budget committee.

G. The appropriation calculated pursuant to subsection B of this section may be included in the general appropriations bill for that fiscal year. Any additional appropriation calculated pursuant to subsection F of this section shall be made by a separate act.

H. At the end of a fiscal year, the budget stabilization fund balance shall not exceed ten percent of state general fund revenue for the fiscal year. Any surplus monies above ten percent shall be transferred by the state treasurer to the state general fund.

I. The state treasurer may temporarily divest monies in the budget stabilization fund to avoid a negative cash balance in operating monies. The amount divested shall not exceed the amount required to meet immediate cash needs. The state treasurer may divest monies in the budget stabilization fund only when the state general fund has a negative cash balance.

J. For the purposes of this section:

1. "Adjusted personal income" means personal income minus transfer payments, as reported by the United States department of commerce, bureau of economic analysis, or its successor agency.

2. "Annual growth rate" means the percentage change in real adjusted personal income in the calendar year ending during a fiscal year as compared to real adjusted personal income for the preceding calendar year. The annual growth rate shall be rounded to the nearest one-hundredth of one percent.

3. "GDP price deflator" means the gross domestic product price deflator reported by the United States department of commerce, bureau of economic analysis, or its successor agency.

4. "Personal income" means the total personal income of all persons in this state reported by the United States department of commerce, bureau of economic analysis, or its successor agency.

5. "Real adjusted personal income" means an amount that is determined by dividing adjusted personal income by the GDP price deflator and multiplying the result by one hundred.

6. "Transfer payments" means that portion of personal income that represents a government expenditure for which no service is rendered or product is delivered, as determined by the United States department of commerce, bureau of economic analysis, or its successor agency.

7. "Trend growth rate" means the average annual growth rate for the most recent seven calendar years, rounded to the nearest one-hundredth of one percent. END_STATUTE

Sec. 3. Title 41, chapter 11, article 1, Arizona Revised Statutes, is amended by adding section 41-1610.02, to read:

START_STATUTE41-1610.02. Public safety parity fund

A. The public safety parity fund is established to pay for the salaries of employees from the department of public safety and the state department of corrections. The fund consists of proceeds from the sale of forfeited digital assets deposited pursuant to section 13-4315 and monies earned from investment from the budget stabilization fund established by section 35-144. The state department of corrections shall administer the fund. Monies in the fund are subject to legislative appropriation.

B. Beginning June 30, 2027 and Each fiscal year thereafter, the state department of corrections shall deposit, pursuant to sections 35-146 and 35-147, forty percent of the monies deposited in the public safety parity fund established by this section in the parity compensation fund established by section 41-1720.

C. In determining the amount of the expenditures from the fund, the state department of corrections shall annually establish and consider benchmarks based on the average total compensation for each comparable corrections personnel rank of the two largest county jails in this state and the two largest private prisons in this state. END_STATUTE

Sec. 4. Section 41-1720, Arizona Revised Statutes, is amended to read:

START_STATUTE41-1720. Parity compensation fund

A. The parity compensation fund is established consisting of monies deposited pursuant to section sections 28-5808 and 41-1610.02 and monies appropriated by the legislature. The department shall administer the fund and, considering state revenues and state employee pay adjustments, . The department shall spend monies from the fund for salaries and benefits for law enforcement personnel that the department determines will enhance the ability of the department to successfully recruit and retain qualified law enforcement personnel. In determining the amount of the expenditures from the fund, the department shall annually establish and consider benchmarks based on the average total compensation for each comparable law enforcement personnel rank of the department's three largest county or municipal peer law enforcement agencies in this state. For the purposes of this subsection, "total compensation" includes base salary, educational incentive pay, physical performance pay, longevity pay and retirement contributions made by an employer on behalf of an employee.

B. On notice from the department, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.

C. Fund monies:

1. Do not revert to the state general fund.

2. Are exempt from the provisions of section 35-190 relating to lapsing of appropriations.

3. Are subject to legislative appropriation. END_STATUTE