ARIZONA HOUSE OF REPRESENTATIVES

57th Legislature, 2nd Regular Session

Majority Research Staff

House: WM DPA/SE 5-3-0-1

HB 2784: ~~cities and towns; technical correction~~

NOW: school district tax levy

Sponsor: Representative Olson, LD 10

House Engrossed

Overview

Requires the county school superintendent to annually reduce the primary school district taxes levied if the total ending cash balances are greater than the current year's budget balances. Also requires, the assessed valuation to be included in the written estimate for the amount of monies required by each school district for the ensuing school year.

History

The board of supervisors of each county, at the time of levying other taxes, are required to annually levy school district taxes on the property in any school district in which additional amounts are required, delinquency factor for estimated uncollected taxes may not be included in the computation of the primary tax rate for school district taxes. The taxes are required to be added to and collected in the same manner as other county taxes on the property within the school district. The amount of the school district taxes levied on the property in a particular school district is required to be paid into the school fund of that school district. Additionally, the board of supervisors of each county are required to annually levy an additional tax in each school district that is not eligible for equalization assistance

(A.R.S. § 15-992).

Property taxes for school districts in Arizona are a major component of local property tax bills, comprising both primary taxes (for maintenance and operations) and secondary taxes (for voter-approved bonds and overrides). The state uses a complex, formula-driven system, often limiting residential primary school taxes to 1% of the property's limited value, with the state covering excesses

(AZDOR.GOV).

Provisions

1. Requires assessed valuation to be included in the written estimate for the amount of monies required by each school district for the ensuing school year based on the proposed budget adopted by each school district governing board. (Sec. 1)

2. Requires the county school superintendent, at the time of levying taxes, to annually reduce the primary school district tax levy amount requests from each school district by an amount determined as follows:

a. determine the total ending cash balances from the school district's maintenance and operations fund and unrestricted capital outlay fund reported in the school district's annual financial report for the prior fiscal year;

b. determine the amount that the school district governing board budgeted from the budget balances for the current year; and

c. subtracts the current year's budget balances from the total ending cash balances in the maintenance and operation fund and unrestricted capital outlay fund. (Sec. 2)

3. Limits the reduction in the primary school district tax levy to 85% of the calculated amount. (Sec. 2)

4. Contains session law, not withstands statute for tax years 2027 through 2031, allowing school districts to reduce their tax rate for the calculated dead cash levy by less than the 85% statutory amount, but not less than 20% in each year. (Sec. 3)

5. Makes technical and conforming changes. (Sec. 1,2)

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9. Initials VP/CS HB 2784

10. 3/9/2026 Page 0 House Engrossed

11.

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