ARIZONA STATE SENATE
Phoenix, Arizona
FACT SHEET FOR S.B. 1092
VLT; reduction; fire district distribution
Purpose:
Reduces the Vehicle License Tax (VLT) assessment rate from $4 to $3.35 per one hundred dollars of assessed value of a vehicle. Modifies the VLT distribution formula to hold the non-general
fund recipients harmless. Repeals the fire district assistance tax and restores the VLT as a partial
funding source for county fire districts.
Background:
VEHICLE LICENSE TAX
The VLT is imposed by Article 9, Section 11 of the Arizona Constitution as an in-lieu tax for all ad valorem property taxes assessed on motor vehicles. The Arizona voters approved a ballot
initiative in 1940 which created this state tax.
The VLT assessment rate, according to ARS 28-1591, is $4 per $100 of a motor vehicle's
value. In the initial year of registration, the value of the vehicle is considered to be 60 per cent of the
manufacturer's base retail price. During each succeeding 12 month period, the value of the vehicle
is depreciated by 15 per cent, until the vehicle reaches the minimum VLT rate of $10 per year.
Current statute requires that 31.5 per cent of VLT revenues be deposited first into the highway user
revenue fund (HURF). In FY 1996, VLT revenues totaled $480.3 million with $151.3 million
allocated to the HURF and the remaining 68.5 per cent of VLT revenues distributed as follows:
20 per cent to the state general fund ($65.8 million)
25 per cent to the county general fund ($82.2 million)
25 per cent to the cities and towns general fund ($82.2 million)
25 per cent to the state general fund for school assistance ($82.2 million)
5 per cent to ADOT's special administrative fund ($16.4 million)
Senate Bill 1071, adopted during the 1996 legislative session, requires a portion of state
general fund VLT revenues be reallocated to the County HURF distribution formula in the following
manner: 1.4 per cent in FY 1998, 3 per cent in FY 1999 and 6 per cent in FY 2000 and each fiscal
year thereafter. Senate Bill 1071 also requires that 2 per cent of state general fund VLT monies be
reallocated to the state highway fund each fiscal year.
Based on ADOT's VLT forecasts and assuming that approximately $9 million in VLT
revenues will be needed each year to partially fund the county fire districts, the adverse impact of
Senate Bill 1092 on the state general fund over the next five fiscal years compared to current law is
estimated to be:
Fiscal Year Reduction in State General Fund Revenues
1998 $100.0 million
1999 $106.1 million
2000 $114.6 million
2001 $122.1 million
2002 $131.1 million
COUNTY FIRE DISTRICTS
From 1941 until 1986, fire districts in Arizona received a large portion of their budgets from
vehicle license tax revenues. In 1986, legislation changed this revenue source to a county-wide
property tax, not to exceed a 10 cents per $100 assessed value. Under Senate Bill 1092, a small
portion of state general fund VLT revenues are used to help fund county fire districts. The Arizona
Fire District Association estimates that approximately $8.5 million in VLT revenues will be needed
each year to fund county fire districts and eliminate the small shortfall that occurs for fire districts in
some rural counties under the current county-wide property tax.
Provisions:
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Prepared by Senate Staff
1/27/97
Under Senate Bill 1092, the state general fund's VLT allocation is eliminated and the portion
of VLT revenues distributed to the state general fund each year for school aid assistance is reduced
to ensure that the non-general fund recipients are held harmless and continue to receive VLT
revenues under a revised percentage formula.
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