Chapter 0028 - 451R - S Ver of SB1111

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       Senate Engrossed
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  State of Arizona
  Senate
  Forty-fifth
  Legislature
  First Regular Session
  2001
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       CHAPTER 28
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    SENATE BILL 1111
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AN ACT

AMENDING SECTIONS 15-999, 35-321, 35-323, 35-327, 42-17255, 42-18055, 42-18107 AND 42-18125, ARIZONA REVISED STATUTES; RELATING TO COUNTY TREASURERS.

(TEXT OF BILL BEGINS ON NEXT PAGE)

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

Section 1. Section 15-999, Arizona Revised Statutes, is amended to read:

15-999. Preference of payment of warrants; use of balance of school fund remaining at close of fiscal year

A. All warrants registered after January 1, 1936, AND drawn on the county treasurer against the school fund of the school district by the county school superintendent OR FINANCE OFFICER OF A SCHOOL DISTRICT THAT HAS ASSUMED ACCOUNTING RESPONSIBILITY PURSUANT TO SECTION 15-914.01 on the order of the governing board, shall be entitled to preference of payment out of the school fund according to priority of registration.

B. Unless otherwise provided in this chapter and chapter 10 of this title, if a balance remains in the school fund of a school district at the close of a fiscal year, such balance shall be used for reduction of school district taxes for the budget year.

C. A warrant that is drawn on the school fund of the school district by the county school superintendent OR FINANCE OFFICER OF A SCHOOL DISTRICT THAT HAS ASSUMED ACCOUNTING RESPONSIBILITY PURSUANT TO SECTION 15-914.01 and that is not presented for payment within one year after the date of issuance is void. All warrants not presented within one year shall have no further force or effect, and any monies held at the expiration of such time in any fund or account for the payment of the warrants shall be transferred or reverted to the fund upon which the warrants were drawn.

Sec. 2. Section 35-321, Arizona Revised Statutes, is amended to read:

35-321. Definitions

In this article, unless the context otherwise requires:

1. "AGENCY POOL PARTICIPANT" MEANS A SUBDIVISION OR AN ENTITY OF A SUBDIVISION THAT HAS MONIES MAINTAINED BY THE TREASURER AND THAT HAS THE AUTHORITY TO DRAW NEGOTIABLE INSTRUMENTS ON THE TREASURER OR MAKE OTHER DISBURSEMENTS FROM MONIES THAT THE TREASURER HOLDS FOR THE SUBDIVISION OR ENTITY.

1. 2. "Board of deposit" means, in the case of a county, the board of supervisors, and in the case of a city or town, the board of trustees or common council.

2. 3. "Capital structure" means the amount of the capital of the eligible depository shown by the latest call statement of condition as defined by rule of the superintendent of banks for the purpose of administration of this article.

4. "COLLECTING ENTITY" MEANS THE ENTITY FROM WHICH THE TREASURER RECEIVES GENERAL FUNDING INCLUDING THE COUNTY FOR COLLECTIONS PERFORMED BY A COUNTY TREASURER, THE CITY FOR COLLECTIONS PERFORMED BY A CITY TREASURER OR THE DISTRICT FOR COLLECTIONS PERFORMED BY A DISTRICT TREASURER.

3. 5. "Eligible depository" means any:

(a) Commercial or savings bank or savings and loan association having either a branch in this state or its principal place of business in this state and insured by the federal deposit insurance corporation or its successor or any other insuring instrumentality of the United States according to the applicable federal law.

(b) Credit union that is insured by the national credit union administration or its successor.

6. "INVOLUNTARY POOL PARTICIPANT" MEANS A SUBDIVISION THAT ONLY RECEIVES THE PRINCIPAL RATIO OF THE MONIES COLLECTED, FOR WHICH THE PRINCIPAL MONIES ARE MANDATED TO BE DISTRIBUTED ON A SPECIFIC DATE AND FOR WHICH THE INTEREST EARNED ON THE MONIES BETWEEN THE TIME OF COLLECTION AND OTHER STATUTORY REQUIREMENTS REVERTS TO THE GENERAL FUND OF THE COLLECTING ENTITY.

4. 7. "Permissible rate of interest" means a rate of interest which an eligible financial institution is permitted to pay by state or federal law or valid state rules or federal regulations.

5. 8. "Public deposit" means public monies deposited in an eligible depository pursuant to this article.

6. 9. "Public monies" includes subdivision monies.

7. 10. "State monies" means all monies in the treasury of this state or coming lawfully into the possession or custody of the state treasurer.

8. 11. "Subdivision" means any county, noncharter city or town. Cities governed by charter have the option of operating under this article.

9. 12. "Subdivision monies" means all monies in the treasury of a subdivision or coming lawfully into the possession or custody of the treasurer.

10. 13. "Supervisory banking authority" means the state superintendent of banks in respect to the affairs of state financial institutions and the comptroller of currency or the federal home loan bank board in respect to national financial associations.

~~11.~~ 14. "Treasurer" includes the treasurer or officer exercising the functions of treasurer of any subdivision but excludes the state treasurer.

~~12.~~ 15. "Trust funds" means those monies entrusted to a public body or official for preservation and investment, as prescribed by the instrument establishing such funds.

Sec. 3. Section 35-323, Arizona Revised Statutes, is amended to read:

35-323. Investing public monies; bidding; security and other requirements

A. The treasurer shall invest and reinvest public monies in securities and deposits with a maximum maturity of ~~three~~ FIVE years. All public monies shall be invested in eligible investments. Eligible investments are:

1. Certificates of deposit in eligible depositories.

2. Interest bearing savings accounts in banks and savings and loan institutions doing business in this state whose accounts are insured by federal deposit insurance for their industry, but only if deposits in excess of the insured amount are secured by the eligible depository to the same extent and in the same manner as required under this article.

3. Repurchase agreements with a maximum maturity of one hundred eighty days.

4. The pooled investment funds established by the state treasurer pursuant to section 35-326.

5. Bonds or other evidences of indebtedness of the United States or any of its agencies or instrumentalities if the obligations are guaranteed as to principal and interest by the United States or by any agency or instrumentality of the United States.

6. Bonds or other evidences of indebtedness of this state or any of its counties, incorporated cities or towns or school districts.

7. Bonds, notes or evidences of indebtedness of any county, municipal district, municipal utility or special taxing district within this state that are payable from revenues, earnings or a special tax specifically pledged for the payment of the principal and interest on the obligations, and for the payment of which a lawful sinking fund or reserve fund has been established and is being maintained, but only if no default in payment on principal or interest on the obligations to be purchased has occurred within five years of the date of investment, or, if such obligations were issued less than five years before the date of investment, no default in payment of principal or interest has occurred on the obligations to be purchased nor any other obligations of the issuer within five years of the investment.

8. Bonds, notes or evidences of indebtedness issued by any county improvement district or municipal improvement district in this state to finance local improvements authorized by law, if the principal and interest of the obligations are payable from assessments on real property within the improvement district. An investment shall not be made if:

(a) The face value of all such obligations, and similar obligations outstanding, exceeds fifty per cent of the market value of the real property, and if improvements on which the bonds or the assessments for the payment of principal and interest on the bonds are liens inferior only to the liens for general ad valorem taxes.

(b) A default in payment of principal or interest on the obligations to be purchased has occurred within five years of the date of investment, or, if the obligations were issued less than five years before the date of investment, a default in the payment of principal or interest has occurred on the obligations to be purchased or on any other obligation of the issuer within five years of the investment.

9. COMMERCIAL PAPER OF PRIME QUALITY THAT IS RATED "P1" BY MOODY'S INVESTORS SERVICE OR RATED "A1" OR BETTER BY STANDARD AND POOR'S RATING SERVICE OR THEIR SUCCESSORS. ALL COMMERCIAL PAPER MUST BE ISSUED BY CORPORATIONS ORGANIZED AND DOING BUSINESS IN THE UNITED STATES.

10. BONDS, DEBENTURES AND NOTES THAT ARE ISSUED BY CORPORATIONS ORGANIZED AND DOING BUSINESS IN THE UNITED STATES AND THAT ARE RATED "A" OR BETTER BY MOODY'S INVESTOR SERVICE OR STANDARD AND POOR'S RATING SERVICE OR THEIR SUCCESSORS.

B. Certificates of deposit shall be purchased from the eligible depository bidding the highest permissible rate of interest. No monies over one hundred thousand dollars may be awarded at any interest rate less than one hundred three per cent of the equivalent bond yield of the offer side of United States treasury bills having a similar term. If the eligible depository offering to pay the highest rate of interest has bid only for a portion of the monies to be awarded, the remainder of the monies shall be awarded to eligible depositories bidding the next highest rates of interest.

C. An eligible depository is not eligible to receive total aggregate deposits from this state and all its subdivisions in an amount exceeding twice its capital structure as outlined in the last call of condition of the superintendent of banks.

D. If two or more eligible depositories submit bids of an identical rate of interest for all or any portion of the monies to be deposited, the award of the deposit of the monies shall be made to the eligible depository among those submitting identical bids having, at the time of the bid opening, the lowest ratio of total public deposits in relation to its capital structure.

E. Each bid submitted, and not withdrawn prior to the time specified, constitutes an irrevocable offer to pay interest as specified in the bid on the deposit, or portion bid for, and the award of a deposit in accordance with this section obligates the depository to accept the deposit and pay interest as specified in the bid pursuant to which the deposit is awarded.

F. The treasurer shall maintain a record of all bids received and shall make available to the board of deposit at its next regularly scheduled meeting a correct list showing the bidders, the bids received and the amount awarded. These records shall be available to the public and shall be kept in the possession of the treasurer for not less than two years from the date of the report.

G. Any eligible depository, before receiving a deposit in excess of the insured amount under this article, shall deliver collateral for the purposes of this subsection equal to at least one hundred one per cent of the deposit. The collateral shall be any of the following:

1. A bond executed by a surety company that is approved by the treasury department of the United States and authorized to do business in this state. The bond shall be approved as to form by the legal advisor of the treasurer.

2. Securities or instruments of the following character:

(a) United States government or agency obligations.

(b) State, county, school district and other district municipal bonds.

(c) Registered warrants of this state, a county or other political subdivisions of this state, when offered as security for monies of the state, county or political subdivision by which they are issued.

(d) First mortgages and trust deeds on improved, unencumbered real estate located in this state. No single first mortgages or trust deeds may represent more than ten per cent of the total collateral. The treasurer may require that the first mortgages or trust deeds comprising the total collateral security be twice the amount the eligible depository receives on deposit. First mortgages or trust deeds qualify as collateral subject to the following limitations:

(i) The promissory note or other evidences of indebtedness secured by such first mortgage or trust deed shall have been in existence for at least three years and shall not have been in default during this period.

(ii) An eligible depository shall at its own expense execute, deposit with the treasurer and record with the appropriate county recorder a complete sale and assignment with recourse in a form approved by the attorney general, together with an unconditional assumption of obligation to promptly pay to the entitled parties public monies in its custody upon lawful demand and tender of resale and assignment.

Eligible depositories may deposit the security described in this subdivision with the state treasurer, and county, city or town treasurers may accept the security described in this subdivision at their option.

3. The safekeeping receipt of a federal reserve bank or any bank located in a reserve city, or any bank authorized to do business in this state, whose combined capital, surplus and outstanding capital notes and debentures on the date of the safekeeping receipt are ten million dollars or more, evidencing the deposit therein of any securities or instruments described in this section. A safekeeping receipt shall not qualify as security, if issued by a bank to secure its own public deposits, unless issued directly through its trust department. The safekeeping receipt shall show upon its face that it is issued for the account of the treasurer and shall be delivered to the treasurer. The safekeeping receipt may provide for the substitution of securities or instruments which qualify under this section with the affirmative act of the treasurer.

H. The securities, instruments or safekeeping receipt for the securities, instruments or warrants shall be accepted at market value if not above par, and, if at any time their market value becomes less than the deposit liability to that treasurer, additional securities or instruments required to guarantee deposits shall be deposited immediately with the treasurer who made the deposit and deposited by the eligible depository in which the deposit was made.

I. The condition of the surety bond, or the deposit of securities, instruments or a safekeeping receipt, must be such that the eligible depository will promptly pay to the parties entitled public monies in its custody, upon lawful demand, and will, when required by law, pay the monies to the treasurer making the deposit.

J. Notwithstanding the requirements of this section, any institution qualifying as an eligible depository may accept deposits of public monies to the total then authorized insurance of accounts, insured by federal deposit insurance, without depositing a surety bond or securities in lieu of the surety bond.

K. An eligible depository shall report monthly to the treasurer the total deposits of that treasurer and the par value and the market value of any pledged collateral securing those deposits.

L. When a security or instrument pledged as collateral matures or is called for redemption, the cash received for the security or instrument shall be held in place of the security until the depository has obtained a written release or provided substitute securities or instruments.

M. The surety bond, securities, instruments or safekeeping receipt of an eligible depository shall be deposited with the treasurer making the deposit, and he shall be the custodian of the bond, securities, instruments or safekeeping receipt. The treasurer may then deposit with the depository public monies then in his possession in accordance with this article, but not in an amount in excess of the surety bond, securities, instruments or safekeeping receipt deposited, except for federal deposit insurance.

N. The following restrictions on investments are applicable:

1. An investment of public operating fund monies shall not be invested for a duration of longer than three years.

2. The board of deposit may order the treasurer to sell any of the securities, and any order shall specifically describe the securities and fix the date upon which they are to be sold. Securities so ordered to be sold shall be sold for cash by the treasurer on the date fixed in the order, at the then current market price. The treasurer and the members of the board are not accountable for any loss occasioned by sales of securities at prices lower than their cost. Any loss or expense shall be charged against earnings received from investment of public funds.

O. If the total amount of subdivision monies available for deposit at any time is less than one hundred thousand dollars, the subdivision board of deposit shall award the deposit of the funds to an eligible depository in accordance with an ordinance or resolution of the governing body of the subdivision.

Sec. 4. Section 35-327, Arizona Revised Statutes, is amended to read:

35-327. Treasurer; duties; safekeeping of securities; warrants of financial officers; interest; exemptions; responsibilities

A. In the investment of trust funds, the responsible financial officer shall draw a warrant at the direction of the treasurer, payable from the proper fund for the payment of the security purchased.

B. A treasurer is responsible for the safekeeping of all securities acquired by the treasurer under this section. Any such securities may be deposited for safekeeping with any trust company that has its principal place of business in this state or that is qualified to do a trust business in this state.

C. A treasurer shall regularly account for, itemize and inventory according to general public fund accounting practices all securities coming lawfully into the treasurer's possession. Such practice shall be audited by the auditor general for the counties and by an independent auditor for cities and towns at the time of the regular audit as prescribed by law.

D. The treasurer may at the expense of the subdivision and with the approval of the governing board enter into an agreement with the trust department of any bank or banks authorized to do a trust business in this state, for the safekeeping and handling of securities of which the treasurer is lawful custodian. The agreement shall be entered into under terms and conditions which secure the proper safeguarding, inventory, withdrawal and handling of the securities. Access to, deposits or withdrawals of the securities from any place of deposit selected by the officers shall not be permitted or made except as the terms of the agreement provide. The agreement need not require that securities be physically located in this state, if the securities are represented by safekeeping receipts issued for the account of the treasurer by a federal reserve bank or any bank located in a reserve city whose combined capital and surplus on the date of the safekeeping receipt is ten million dollars or more.

E. When securities acquired under this section mature and become due and payable, the treasurer shall present them for payment according to their terms and collect the monies payable on them. The monies collected shall be treated as subdivision monies subject to reinvestment or operating needs or trust monies subject to the provisions of the trust.

F. Interest and appreciation realized on any investment authorized by this section shall be collected by the treasurer and credited by the treasurer in accordance with general public fund accounting practices. Interest realized on subdivision monies pooled within a public deposit and not maintained by a treasurer for more than sixty days shall be credited to the depositing agency's general fund. Interest realized on public deposit monies that are maintained solely by the treasurer shall be distributed on a pro rata basis to subdivision accounts. All other interest realized on any public deposits not otherwise apportioned by law shall be credited to the general fund of this state or the subdivision making the deposit.

F. THE TREASURER SHALL ALLOCATE POOLED INCOME EARNINGS ON A PRO RATA BASIS TO AGENCY POOL PARTICIPANTS. INVOLUNTARY POOL PARTICIPANTS SHALL HAVE THE INCOME EARNINGS FOR THEIR FUNDS DEPOSITED IN THE GENERAL FUND OF THE COLLECTING ENTITY.

G. As provided in this article, the governing body of any subdivision or of any agency, department, board or commission of this state or of any subdivision may, by the adoption of a resolution of continuing effect, authorize the treasurer to invest funds collected for the governing body.

H. The investment of public monies as provided in this section is exempt from the provisions of section 35-142, subsection B and sections 35-154, 35-181.01, 35-181.02, 35-182 through 35-185, 35-185.01, 35-185.02, 35-186 through 35-190, 35-190.01, 35-191, 35-192, 35-192.01, 35-192.02, 35-193, 35-193.02 and 41-732.

I. A treasurer is responsible for the safekeeping, management and disbursement of any investment made and any interest received in compliance with this article.

Sec. 5. Section 42-17255, Arizona Revised Statutes, is amended to read:

42-17255. Remitting tax collections to municipality

A. On or before the fifteenth day of each month the county treasurer shall pay to each city and town treasurer in the county all money collected during the previous month as taxes for the city or town. ALL INTEREST EARNED ON THE MONIES COLLECTED SHALL BE PAID INTO THE COUNTY GENERAL FUND FOR USE AS DETERMINED BY THE BOARD OF SUPERVISORS.

B. The city or town treasurer shall give the county treasurer a receipt for each payment. The county treasurer shall retain the receipt for one year after the annual report to the board of supervisors under section 11-501. The city or town treasurer shall retain a copy of the receipt to be available for purposes of auditing the city or town treasurer's accounts.

Sec. 6. Section 42-18055, Arizona Revised Statutes, is amended to read:

42-18055. Posting payments; receipts

A. When a tax is paid, the county treasurer shall ~~enter~~ RECORD the date of payment ~~on the roll~~ and credit the payment to the person or property that is liable for the tax.

B. Except as provided in subsection C, the treasurer shall ~~give~~ PROVIDE a receipt for the payment stating:

~~1. The amount of tax.~~

~~2. The amount of interest.~~

3. 1. The total amount paid.

4. 2. The date of payment.

~~5. A description of the property assessed with sufficient certainty to identify it.~~

6. 3. The parcel identification number.

~~7. The year for which the tax was assessed.~~

C. The ~~board of supervisors may~~ TREASURER SHALL establish ~~a procedure~~ PROCEDURES for ~~the county treasurer to issue~~ ISSUANCE OR NONISSUANCE OF receipts. for tax payments made by check. If such a procedure is established, receipts for tax payments made by check shall only be issued if the person who makes the payment requests a receipt. A fee shall not be charged for the receipt. If the treasurer provides tax statements, they shall contain:

~~1. A statement that a receipt will not be issued for payments made by check unless the taxpayer requests a receipt.~~

~~2. An appropriate place in which the taxpayer may request a receipt.~~

Sec. 7. Section 42-18107, Arizona Revised Statutes, is amended to read:

42-18107. Additional penalty on listed property

A. A penalty of five dollars or five per cent of the delinquent taxes for which the tax lien is being sold, whichever is more, shall be added to the amount of taxes that are delinquent on each parcel of real property that is separately assessed and described in the list and notice.

B. This penalty:

1. Is imposed and is due on January 1 after the list is ~~printed~~ PREPARED pursuant to section 42-18106.

2. Shall be collected by the county treasurer.

Sec. 8. Section 42-18125, Arizona Revised Statutes, is amended to read:

42-18125. Erroneous sales

A. If by mistake or wrongful act of the county treasurer, recorder or assessor, or as a result of double assessment, a real property tax lien is sold on property on which no tax is due, the county treasurer shall hold the purchaser harmless by paying the purchaser the amount of the principal and interest at the rate bid and endorsed on the certificate of purchase or ~~twelve~~ TEN per cent per year simple, whichever is less.

B. The treasurer, recorder or assessor, as the case may be, and the surety on the official bond of the officer are liable to the county for interest on sales made through the officer's mistake or misconduct.

APPROVED BY THE GOVERNOR APRIL 3, 2001.

FILED IN THE OFFICE OF THE SECRETARY OF STATE APRIL 3, 2001.