ARIZONA STATE SENATE
Phoenix, Arizona
PSPRS; EORP; tax equity;
benefits
Purpose
Extends
a two percent tax equity increase to Public Safety Personnel Retirement System
(PSPRS) and Elected Official Retirement Plan (EORP) members retiring on or
after November 1, 2000 but before November 1, 2001.
Background
In
1989, as a result of the U.S. Supreme Court ruling in Davis v. Michigan,
legislation was passed that increased the taxation of Arizona retirement
income. To offset for the taxation of
pension income above $2,500, a three percent benefit increase was granted to
PSPRS members. Since that time, the
Legislature has extended a similar equity increase on six different
occasions. The most recent increase was
in FY 1999-2000 at two percent.
Administrators
for PSPRS and EORP estimate that the increase for PSPRS members will have a
total cost of approximately $7,000 and $17,000 for the EORP. The general fund portions of these costs
have not yet been determined.
Provisions
1. Grants a two percent tax equity to PSPRS and EORP members employed before September 15, 1989 and retiring after October 31, 2000 but before November 1, 2001.
2. Stipulates the cost of the benefit increase is payable from the applicable employer cost.
3. Repeals the tax equity increase from and after December 31, 2001.
4. Provides for a general effective date.
Prepared by Senate Staff
January 16, 2001