ARIZONA STATE SENATE

RESEARCH STAFF

DENISSE GEE

LEGISLATIVE RESEARCH ANALYST

FINANCE COMMITTEE

Telephone: (602) 542-3171

Facsimile: (602) 542-7833

TO: MEMBERS OF THE SENATE

APPROPRIATIONS COMMITTEE

DATE: April 19, 2002

SUBJECT: Strike Everything Amendment to H.B. 2096

Purpose

Creates, in statute, a new county property tax levy on all property classes for new school construction. Amends the Arizona Constitution to limit property tax levies imposed by the Legislature, counties, cities, towns, community colleges and school districts, unless the increased amount is approved by the voters.

Background

In 1998, the Legislature enacted Students FIRST, which replaced voter-approved general obligation bonding as the primary source for school construction with a centralized state funding system. The new system contains three major funding components: new school facilities, building renewal and deficiency correction. Monies for new school construction are currently requested by the School Facilities Board (SFB) from the State Treasurer from transaction privilege tax (TPT) proceeds on an annual basis. The strike everything amendment to H.B. 2096 statutorily provides for additional funding for new school construction through a new countywide property tax levy.

Currently, Article IX, Section 19 of the Arizona Constitution establishes a two percent property tax levy limit per year on county, city, town and community colleges. The strike everything amendment to H.B. 2096 proposes an additional limit whereby the levy cannot increase more than the sum of the percentage change in population growth and the gross domestic product (GDP) price deflator. Both limitations provide that the voters may exceed the prescribed limitations. Additionally, the limitation prescribed in the strike everything amendment to H.B. 2096 may be exceeded by an election held only on the second Tuesday in May.

A Joint Legislative Budget Committee (JLBC) staff fiscal note has been requested.

Provisions

New School Construction (Statutory Change)

1. Requires the Board of Supervisors of a county to annually levy a property tax for new school construction on all property classes for new school construction.

2. Requires SFB to submit projected construction costs for new school construction to JLBC.

3. Requires JLBC to determine the property tax rate to be levied and collected by each county.

4. Requires the county treasurer to deposit the collected monies into the new school facilities fund.

5. Requires JLBC to submit by the second Monday in August to the board of supervisors of each county a statement of the new property tax to be levied and collected.

6. Stipulates that JLBC must compute the property tax levy based on SFB’s projected construction costs for new school construction.

7. Specifies that the board of supervisors must compute the property tax at the rate that JLBC conveyed to the board of supervisors.

8. Specifies that, for the purposes of levying a property tax for new school construction, the assessed valuation for all property classes is ten percent of its full cash value or limited valuation, as applicable.

Property Tax Levy Increases, Election (Constitutional Change)

9. Requires the Legislature, county, city, town, community college district or school district to submit any increased property tax levy to the voters.

10. Specifies that, to be eligible to be put to a vote of the qualified electors, the amount of the increased property tax levy must be greater than the sum of the percentage change in the relevant jurisdiction’s population and the GDP price deflator, as reported by the U.S. Department of Commerce, or a successor index.

11. Disallows the Legislature, county, city, town, community college district or school district to levy any increased property tax over the prior year (if the amount of the increased property tax levy is greater than the sum of the percentage change in the relevant jurisdiction’s population and the GDP price deflator), unless the increased levy is approved by a majority of qualified electors voting in a special election specifically called for that purpose.

12. Requires that the election be held on the second Tuesday in May.

13. Requires the Legislature to statutorily prescribe implementation procedures, including voter notification and jurisdictional election procedures.

Miscellaneous

14. Requires Legislative Council to prepare conforming legislation for the first regular session of the Forty-sixth Legislature if this act is approved by the voters at the next general election.

15. Declares that this measure is not subject to approval or disapproval of the Governor before submission to the voters.

16. Requires the Secretary of State to submit the measure to the voters at the next general election and becomes effective if approved by the voters and on proclamation of the Governor.

DG/jas