HCR 2004
Initials FK Page 1 Military Affairs & Public Safety
ARIZONA HOUSE OF REPRESENTATIVES
Fifty-fifth Legislature
Second Regular Session
HCR2004: fire districts; funding; TPT increment
Sponsor: Representative Payne, LD 21
Committee on Military Affairs & Public Safety
Overview
Applies an additional Transaction Privilege Tax (TPT) and Use Tax increment of 0.1% for 20 years
beginning on January 1, 2023. Establishes, the Fire District Saftey Fund (FDSF), and outlines
the administration of the tax increment into the FDSF.
History
Arizona's 144 fire districts currently receive revenue from secondary property taxes through the
fire district assistance tax. The fire district assistance tax base revenue is limited to not more than
$.10 per $100 of assessed property valuation within the fire district; with an 8% allowable growth
rate annually. In 2021, the Legislature increased the fire district statutory rate cap to $3.375 for
tax year 2022 and $3.50 in tax year 2023 and beyond (A.R.S. § 48-807); (SB1828).
TPT currently collects revenue from businesses at a 5% rate across the following business
classifications:
1) Transporting classification;
2) Utilities classification;
3) Telecommunications classification;
4) Pipeline Classification;
5) Private car line classification;
6) Publication classification;
7) Job printing classification;
8) Prime contracting classification;
9) Amusement classification;
10) Restaurant classification;
11) Personal property rental classification; and
12) Retail classification (A.R.S § 42-5010).
Effective July 1, 2021 through July 1, 2041, TPT collects additional revenue across all the
classifications above at the rate of 0.6% for education purposes (A.R.S § 42-5010.01).
The Use Tax collects revenue, at a 5% rate, from every person storing, using or consuming in
Arizona tangible personal property purchased from a retailer or utility business. Effective July 1,
2021 through July 1, 2041, the Use Tax collects an additional rate increment of 0.6% revenue
(A.R.S § 42-5155).
Provisions
1. Effective January 1, 2023, adds an additional 0.1% tax rate increment from the TPT and the
Use Tax for the ensuing 20 years. (Sec. 1 and Sec. 2)
☐ Prop 105 (45 votes) ☐ Prop 108 (40 votes) ☐ Emergency (40 votes) ☐ Fiscal Note HCR 2004
Initials FK Page 2 Military Affairs & Public Safety
2. Directs the Department of Revenue to separately account for and deposit revenue gained
from the tax rate increment into the FDSF. (Sec. 1)
3. Establishes the FDSF which consists of revenue gained from the proposed 0.1% tax
increment, private donations and interest. (Sec. 3)
4. Prohibits the transfer of monies from the FDSF to any other fund. (Sec. 3)
5. States unused monies from the FDSF will not revert to the state GF. (Sec. 3)
6. Directs the State Treasurer to administer the fund. (Sec. 3)
7. Requires monies in the FDSF to first be spent on:
a) the actual reasonable cost incurred by the State Treasurer to administer the FDSF;
b) the actual reasonable cost incurred by the Department of Revenue to impose and collect
the additional tax rate increment; and
c) all other mandatory state expenditures required to implement the additional tax rate
increment. (Sec. 3)
8. Allows the State Treasurer to prescribe appropriate transfer forms to administer the fund.
(Sec. 3)
9. Requires the State Treasurer to transfer monies not used in the administration of the fund as
follows:
a) initially distribute funds each month to fire districts in proportion to the fire district's
equalized property valuation, but no more than 3% of the fund may go to any one fire
district regardless of size;
b) secondly distribute funds to fire districts who received less than 3% of the fund during
initial distribution, but not distribute more than 3% to any one fire district; and
c) distribute all remaining funds equally amongst all fire districts. (Sec. 3)
10. Specifies the following for monies transferred to a fire district:
a) states that funds distributed to a fire district that does not participate in a joint powers
authority must be placed in the fire district general fund kept for that district;
b) states that funds distributed to a fire district that does participate in joint powers authority
must be placed in the joint powers authority general fund;
c) may be deposited in the relevant governmental funds; and
d) may be spent by that fire district to carry out any of its duties. (Sec. 3)
11. Requires the Secretary of State to submit the proposition to the voters at the next general
election. (Sec. 7)
12. Defines fire district. (Sec. 3)
13. Contains a legislative intent clause. (Sec. 5)
14. Contains a severability clause. (Sec. 6)
15. Makes technical and conforming changes. (Sec. 2)