Fiscal Note
BILL # HB 2725 TITLE: state debt payoff
SPONSOR: Cook STATUS: As Amended by House APPROP
PREPARED BY: Jack Brown
Description
The bill would make appropriations for the retirement or defeasance of 2 sets of state financing agreements: 1) The
state's portion of the Phoenix Convention Center financing; and 2) University research infrastructure financing, which
funded projects at all 3 state universities.
Estimated Impact
In total, the bill appropriates $605.5 million from the Budget Stabilization Fund in FY 2024 for the one-time cost of retiring
the 2 state financing agreements. After accounting for the debt payoff appropriation of $605.5 million (which includes
transaction costs) and multi-year debt service savings of $820.2 million from eliminating the remaining payments, the
state would realize a cumulative net savings of $214.7 million.
In terms of annual debt service payments, the FY 2025 Baseline includes $58.6 million of General Fund spending for debt
service payments on these issuances. Under HB 2725, the state's ongoing General Fund spending would be reduced by
$(58.6) million in FY 2025 as the bill would eliminate those General Fund payments.
Analysis
Laws 2003, Chapter 266 authorized the state to make distributions for the debt service related to financing certain
convention center projects, provided that state funding would account for no more than 50% of the total project cost and
would not exceed $300 million. In 2005, the City of Phoenix issued $600 million of bonds, 50% of which were to be paid
from the state share of funding. The state distribution occurs according to a statutory schedule through FY 2044. The bill
would appropriate $411.0 million from the Budget Stabilization Fund in FY 2024 for the retirement or defeasance of the
state portion of the Phoenix Convention Center financing. After accounting for the debt payoff appropriation of $411.0
million (which includes transaction costs) and multi-year debt service savings of $599.6 million from eliminating the
remaining payments, the state would realize a cumulative net savings of $188.6 million through FY 2044.
(Continued) Table 1
Issuance
Debt Payoff
Funding Amount
Total Debt Service
Eliminated
Total
Net Savings
Length of
Debt Term
FY 25 Payment
Eliminated
Phoenix Convention Center
(State Portion)
411.0 599.6 188.6 FY 44 26.0
University Research Financing194.5 220.6 26.1 FY 31 32.6
Total $605.5 $820.2 $214.7 $58.6
HB 2725 Fiscal Impact
($ in Millions) - 2 -
Originally enacted by Laws 2003, Chapter 267, A.R.S. ยง 15-1670 makes annual General Fund appropriations to the state
university system through FY 2031 to finance lease-purchase agreements for research infrastructure projects. The bill
would appropriate $194.5 million from the Budget Stabilization Fund in FY 2024 for the retirement or defeasance of the
financing agreements. After accounting for the debt payoff appropriation of $194.5 million (which includes transaction
costs) and multi-year debt service savings of $220.6 million from eliminating the remaining payments, the state would
realize a cumulative net savings of $26.1 million through FY 2031.
Local Government Impact
None
2/15/24