Bill kills any city thoughts of tax contracting

Department of revenue willstay in charge of collections

Gov. Jan Brewer

Gov. Jan Brewer

PHOENIX - Gov. Jan Brewer signed a bill Tuesday that would prohibit cities and municipalities from using a third party vendor to collect their taxes, a move the Kingman City Council had been contemplating.

Currently, most cities and towns in the state contract with the Arizona Department of Revenue to collect their taxes. Recently several cities, including Bullhead City, have moved to have a third party vendor collect, audit and report their taxes to the department of revenue.

Senate Bill 1165 puts an end to that, prohibiting cities from using a third party vendor to collect, audit and submit their state transaction privilege taxes and other associated taxes to the department of revenue.

According to the department of revenue, transaction privilege taxes are taxes paid by someone selling or leasing a good

or service. The state levies the tax against following types of vendors, retail sales, restaurants/bars, hotel/motel, commercial leasing, advertising, amusements, personal property rentals, real property rentals, construction contracting, owner/builders, manufactured building, mining, timbering, transportation, printing, publishing, utilities, communications, air/railroad, and private cars/pipelines. Some cities have their own transaction privilege taxes.

The bill does not apply to contracts that existed before Jan. 1, 2011. It is applicable to any contracts that are up for renewal.

Brewer also signed 55 more bills into law and vetoed two bills Tuesday and Wednesday.

Vetoes

Brewer vetoed House Bill 2581 Tuesday. The bill would increase the tax credit a company could claim for donating to a school tuition organization. The organizations offer students scholarships to go to the school of their choice. The bill would also remove the cap on how much a company or an individual could give to such organizations.

In a letter to Arizona Speaker of the House Kirk Adams, Brewer said that balancing the 2012 state budget had been a long and painful process.

"Undoing that effort and immediately placing fiscal year 2012 into a deficit is inappropriate. Any tax reduction, including tax credits, must be part of an overall plan to keep the budget balanced," she wrote. "Aggregate caps on tax credits are critical to the state's ability to budget. Corporate tax credits should have aggregate caps."

She also pointed out that the increase in tax credits could negatively impact some of the state's smaller counties such as Greenlee and Graham.

Brewer was also concerned the tax credits would be used to offset luxury or other consumption based taxes. Those taxes are usually passed on from the wholesaler to the retailer to the consumer. If she signed the bill, there was no guarantee that a wholesaler would pass the tax benefit to retailers or consumers.

She also vetoed Senate Bill 1552 Wednesday. The bill would allow businesses that provide services in multiple states to treat sales to Arizona businesses as in-state sales for tax purposes.

The bill would take effect Dec. 31 and could cost the state $33 million annually in corporate taxes, according to the Arizona Department of Revenue, Brewer wrote in a letter to Senate President Russell Pearce. She reminded Pearce that while the state did need to reform some of its corporate income tax statutes, those reforms needed to be made gradually in order to minimize the effect on the state's revenue.

The state has already passed the Arizona Economic Competitiveness Package, which includes corporate tax reforms that will be phased in gradually starting in 2014, Brewer wrote.

"In contrast, (SB) 1552 cuts corporate income taxes on services and other intangible products immediately at the end of this year. I don't believe it is fair to allow one industry to 'jump the line' in front of other industries in seeking this specific structural tax reform," she wrote. Brewer recommended her office and the Legislature continue to discuss the issue and introduce a new bill in the next session.

Signed bills

Brewer did sign several other bills:

• HB 2245 allows people to tape record or videotape homeowners association meetings.

• HB 2297 eliminates the state's Escrow Recovery Fund and requires escrow agents to provide buyers and sellers with a closing protection letter. The remaining $435,000 in the fund will be transferred to the state's General Fund.

• HB 2384 prohibits a public university, college or community college from using tuition or fees to support programs that teach students how to perform abortions. It also prohibits charities from providing, paying for, promoting or referring someone to a place that offers abortions.

• HB 2412 limits credit card companies to six years to sue a person after they default on their credit card payments.

• SB 1149 changes the fees that homeowner associations can charge members who have not paid their dues and when associations must notify homeowners that they are behind in their dues. It also prohibits HOAs from charging fees for putting a for rent, lease, open house or sale sign inside or outside a property. The bill takes effect Dec. 31.

• SB 1244 allows law enforcement officers to video or audio tape minors without their parent's consent as long a it is part of an investigation.

• SB 1290 prohibits county elections employees from holding a position in a political campaign or committee.

• SB 1553 establishes a state savings account program that allows parents of special needs students pay for 90 percent of the education they need. The money can only be used toward tuition, fees, textbooks, educational therapies from licensed practitioners, tutoring services, entrance exams for college and account management fees. Parents have to reapply for the funds every year. The accounts will be audited on a regular basis.

• HB 2146 allows certified National Rifle Association instructors to teach concealed carry weapons classes after submitting a fee, fingerprints and passing a federal background check.

• HB 2369 allows first and second DUI and extreme DUI offenders to continue to work or attend school while serving their sentences.

• HB 2490 prohibits local governments from banning toys or other promotional items in fast food or restaurant meals.

• HB 2585 requires the Arizona State Board of Pharmacy to keep track of medical marijuana users in its prescription database.

• SB 1298 allows pharmacists to give flu shots and immunizations to children between the ages of 6 and 18 without a prescription during a public health emergency. It also allows them to give immunizations and vaccines to children between the ages of 6 and 18 with a written prescription.

• SB 1412 requires a person turning in more than 10 early ballots to an elections office to show photo ID. The department must then keep a copy of the ID information and send it to the Secretary of State's Office. It also makes it a class V felony to trade an early ballot for a vote, to sell a ballot for a vote, to pose as an elections official or as an official early ballot drop off center, or collect ballots and not turn them into the elections department.

• HB 2003 prohibits local governments from charging fees for emergency fire or rescue services at an accident. Brewer asked the Legislature to work with Arizona fire chiefs to clarify the provisions of the bill.

• HB 2656 creates a special vehicle license plate to honor women veterans. In a letter to the Legislature, Brewer stated that she was concerned about the growing number of specialty plates and how hard it may be for law enforcement to identify the plate as an Arizona plate.