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HB 2959

STATE GOVERNMENT-TECH

104th Regular Session Introduced by Theresa Mah

HB 2959 lets ADOR assess and transfer fees from local governments to fund a State Tax System modernization, via a dedicated fund, through 2028.

Referred to Rules Committee
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Bill Summary · HB 2959

Summary — HB 2959 (State of Arizona) — “STATE GOVERNMENT‑TECH”

Status: Referred to Rules Committee
Introduced: February 18, 2025 (57th Legislature, 1st Regular Session)

Purpose

HB 2959 amends A.R.S. § 42‑5041 to (re)authorize and clarify fee assessments, transfers, and a dedicated fund to pay for an “integrated tax system modernization project” at the Arizona Department of Revenue (ADOR). The bill sets procedures for assessing and collecting local cost‑sharing fees, authorizes transfers from certain tax collections, creates/defines the fund, and specifies uses and timing.

Key provisions

  • Timeframe/sunset: The fee assessment and transfer authority applies “from and after June 30, 2022 through June 30, 2028.”
  • Annual assessment and payment schedule:
    • ADOR must assess fees (to covered local governments) not later than October 31 each year.
    • Fees are payable immediately on assessment; if unpaid by December 31, the state treasurer will withhold the delinquent amount from applicable state shared revenue distributions until satisfied.
  • Entities assessed: counties, cities, towns that receive state shared revenues (per A.R.S. §§ 42‑5029 or 43‑206), councils of governments receiving revenues under §§ 42‑6105 and 42‑6105.01, and regional transportation authorities (RTAs) located in counties with population >800,000 that receive revenues under § 42‑6106.
  • Transfers authorized:
    • ADOR may transfer amounts (as determined by the director) from monies collected under § 42‑5010.01 and § 42‑5155(E) (per § 42‑5029.02) to cover modernization costs tied to those taxes.
    • State treasurer shall transfer amounts (as determined by the director) from monies collected under § 42‑5452 (pursuant to § 36‑2856(B)(2)) to cover modernization costs related to that tax.
    • Transfers are limited to “actual reasonable costs” incurred by ADOR for upgrades related to those specific taxes.
  • Fund and use:
    • Establishes the “Department of Revenue Integrated Tax System Project Fund” to receive assessed fees and transferred monies.
    • The ADOR director administers the fund; monies are subject to legislative appropriation and must be used solely for administrative, development, and operating costs of implementing the integrated tax system modernization project.
  • Municipal financing flexibility: counties, cities and towns may use any of their own revenue sources, including certain countywide special taxing jurisdiction monies, to pay their share.

FY 2025‑2026 specifics (legislative intent)

  • Total aggregate fees assessed in FY 2025‑2026 may not exceed $6,558,800.
  • Allocation methodology: shares for counties, cities/towns, councils of governments, and RTAs are to be proportional to the aggregate amounts those classes received two fiscal years prior under a detailed list of specified A.R.S. distribution sections (the bill lists the statutes used to compute the percentages).

Who is affected

  • Local governments receiving state shared revenues: counties, cities, towns, councils of governments, and certain regional transportation authorities.
  • The Department of Revenue (administrator and beneficiary of funds).
  • State treasurer (enforcement by withholding distributions if fees are delinquent).
  • Ultimately local taxpayers to the extent local governing bodies elect funding sources to pay assessed fees.

Procedural / timeline notes

  • The statute as amended covers fiscal activity retroactive to June 30, 2022 and sunsets June 30, 2028.
  • Assessment occurs annually (by Oct. 31) with payment due immediately and enforcement via withholding after Dec. 31.
  • The posted bill materials include both the introduced and a House‑engrossed version that are largely identical on § 42‑5041 amendments.
  • (Note: some public record text attached to the file contains unrelated material from other states; this summary concerns the Arizona A.R.S. § 42‑5041 amendment described above.)

Compiled from official sources — confirm details with the bill’s official record.

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