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Arizona and the Battle of the Budget


 The Arizona capitol...site of contentious budget debates.

The Special Session to finalize the Arizona state budget for FY 2013-14 was, by all accounts, contentious. However, early this morning, the House passed a bipartisan budget that included a controversial expansion of Medicaid. The Senate, which gave its initial approval yesterday, is expected to vote on the budget later today.

The Medicaid controversy took front and center of the debate. Missing was any mention of Governor Jan Brewer's (R) transaction privilege tax simplification plans. HB 2111, an updated version of HB 2657, passed the House back in March and was referred to the Senate RULES Committee, where it was adjourned sine die.

Many Arizona localities are concerned about the impact transaction privilege tax simplification would have on their budgets. Simplification discussions have included proposals to eliminate "municipal authority to assess tax on new construction. Instead, that tax would be replaced with a retail sales tax on construction materials at the point of sale." The concern is that "moving the tax assessment from the place of business to the point of sale will ultimately squeeze out certain municipalities due to the nature of wholesale buys for major construction projects."

On May 16, The League of Arizona Cities and Towns unveiled their own version of a tax simplification plan, which "holds city and town budgets harmless." Yet as the legislative session draws to a close, the fate of any transaction privilege tax simplification plan is uncertain.

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photo credit: jimmywayne via photopin cc


Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.