Legislators Navigate Uncharted Territory
By Lori Lustig
The First Regular Session of the 49th Legislature adjourned sine die at 7:31 a.m. on July 1. On July 6, legislators began their Third Special Session to hammer out a budget. Not only are we in unusual and historic times for our economy, we are in unprecedented and uncharted territory for our legislature.
Truth be told, the legislature has passed three budgets, the first of which was passed by both the Senate and the House on June 4. The budget bills included sweeping reforms for impact fees. However, there were many other pieces to the legislation and the governor made her overall dissatisfaction known quickly.
Under the threat of veto, the legislature began negotiations with the governor to modify the bills. As part of those negotiations, they settled on the contents of previously filed HB 2259 as the platform for impact fee reform to refine the infrastructure improvement plan process. Also included were a two-year moratorium on development fees; a two-year building code moratorium on residential and commercial buildings; and a two-year moratorium on tax rate increases levied on construction contracting.
Included in another one of the budget bills was the allowance of cities and towns to use current impact fee money to backfill other monies--primarily the Vehicle License Tax--swept by the state from city coffers. This second set of budget bills was presented to the governor and subsequently vetoed between July 1 and July 6.
During the summer months, the legislature went back to the drawing board and re-codified many of the provisions included in the July 1 budget bills. They put together a third budget package for the governor that was also supposed to contain a referral to the ballot of a one-cent sales tax increase for a November special election. The industry-related provisions above were retained and made retroactive to July 1.
Unfortunately, the sales tax could not be passed successfully and the remaining bills were presented to the governor again on Aug. 20.On Aug. 25, the Legislature adjourned the Third Special Session sine die giving the governor 10 additional days to decide whether to veto all or some of the bills, sign some or all of the bills, or allow some or all of the bills to become law without her signature. In the end, she signed some bills, vetoed other bills and line-item vetoed the remaining bills.
Among the budget related bills signed was HB 2008 containing the above industry-related provisions, which will become law retroactive to July 1. Among the bills vetoed was SB 1025, containing the repeal of the State Equalization property tax.
Businesses in general also lost other potential corporate income tax cuts. State agencies, including the Registrar of Contractors, are in serious financial straits as state revenues continue to decline and take a toll on agency budgets. Arizona is not alone, as many other states face similar struggles, but that is small consolation to business owners.
Conventional wisdom among lobbyists said we would be returning in September and October to work on expected budget shortfalls. But no crystal ball foretold we would still be working on the fiscal budget.
Lori Lustig, RN JD, is a State Lobbyist who has represented Arizona homebuilders' associations at both the state and municipal levels.
