PASSING THE BUCK

PHOENIX, March 9 – The FY16 budget doesn’t raise taxes, but aims to increase revenue by getting more bang for its tax buck. While the budget scraps Ducey’s original proposal to bring in $32.6 million through additional TPT collectors, it finds other ways to maximize tax revenue. S1471 (budget; BRB; revenue; FY2015-16) provides about $3.1 million to DOR to contract for fraud prevention services, which JLBC estimated will bring in nearly $42 million in FY16. The budget also creates a tax amnesty period from Sept. 1 to Oct. 31, in which people or businesses can get interest and penalties waived if they pay their unpaid taxes. Some of the revenue that the state plans to bring in under the FY16 budget will come at the expense of local government. S1471 requires cities and counties to pay DOR for the cost of collecting their shared revenue, with aggregate fees from all jurisdictions capped at about $20.7 million per year. Ken Strobeck, executive director of the League of Arizona Cities and Towns, said the League successfully pushed for some changes to the language. For one, he said the floor amendment to S1471 essentially stipulates that the cities and counties are paying a fee for service, as opposed to local government paying money that simply goes into the general fund. And language stating that the fee will be determined by the DOR director opens the door for agreements between local governments and the agency, and allows for the fee to be eliminated or reduced in future years. “I can’t say that my members are particularly happy. They believe that state agencies should be funded by state operations. But it was something that my executive committee took a look at in the initial governor’s budget and said, we again recognize that they are in a tough spot and we are willing to help out with this fee, as long as it is a fee for service and as long as it is not a permanent, forever fee,” Strobeck said. Craig Sullivan, executive director of the County Supervisors Assn, noted that the state is shifting other costs to the counties. In addition to DOR collections fee, the state is shifting costs for juvenile corrections and homeowner liability to the counties, with the three shifts amounting to about $32.6 million from the counties. “That’s on top of ongoing shifts that occurred during the downturn of the last several years,” he said.