Bill Text: AZ HB2250 | 2010 | Forty-ninth Legislature 2nd Regular | Engrossed
Bill Title: Arizona's job recovery act
Spectrum: Partisan Bill (Republican 38-0)
Status: (Engrossed - Dead) 2010-04-26 - Senate majority caucus: Do pass [HB2250 Detail]
Download: Arizona-2010-HB2250-Engrossed.html
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House Engrossed |
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State of Arizona House of Representatives Forty-ninth Legislature Second Regular Session 2010
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HOUSE BILL 2250 |
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AN ACT
providing for the delayed repeal of section 15-994, Arizona Revised Statutes; Amending section 20-224.03, Arizona Revised Statutes; repealing section 23‑730.02, Arizona Revised Statutes; repealing title 23, chapter 4, article 5.2, Arizona Revised Statutes; amending sections 35‑701 and 41-1276, Arizona Revised Statutes; changing the designation of title 41, chapter 10, article 2, Arizona Revised Statutes, to "Arizona enterprise development program"; repealing sections 41‑1521, 41‑1522, 41‑1523 and 41‑1524, Arizona Revised Statutes; amending sections 41-1525, 41‑1525.01, 41‑1526 and 41-1527, Arizona Revised Statutes; repealing section 41‑1528, Arizona Revised Statutes; repealing title 41, chapter 10, article 4, Arizona Revised Statutes; amending title 41, chapter 10, Arizona Revised Statutes, by adding a new article 4 and articles 5 and 5.1; Amending sections 41-1554.01, 41-1554.02, 41-1554.03, 41‑1554.06, 42-1116, 42-2003, 42-12006, 42-12009, 42-15001, 42-15006, 43‑206 and 43-222, Arizona Revised Statutes; amending title 43, chapter 4, article 1, Arizona Revised Statutes, by adding section 43-409; amending sections 43‑1011, 43‑1074, 43-1111, 43‑1139 and 43-1161, Arizona Revised Statutes; amending Laws 1996, chapter 344, section 12, as amended by Laws 2001, chapter 370, section 8 and Laws 2006, chapter 387, section 5; relating to employment incentives.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Delayed repeal
Section 15-994, Arizona Revised Statutes, is repealed from and after June 30, 2014.
Sec. 2. Section 20-224.03, Arizona Revised Statutes, is amended to read:
20-224.03. Premium tax credit for increased employment in enterprise zones; definition
A. A tax credit is allowed against the premium tax liability incurred by an insurer pursuant to section 20‑224, 20‑837, 20‑1010, 20‑1060 or 20‑1097.07 for net increases in qualified employment positions of residents of this state by an insurer that is located in an enterprise zone established under title 41, chapter 10, article 2 as certified by the department of commerce pursuant to section 41‑1525. A tax credit is not allowed for the portion of the tax payable to the fire fighters' relief and pension fund pursuant to section 20‑224 or the portion of the tax payable to the public safety personnel retirement system pursuant to section 20‑224.01. Subject to subsection D of this section, the amount of the tax credit is equal to:
1. One‑fourth of the taxable wages paid to an employee in a qualified employment position, not to exceed five hundred dollars, in the first year or partial year of employment.
2. One‑third of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand dollars per qualified employment position, in the second year of continuous employment.
3. One‑half of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand five hundred dollars per qualified employment position, in the third year of continuous employment.
B. To qualify for a credit under this section:
1. An insurer must:
(a) Relocate its operation from outside this state to a location in this state or expand its in-state operation.
(b) Create at least twenty-five new full-time employment positions in a city or town with a population of fifty thousand persons or more or at least fifteen new full-time employment positions in any other location.
1. 2. All of the employees with respect to whom a credit is claimed must reside in this state.
2. 3. Thirty‑five per cent of the employees with respect to whom a credit is claimed for the first year of employment must reside on the date of hire in an enterprise zone that is located in the same county in which the insurer is located. If an employee for whom a credit was allowed in the first year of employment leaves employment during the second or third year, the taxpayer may substitute another employee who meets the requirements of paragraph 3 4 of this subsection and who was hired during the same year as the original employee. If the original employee was counted toward the residency requirement under this paragraph, the substitute employee must also have resided in a zone at the time the substitute was hired.
3. 4. A qualified employment position must meet all of the following requirements:
(a) The position must be a minimum of one thousand seven hundred fifty hours per year of full‑time and permanent employment.
(b) The job duties must be performed primarily at the zone locations of the business location. If an eligible employee in a qualified employment position is transferred or assigned to work in the taxpayer's workplace at a different location that is also located in an enterprise zone and qualifies as a zone location, it may be considered to be continuous employment if it continues to meet all qualified employment position requirements.
(c) The employment must include health insurance coverage for the employee for which the employer pays at least fifty per cent of the premium or membership cost. If the taxpayer is self‑insured, the taxpayer must pay at least fifty per cent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.
(d) The employer must pay compensation at least equal to one hundred seventy-five per cent of the wage offer by county as computed annually by the department of economic security research administration division or successor administration.
(e) The employee must have been employed for at least ninety days during the first taxable year. An employee who is hired during the last ninety days of the taxable year shall be considered a new employee during the next taxable year. A qualified employment position that is filled during the last ninety days of the taxable year is considered to be a new qualified employment position for the next taxable year.
(f) The employee has not been previously employed by the taxpayer within twelve months before the current date of hire.
C. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was allowed in the first year.
D. The net increase in the number of qualified employment positions is the lesser of the total number of filled qualified employment positions created in the zone during the tax year or the difference between the average number of full‑time employees in the zone in the current tax year and the average number of full‑time employees during the immediately preceding taxable year. The net increase in the number of qualified employment positions computed under this subsection may not exceed two hundred qualified employment positions per taxpayer each year.
E. A taxpayer who claims a credit under section 20‑224.04 shall not claim a credit under this section with respect to the same employees.
F. Pursuant to subsection A of this section, if the allowable tax credit exceeds the state premium tax liability, the amount of the claim not used as an offset against the state premium tax liability may be carried forward as a tax credit against subsequent years' state premium tax liability for the period, not to exceed five taxable years. , provided that the insurer remains in an enterprise zone.
G. If a person purchases an insurance business in a zone or if an insurance business in a zone changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for one or more qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete. If a person purchases a taxpayer that had qualified for first or second year credits or if an insurance business changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets other eligibility requirements of this section. Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.
H. An insurer that claims a tax credit against state premium tax liability is not required to pay any additional retaliatory tax imposed pursuant to section 20‑230 as a result of claiming that tax credit.
I. A failure to timely report and certify to the department of commerce the information prescribed by section 41‑1525, subsection B C, paragraphs 1, 2 and 3 and in the manner prescribed by section 41‑1525, subsection C D, disqualifies the insurer from the credit under this section. The department of insurance shall require written evidence of the timely report to the department of commerce.
J. The termination of an enterprise zone does not affect the credit under this section with respect to:
1. Insurers that have employees in the second and third years of employment in qualified employment positions under subsection A, paragraphs 2 and 3 of this section if the business remains in the location that was in the enterprise zone.
2. Amounts carried forward into subsequent taxable years under subsection F of this section.
K. J. The department may adopt rules necessary for the administration of this section.
L. K. For the purposes of this section, "insurer" means any entity that is subject to premium tax liability pursuant to section 20‑224, 20‑837, 20‑1010, 20‑1060 or 20‑1097.07.
Sec. 3. Repeal
A. Section 23-730.02, Arizona Revised Statutes, is repealed.
B. Title 23, chapter 4, article 5.2, Arizona Revised Statutes, is repealed.
Sec. 4. Section 35-701, Arizona Revised Statutes, is amended to read:
35-701. Definitions
In this chapter, unless the context otherwise requires:
1. "Corporation" means any corporation organized as an authority as provided in this chapter.
2. "Designated area" means any area of this state which is either designated pursuant to section 36‑1479 as a slum or blighted area as defined in section 36‑1471, designated by regulation as a pocket of poverty or a neighborhood strategy area by the United States department of housing and urban development pursuant to title I of the housing and community development act of 1977 (P.L. 95-128; 42 United States Code sections 5301 through 5320), as amended, and the department of housing and urban development act (P.L. 89-174; 42 United States Code section 3535(d)) or designated by the United States department of housing and urban development as an empowerment or enterprise zone pursuant to the federal omnibus budget reconciliation act of 1993 (P.L. 103-66; 26 United States Code section 1391(g)) or an area certified as an enterprise zone pursuant to section 41‑1524, subsection B.
3. "Governing body" means:
(a) The board or body in which the general legislative powers of the municipality or the county are vested.
(b) The Arizona board of regents with respect to a corporation formed with the permission of the Arizona board of regents.
4. "Income" means gross earnings from wages, salary, commissions, bonuses or tips from all jobs, net earnings from such person's or family's own nonfarm business, professional practice or partnership, and net earnings from such person's or family's own farm. Income includes income, other than earnings, that consists of amounts received from social security or railroad retirement, interest, dividends, veterans payments, pensions and other regular payments, public assistance or welfare payments, including aid for dependent children, old age assistance and aid to the blind or totally disabled, but excluding separate payments for hospital or other medical care.
5. "Manufactured house" means a structure that is manufactured in a factory after June 15, 1976, that is delivered to a homesite in more than one section and that is placed on a permanent foundation. The dimensions of the completed house shall not be less than twenty feet by forty feet, the roof must be sloping, the siding and roofing must be the same as those found in site‑built houses and the house must be eligible for thirty year real estate mortgage financing.
6. "Municipality" or "county" means the Arizona board of regents or any incorporated city or town, including charter cities, or any county in this state in which a corporation may be organized and in which it is contemplated the corporation will function.
7. "Persons of low and moderate income" means, for the purposes of financing owner‑occupied single family dwelling units in areas which the municipality has found, pursuant to section 36‑1479, to be slum or blighted areas, as defined in section 36‑1471, persons and families whose income does not exceed two and one‑half times the median family income of this state. In all other areas it means persons and families whose income does not exceed one and one‑half times the median family income of this state.
8. "Project" means any land, any building or any other improvement and all real and personal properties, including machinery and equipment whether or not now in existence or under construction and whether located within or without this state or the municipality or county approving the formation of the corporation, that are suitable for any of the following:
(a) With respect to a corporation formed with the permission of a municipality or county other than the Arizona board of regents:
(i) Any enterprise for the manufacturing, processing or assembling of any agricultural or manufactured products.
(ii) Any commercial enterprise for the storing, warehousing, distributing or selling of products of agriculture, mining or industry, or of processes related thereto, including research and development.
(iii) Any office building or buildings for use as corporate or company headquarters or regional offices or the adaptive use for offices of any building within this state that is on the national register of historic places or rehabilitation of residential buildings located in registered historic neighborhoods.
(iv) A health care institution as defined in section 36‑401.
(v) Residential real property for dwelling units located within the municipality or county approving the formation of the corporation and, in the case of a county, whether or not also within a municipality that is within the county.
(vi) Repairing or rehabilitating single family dwelling units or constructing or repairing residential fences and walls.
(vii) Convention or trade show facilities.
(viii) Airports, docks, wharves, mass commuting facilities, parking facilities or storage or training facilities directly related to any of the facilities as provided in this item.
(ix) Sewage or solid waste disposal facilities or facilities for the furnishing of electric energy, gas or water.
(x) Industrial park facilities.
(xi) Air or water pollution control facilities.
(xii) Any educational institution that is operated by a nonprofit educational organization that is exempt from taxation under section 501(c)(3) of the United States internal revenue code and that is not otherwise funded by state monies, any educational institution or organization that is established under title 15, chapter 1, article 8 and that is owned by a nonprofit organization, any private nonsectarian school or any private nonsectarian organization established for the purpose of funding a joint technological education school district.
(xiii) Research and development facilities.
(xiv) Commercial enterprises, including facilities for office, recreational, hotel, motel and service uses if the facilities authorized by this item are to be located in a designated area.
(xv) A child welfare agency, as defined in section 8‑501, owned and operated by a nonprofit organization.
(xvi) A transportation facility constructed or operated pursuant to title 28, chapter 22.
(xvii) A museum operated by a nonprofit organization.
(xviii) Facilities owned or operated by a nonprofit organization described in section 501(c) of the United States internal revenue code of 1986.
(xix) New or existing correctional facilities within this state.
(b) With respect to a corporation formed with the permission of the Arizona board of regents, any facility consisting of classrooms, lecture halls or conference centers or any facility for research and development or for manufacturing, processing, assembling, marketing, storing and transferring items developed through or connected with research and development or in which the results of such research and development are utilized, but only if the facility is located in an area designated as a research park by the Arizona board of regents.
9. "Property" means any land, improvements thereon, buildings and any improvements thereto, machinery and equipment of any and all kinds necessary to a project and any other personal properties deemed necessary in connection with a project.
10. "Research park" means an area of land that has been designated by the Arizona board of regents as a research park for a university and that, at the date of designation, is owned by this state or by the Arizona board of regents.
11. "Single family dwelling unit" includes any new, used or manufactured house that meets the insuring requirements of the federal housing administration, the veterans administration or any other insuring entity of the United States government or any private mortgage insurance or surety company that is approved by the federal home loan mortgage corporation or the federal national mortgage association.
Sec. 5. Section 41-1276, Arizona Revised Statutes, is amended to read:
41-1276. Truth in taxation levy for equalization assistance to school districts
A. On or before February 15 of each year, the joint legislative budget committee shall compute and transmit the truth in taxation rates for equalization assistance for school districts for the following fiscal year to:
1. The chairmen of the house of representatives ways and means committee and the senate finance committee or their successor committees.
2. The chairmen of the appropriations committees of the senate and the house of representatives or their successor committees.
B. The truth in taxation rates consist of the qualifying tax rate for a high school district or a common school district within a high school district that does not offer instruction in high school subjects pursuant to section 15‑971, subsection B, paragraph 1, a qualifying tax rate for a unified district, a common school district not within a high school district or a common school district within a high school district that offers instruction in high school subjects pursuant to section 15‑971, subsection B, paragraph 2 and a state equalization assistance property tax rate pursuant to section 15‑994 that will offset the change in net assessed valuation of property that was subject to tax in the prior year.
C. The joint legislative budget committee shall compute the truth in taxation rates as follows:
1. Determine the statewide primary net assessed value for the preceding tax year as provided in section 42‑17151, subsection A, paragraph 3.
2. Determine the statewide primary net assessed value for the current tax year, excluding the net assessed value of property that was not subject to tax in the preceding year.
3. Divide the amount determined in paragraph 1 of this subsection by the amount determined in paragraph 2 of this subsection.
4. Adjust the qualifying tax rates and the state equalization assistance property tax rate for the current fiscal year by the percentage determined in paragraph 3 of this subsection in order to offset the change in net assessed value.
D. Except as provided in subsections E and G of this section, the qualifying tax rate for a high school district or a common school district within a high school district that does not offer instruction in high school subjects, the qualifying tax rate for a unified school district, a common school district not within a high school district or a common school district within a high school district that offers instruction in high school subjects and the state equalization assistance property tax rate for the following fiscal year shall be the rate determined by the joint legislative budget committee pursuant to subsection C of this section. The committee shall transmit the rates to the superintendent of public instruction and the county boards of supervisors by March 15 each year.
E. If the legislature proposes either qualifying tax rates or a state equalization assistance property tax rate that exceeds the truth in taxation rate:
1. The house of representatives ways and means committee and the senate finance committee or their successor committees shall hold a joint hearing on or before February 28 and publish a notice of a truth in taxation hearing that meets the following requirements:
(a) The notice shall be published twice in a newspaper of general circulation in this state that is published at the state capital. The first publication shall be at least fourteen but not more than twenty days before the date of the hearing. The second publication shall be at least seven but not more than ten days before the date of the hearing.
(b) The notice shall be published in a location other than the classified or legal advertising section of the newspaper.
(c) The notice shall be at least one‑fourth page in size and shall be surrounded by a solid black border at least one‑eighth inch in width.
(d) The notice shall be in the following form, with the "truth in taxation hearing ‑ notice of tax increase" headline in at least eighteen point type:
Truth in Taxation Hearing
Notice of Tax Increase
In compliance with section 41‑1276, Arizona Revised Statutes, the state legislature is notifying property taxpayers in Arizona of the legislature's intention to raise the property tax levy over last year's level.
The proposed tax increase will cause the taxes on a $100,000 home to increase by $_____.
All interested citizens are invited to attend a public hearing on the tax increase that is scheduled to be held ___________ (date and time) at _________ (location).
(e) For purposes of computing the tax increase on a one hundred thousand dollar home as required by the notice, the joint meeting of the house of representatives ways and means committee and the senate finance committee or their successor committees shall consider the difference between the truth in taxation rate and the proposed increased rate.
2. The joint meeting of the house of representatives ways and means committee and the senate finance committee or their successor committees shall consider any motion to recommend the proposed tax rates to the full legislature by roll call vote.
F. In addition to publishing the truth in taxation notice under subsection E, paragraph 1 of this section, the joint meeting of the house of representatives ways and means committee and the senate finance committee or their successor committees shall issue a press release containing the truth in taxation notice.
G. Notwithstanding any other law, the legislature shall not adopt a state budget that provides for either qualifying tax rates pursuant to section 15‑971 or a state equalization assistance property tax rate pursuant to section 15‑994 that exceeds the truth in taxation rates computed pursuant to subsection A of this section unless the rates are adopted by a concurrent resolution approved by an affirmative roll call vote of two‑thirds of the members of each house of the legislature before the legislature enacts the general appropriations bill. If the resolution is not approved by two‑thirds of the members of each house of the legislature, the rates for the following fiscal year shall be the truth in taxation rates determined pursuant to subsection C of this section and shall be transmitted to the superintendent of public instruction and the county boards of supervisors.
H. Notwithstanding subsection C of this section and if approved by the qualified electors voting at a statewide general election, the legislature shall not set a qualifying tax rate that exceeds $2.1265 for a common or high school district or $4.253 for a unified school district. The legislature shall not set a county equalization assistance for education rate that exceeds $0.5123.
I. Pursuant to subsection C of this section, the qualifying tax rate in tax year 2008 for a high school district or a common school district within a high school district that does not offer instruction in high school subjects as provided in section 15‑447 is $1.4622 and for a unified school district, a common school district not within a high school district or a common school district within a high school district that offers instruction in high school subjects as provided in section 15‑447 is $2.9244. The state equalization assistance property tax rate in tax years 2006, 2007 and 2008 is zero. The state equalization assistance property tax rate in:
1. Tax year years 2009 and 2010 shall be computed by annually adjusting the tax year 2005 rate of $0.4358 as provided by this section through tax year years 2009 and 2010, respectively.
2. Tax year 2011 shall be seventy-five per cent of the rate computed for tax year 2010.
3. Tax year 2012 shall be fifty per cent of the rate computed for tax year 2010.
4. Tax year 2013 shall be twenty-five per cent of the rate computed for tax year 2010.
5. Tax years following 2013 shall be zero.
Sec. 6. Heading change
The article heading of title 41, chapter 10, article 2, Arizona Revised Statutes, is changed from "ENTERPRISE ZONES" to "ARIZONA ENTERPRISE DEVELOPMENT PROGRAM".
Sec. 7. Repeal
Sections 41-1521, 41-1522, 41-1523 and 41-1524, Arizona Revised Statutes, are repealed.
Sec. 8. Section 41-1525, Arizona Revised Statutes, is amended to read:
41-1525. Tax incentives; definitions
A. The owner of a business or an insurer located in an enterprise zone before July 1, 2011 and qualifying under this section is eligible for an income tax credit under section 43‑1074 or 43‑1161 or a premium tax credit under section 20‑224.03 for net increases in qualified employment positions, except employment positions at a zone location where more than ten per cent of the business conducted at the location consists of retail sales of tangible personal property, measured either by the number of employees assigned to retail sales or the square footage of the facility used for retail sales activities at the location in the zone. Retail sales and retail sales activities do not include:
1. Food and beverage for consumption on the premises solely by employees and occasional guests of employees at the location.
2. Promotional products not available for sale and displaying the company logo or trademark.
3. Products sold to company employees.
B. To qualify under this section A business or insurer must:
1. Relocate its operation from outside this state to a location in this state or expand its in-state operation.
2. Create at least twenty-five new full-time employment positions in a city or town with a population of fifty thousand persons or more or at least fifteen new full-time employment positions in any other location.
3. Compensate full-time employees at the zone location at least equal to one hundred seventy-five per cent of the wage offer by county as computed annually by the department of economic security research administration division or successor administration.
4. Provide health insurance coverage for full-time employees for which the employer pays at least fifty per cent of the premium or membership cost or, if the taxpayer is self‑insured, the employer pays at least fifty per cent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.
5. Obtain and submit to the department a resolution of the governing board of the city or town in which the business will be located, or of the county if the business will not be located in a city or town. The resolution must acknowledge that the business intends to meet the requirements of this section and list any incentives offered to the business by the city, town or county.
B. C. To qualify for claim a tax credit, the owner must:
1. Certify to the department of revenue or the department of insurance, as applicable, on or before the due date of the tax return, including any extensions for the year for which the credit is claimed, in a form prescribed by the department of revenue including electronic media, information that the department of revenue may require, including the ownership interests of co‑owners of the business if the business is a partnership, limited liability company or an S corporation, and the following information for each employee in the zone location:
(a) The date of initial employment.
(b) The number of hours worked during the year.
(c) Whether the position was full‑time.
(d) The residence of the employee.
(e) Whether the residence was in or outside the zone.
(f) (c) If the residence was in the zone, where in the zone it is located.
(g) (d) The employee's annual compensation.
(h) (e) The total cost of health insurance for the employee and the cost paid by the employer.
(i) (f) If the employee had been previously employed, the last date of previous employment.
2. Report and certify to the department of commerce the following information, and provide supporting documentation, on a form and in a manner approved by the department of commerce and, as specified in subsection C D of this section, for each year in which the taxpayer earned and claimed or used credits or is carrying forward amounts from previously earned and claimed credits:
(a) The business name and mailing address and any other contact information requested by the department of commerce.
(b) The business location and the name of the zone in which the business is located.
(c) The average hourly wage and the total amount of compensation paid to employees qualified for the credit and for all employees at the zone location.
(d) The total number of qualified employment positions and the amount of income tax or premium tax credits qualified for in the tax year.
(e) The estimated amount of tax credits to be used in the tax year to offset tax liability.
(f) The estimated amount of tax credits to be available for carryforward in the tax year and the tax year in which the credits expire.
(g) The number of jobs and the amount of credits earned and claimed on the prior year's income tax or insurance premium tax returns.
(h) The amount of credits used to offset tax liabilities on the prior year's income tax or insurance premium tax return.
(i) The amount of credits available for carryforward as reported on the prior year's tax return and the tax year the credits expire.
(j) Capital investment made in the zone at the location during the tax year and the preceding tax year.
(k) That each qualified employment position meets all of the following requirements:
(i) The position is at least one thousand seven hundred fifty hours per year of full‑time permanent employment.
(ii) All credits that are being claimed are for wages for job duties performed primarily at the zone designated locations of the business.
(iii) The employment includes health insurance coverage for the employee for which the employer pays at least fifty per cent of the premium or membership cost. If the taxpayer is self‑insured, the employer pays at least fifty per cent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.
(iv) The employer pays compensation at least equal to one hundred seventy-five per cent of the wage offer by county as computed annually by the department of economic security research administration division or successor administration.
(l) That the only retail sales activities engaged in at the zone location were as specified in subsection A of this section.
(m) Other information necessary for the management and reporting of the incentives under this section.
3. For any year in which the taxpayer is claiming first year credits, report and certify the following additional information and provide supporting documentation to the department of commerce on a form and in a manner approved by the department, and as specified in subsection C D of this section:
(a) That thirty‑five per cent of the employees with respect to whom a credit is claimed for the first year of employment resided on the date of employment in an enterprise zone that is located in the same county in which the business is located.
(b) (a) That the increase in the number of qualified employment positions for which credit is sought is the least of:
(i) The total number of filled qualified employment positions created at the zone location during the tax year.
(ii) The difference between the average number of full‑time employees at a zone location in the current tax year and the average number of full‑time employees during the immediately preceding tax year.
(iii) Two hundred qualified employment positions per taxpayer each year.
(c) (b) That all employees filling a qualified employment position were employed for at least ninety days during the first taxable year.
(d) (c) That none of the employees filling qualified employment positions were employed by the taxpayer during the twelve months before the current date of hire.
(e) (d) That all employees for whom second and third year credits are claimed are in qualified employment positions for which first year credits were allowed and claimed by the taxpayer on the original first and second year tax returns. For the purposes of this subsection, the requirement to claim the credit on the original tax return does not apply to qualified employment positions created before January 1, 2002 and certified to the department of commerce.
(f) (e) That all employees for whom credits are taken performed their job duties primarily at the zone designated locations of the business.
C. D. To qualify for first year credits, the report and certification prescribed by subsection B C, paragraphs 2 and 3 of this section must be filed with the department of commerce by the earlier of six months after the end of the tax year in which the qualified employment positions were created or by the date the tax return is filed for the tax year in which the qualified employment positions were created. To qualify for second year credits, the report and certification prescribed by subsection B C, paragraph 2 of this section must be filed with the department of commerce by the earlier of six months after the end of the taxable year or the date the tax return is filed for the tax year in which the second year credits are allowable. To qualify for third year credits, the report and certification prescribed by subsection B C, paragraph 2 of this section must be filed with the department of commerce by the earlier of six months after the end of the tax year or the date the tax return is filed for the tax year in which the third year credits are allowable.
D. E. Any information submitted to the department of commerce under subsection B C, paragraph 2, subdivisions (e) through (i) of this section is exempt from the provisions of title 39, chapter 1, article 2 and considered to be confidential and is not subject to disclosure except:
1. To the extent that the person or organization that provided the information consents to the disclosure.
2. To the department of revenue for use in tax administration.
E. Real and personal property within an enterprise zone which is owned or used by a small manufacturing business that is certified by the department pursuant to section 41‑1525.01 before July 1, 2011 shall be assessed as class six property as provided by section 42‑12006.
F. The following property that is owned or used by a qualifying business that is certified by the department pursuant to section 41-1525.01 shall be assessed as class six property as provided by section 42-12006 or as class nine property as provided by section 42-12009:
1. Personal property and improvements that are constructed or undergo a major renovation from and after June 30, 2010 through June 30, 2016.
2. Real property that is owned by the qualifying business on which the personal property and improvements described in paragraph 1 of this subsection are located.
F. G. Documents filed with the department of commerce, the department of insurance and the department of revenue under subsection B C of this section shall contain either a sworn statement or certification, signed by an officer of the company under penalty of perjury, that the information contained is true and correct according to the best belief and knowledge of the person submitting the information after a reasonable investigation of the facts. If the document contains information that is materially false, the taxpayer is ineligible for the tax incentives under subsection A of this section and is subject to recovery of the amount of tax incentives allowed in preceding taxable years based on the false information, plus penalties and interest.
G. H. The department of commerce may make site visits to a taxpayer's facilities if it is necessary to further document or clarify reported information. The taxpayer must freely provide the access.
H. I. The department by rule may prescribe additional reporting requirements for taxpayers who claim tax benefits pursuant to this section.
I. J. For the purposes of this section:
1. "Assigned to retail" means working more than twenty‑five per cent of an employee's time in one or more retail sales activities.
2. "Location" means a single parcel or contiguous parcels of owned or leased land, the structures and personal property contained on the land or any part of the structures occupied by a taxpayer.
2. 3. "Retail sales" means the sale of tangible personal property to an ultimate consumer.
3. 4. "Retail sales activities" means all activities persons operating a retail business normally engage in, including taking orders, filling orders, billing orders, receiving and processing payment and shipping, stocking and delivering tangible personal property to the ultimate consumer, except drop shipments by a company acting on behalf of an unrelated company that has made a sale to a final consumer.
4. "Zone location" means a single parcel or contiguous parcels of owned or leased land, the structures and personal property contained on the land or any part of the structures occupied by a taxpayer.
Sec. 9. Section 41-1525.01, Arizona Revised Statutes, is amended to read:
41-1525.01. Certification of business property for property tax classification; definitions
A. Through June 30, 2011 2016, the department of commerce shall annually certify small manufacturing or small commercial printing businesses that qualify for property tax incentives under this section 41‑1525, subsection E. To qualify under this section:
1. The business must meet the requirements of section 41-1525, subsection B.
1. 2. A small manufacturing or small commercial printing business must meet the minimum capital investment requirements within three years after first becoming certified as prescribed by this paragraph. The amount of capital investment determines the tax classification and the number of years the property qualifies for property tax incentives as prescribed by sections 42-12006 and 42-12009. The investments may be cumulative. A small manufacturing or small commercial printing business shall not include fixed assets purchased from an enterprise zone manufacturing or small commercial printing company another business already certified under this section. Subject to subsection E of this section, certification is effective on January 1 of the valuation year, as defined in section 42‑11001, following completion of the required investment. Qualifying property under this paragraph may include personal property and improvements that are constructed or undergo a major renovation from and after June 30, 2010 through June 30, 2016, newly constructed improvements to real estate or newly occupied improvements that were formerly vacant and real property that is owned by the qualifying business on which qualifying personal property and improvements are located. To qualify, the small manufacturing or small commercial printing business must invest at least the following amount, as applicable, in fixed assets in the zone after December 31, 2000 2010:
(a) In a city or town with a population of fifty thousand persons or more, at least five million dollars of capital investment within three years after first being certified under this section.
(b) In any other location, at least two million dollars of capital investment within three years after first being certified under this section.
(c) In any location, a capital investment of at least two hundred fifty million dollars and at least one hundred fifty new full-time employment positions qualify the property for classification as class nine pursuant to section 42-12009.
(a) In counties with a population of two hundred fifty thousand persons or more, two million dollars, except as provided in subdivision (b) of this paragraph.
(b) In all other counties, and for cities and towns located in counties with a population of two hundred fifty thousand persons or more and that have no portion of the corporate boundaries located within twenty‑five air miles from the exterior corporate boundary of the largest city in the county:
(i) Cities with a population of eighty thousand persons or more, two million dollars.
(ii) Cities and towns with a population of at least fifteen thousand but less than eighty thousand persons and in unincorporated areas of the county, one million dollars.
(iii) Cities and towns with a population of less than fifteen thousand persons, five hundred thousand dollars.
2. 3. A business initially applying for certification under this section must report the following with supporting documentation to the department of commerce on a form and in a manner prescribed by the department:
(a) Business name and mailing address and any other contact information requested by the department.
(b) Business location and the enterprise zone in which the business is located.
(c) The number of full‑time employees at the time of application and the benefits provided to employees.
(d) The assessor's parcel number of real property to which class six or class nine assessment classification will apply.
(e) If available, the assessor's account number for personal property to which class six or class nine assessment classification will apply.
(f) For the zone location, the gross receipts, gross payroll and average hourly wage paid to employees for the preceding taxable year.
(g) A statement of the ownership and description of operations of the zone business.
(h) Documentation of the required investment in fixed assets that identifies the fixed assets and establishes the cost of the fixed assets and the time of investment.
(i) Documentation that establishes the type and amount of manufacturing or printing business activity conducted at the zone location.
(j) Ownership and full cash value of real and personal property to be certified.
(k) Other information necessary for the management and reporting of this program as determined by the department.
B. The department shall not certify any business for qualification for property tax incentives after June 30, 2011 2016. However, certification under this section is valid for five years subject to annual recertification regardless of whether under changing circumstances the business grows beyond ninety‑nine full‑time employees at the zone location or gross annual receipts of more than four million dollars and regardless of whether the enterprise zone continues in existence if it continues to meet the other eligibility requirements.
C. In order to be annually recertified pursuant to subsection B of this section, a small manufacturing or small commercial printing business must continue to meet all the eligibility requirements of this section and must annually report the following and provide supporting documentation to the department of commerce on a form and in a manner approved by the department:
1. Information required by subsection A, paragraph 2 3, subdivisions (a), (b), (d), (e), (f), (i), (j) and (k) of this section.
2. Changes in location, ownership and operations of the business in the immediately preceding year.
3. The average number of full‑time employees at the zone location for the immediately preceding year.
D. To qualify for receive classification as class six or class nine property for tax purposes, the certified business must submit a copy of the department's initial certification, and each annual recertification, with a written request to reclassify the property to the county assessor of the county in which the property is located by December 10 of each year.
E. A manufacturer or commercial printer business shall submit its application for initial certification or annual recertification to the department not later than October 1 of each year. The department shall notify the appropriate county assessors of all qualified enterprise zone properties located within their county not later than December 1 of each year.
F. If a manufacturer or commercial printer business moves from the originally certified location, it loses its eligibility. The manufacturer or commercial printer business may apply for certification at a new zone location for the remainder of its five years if it meets the minimum investment requirements in fixed assets that were not moved from the prior zone location, meets all other eligibility requirements of this section and has not reached the five year eligibility limit.
G. Once a manufacturer or commercial printer business establishes the basis for eligibility and the department certifies the manufacturer or commercial printer business, the business may change its basis of eligibility during the four remaining years of potential eligibility as long as the manufacturer or commercial printer business meets the requirements for the new basis of eligibility.
H. If a certified manufacturing or commercial printer business is purchased by another entity or changes by more than twenty per cent of the ownership interest through reorganization, stock purchase or merger, the certification is terminated. The new manufacturer or small commercial printer business may apply for certification according to eligibility requirements of this section.
I. A small business that was originally certified for a ten year period of property reclassification loses eligibility for any year in which the size limits are exceeded or the business is no longer independently owned and operated.
J. I. The department of commerce shall notify the department of revenue and the county assessor if a certified small manufacturing or small commercial printing business closes, moves from the enterprise zone or fails to maintain its eligibility, and the assessor shall make the appropriate changes to the tax roll.
K. J. The department of commerce may make site visits to a taxpayer's facilities if it is necessary to further document or clarify reported information. The taxpayer must freely provide the access.
L. K. Documents filed with the department of commerce pursuant to this section shall contain either a sworn statement or certification, signed by an officer of the company under penalty of perjury, that the information contained is true and correct according to the best belief and knowledge of the person submitting the information after a reasonable investigation of the facts. If the document contains information that is materially false, the taxpayer is ineligible for the tax benefits under this section and is subject to recovery of the amount of tax benefits allowed in preceding years based on the false information, including penalties and interest.
M. L. The department by rule may prescribe additional reporting requirements for persons who claim a tax benefit pursuant to this section.
N. M. For the purposes of this section:
1. "Closely held" means five or fewer individuals own more than fifty per cent of the ownership interest in the company, corporation or partnership.
2. "Commercial printing" means producing printed product through a lithographic or flexographic process, from material cut to press size on the premises, transferred with pressure and finished with a process that may include scoring, folding, die cutting, gluing, stamping, embossing or packaging. Commercial printing does not include businesses regulated pursuant to section 42‑5065.
3. "Family owned" means more than fifty per cent of the ownership interest in the company, corporation or partnership is owned by members of the same family.
4. 1. "Fixed assets" means property that is used in operating a business, such as furniture, land, buildings and machinery, and that is not ordinarily converted into cash after they are declared fixed assets.
5. "Independently owned and operated" means not more than fifty per cent of the ownership interest in the small manufacturing or small commercial printer business is held by another entity unless the final ownership of the entity is family owned or closely held.
6. "Manufacturing" means fabricating, producing or manufacturing products, wares or articles for use from raw or prepared materials and imparting to those materials new forms, qualities, properties and combinations. Manufacturing does not include generating electricity at a facility assessed pursuant to title 42, chapter 14, article 4.
7. "Minority owned business" means an independently owned and operated business of which a majority of the business is owned by African Americans, persons of Hispanic or Latin American ancestry and persons of Native American, Asian or other minority origin or descent.
8. "Small commercial printing business" means a minority owned business or a woman owned business or a concern, that is independently owned and operated and employs less than one hundred full‑time employees at the location in the enterprise zone when certified by the department of commerce or had gross annual receipts of less than four million dollars in its last fiscal year.
9. "Small manufacturing business" means a minority owned business or a woman owned business or a concern, that is independently owned and operated and employs less than one hundred full‑time employees at the location in the enterprise zone when certified by the department of commerce or had gross annual receipts of less than four million dollars in its last fiscal year.
10. "Woman owned business" means an independently owned and operated business of which a majority of the business is owned by one or more women.
11. 2. "Zone Location" has the same meaning prescribed in section 41‑1525.
Sec. 10. Section 41-1526, Arizona Revised Statutes, is amended to read:
41-1526. Duties of department
The department shall administer this article and shall:
1. Monitor the implementation and operation of this article and continually evaluate the progress made in the enterprise zones attracting new businesses.
2. Assist an employer or prospective employer in a zone to obtain the benefits of any incentive or inducement program authorized by law.
3. Submit an annual written report, evaluating the effectiveness of the program and presenting any suggestions to improve the program, to the governor no later than March 1 of each year.
4. Adopt rules as necessary to administer this article.
5. Provide information regarding zones the business incentives on request and conduct informational and instructional seminars and training.
Sec. 11. Section 41-1527, Arizona Revised Statutes, is amended to read:
41-1527. Annual reports; department of commerce; department of revenue
A. On or before September 30 of each year the department of commerce shall transmit a report to the governor, the president of the senate, the speaker of the house of representatives and the chairpersons of the senate finance committee and the house of representatives ways and means committee, or their successor committees, and shall provide a copy of this report to the secretary of state and the director of the Arizona state library, archives and public records. The report shall contain the following information:
1. The number, size and location of all enterprise zones established as of the end of the preceding fiscal year pursuant to this article.
2. 1. The business names, and locations, number of employees and amount of compensation paid to employees qualifying for income tax credits as reported to the department pursuant to section 41‑1525 in each enterprise zone.
3. 2. The amount of capital investment, made during the preceding fiscal year and cumulatively, in each enterprise zone.
4. 3. The number of minority owned businesses, woman owned businesses and other small manufacturing businesses certified for property tax incentives pursuant to section 41‑1525.01 in the preceding fiscal year and cumulatively, in each enterprise zone, and for each such business:
(a) The name and location.
(b) The number of employees.
(c) The full cash value of the property qualifying for classification as class six pursuant to section 42‑12006 or class nine pursuant to section 42-12009.
B. On or before September 30 of each year the department of revenue shall transmit a report to the governor, the president of the senate, the speaker of the house of representatives and the chairpersons of the senate finance committee and the house of representatives ways and means committee, or their successor committees, and shall provide a copy of this report to the secretary of state and the director of the Arizona state library, archives and public records. The report shall contain the following information:
1. The full cash value and assessed valuation of property classified as class six pursuant to section 42‑12006, paragraph 4 in each enterprise zone and the assessed valuation of that property if it was not classified as class six.
2. The full cash value and assessed valuation of property classified as class nine pursuant to section 42-12009, subsection A, paragraph 6 and the assessed valuation of that property if it was not classified as class nine.
2. 3. The fiscal impact on each taxing jurisdiction for the current tax year of classifying property in enterprise zones as class six or class nine rather than in the classification in which it would otherwise be classified.
3. 4. The total dollar amount of income tax credits allowed for the preceding taxable year pursuant to sections 43‑1074 and 43‑1161.
Sec. 12. Repeal
A. Section 41-1528, Arizona Revised Statutes, is repealed.
B. Title 41, chapter 10, article 4, Arizona Revised Statutes, is repealed.
Sec. 13. Title 41, chapter 10, Arizona Revised Statutes, is amended by adding a new article 4 and articles 5 and 5.1, to read:
ARTICLE 4. ARIZONA JOB TRAINING
41-1541. Definitions
In this article, unless the context otherwise requires:
1. "Agreement" means the agreement among an employer, an educational institution and the director concerning an impact project.
2. "Arizona basic enterprise" means any enterprise that is located or principally based in this state and that can provide demonstrable evidence that it meets one or more of the following:
(a) It is primarily engaged in one or more of the Arizona basic industries.
(b) It is the national or regional corporate headquarters of an Arizona basic industry.
(c) It is primarily engaged in developing or producing goods or providing services for out-of state sale.
(d) It is the corporate or regional headquarters of a multistate enterprise that is primarily engaged in out-of-state industrial activities.
3. "Arizona basic industry" means:
(a) Mining.
(b) Manufacturing.
(c) Producing goods or services that derive at least sixty-five per cent of revenue from out-of-state sales.
(d) Research and development of new products, processes or technologies.
(e) Industries identified by North American industry classification system code sectors 31, 32 and 33.
4. "Department" means the department of commerce.
5. "Director" means the director of the department of commerce.
6. "Educational institution" means a state university under the jurisdiction of the Arizona board of regents, a community college in this state, a private postsecondary educational institution licensed by this state or a vocational postsecondary school with a campus in this state.
7. "Employee" means a person employed in a new job.
8. "Employer" means an Arizona basic enterprise providing new jobs in conjunction with a project, except that the following do not qualify for the purposes of this article:
(a) Any corporation, partnership or other entity identified by any of the following North American industry classification system code groups, sectors or subsectors:
(i) Industry group 7132 or 8131.
(ii) Sector 44, 45, 61, 92 or 221, including water and sewer services.
(iii) Subsector 722.
(b) Any corporation, partnership or other entity that is delinquent in the payment of any unprotested taxes or other amounts due to the federal government, this state or any political subdivision of this state.
(c) Any corporation, partnership or other entity that has filed for or has publicly announced its intention to file for bankruptcy protection.
9. "Full-time" means permanent employment for at least one thousand seven hundred fifty hours per year.
10. "Headquarters" means a principal central administrative office where primary headquarters related functions and services are performed, including financial, personnel, administrative, legal, planning and similar business functions are performed.
11. "Impact program" or "program" means the projects undertaken by the department pursuant to this article for a new or expanding Arizona basic enterprise.
12. "Impact project" or "project" means a training arrangement that is the subject of an agreement as provided by this article and entered into between an educational institution and an employer to provide program services.
13. "New job" means full-time employment in a new or expanding Arizona basic enterprise that pays an average annual wage equal to one hundred thirty-five per cent of the wage offer by county as computed annually by the department of economic security research administration division or successor administration and includes health insurance for employees for which the employer pays at least fifty per cent of the premium or membership cost, but not including jobs of recalled workers or existing jobs that are vacant or other jobs that formerly existed in the enterprise in this state.
14. "Primarily engaged" means at least one-half of the gross income of the enterprise is derived from the engagement.
15. "Program costs" means all necessary and incidental costs of providing program services except for:
(a) Any wages paid to persons receiving education or training under a project.
(b) Any costs for purchase or lease of training equipment that exceed one-half of total program costs for the project.
(c) Any costs for administrative expenses that exceed ten per cent of total program costs for the project.
(d) Any costs for direct investments in education and related workforce development institutions, for improvements to workforce development, human capital, training expertise and infrastructure that exceed ten per cent of total program costs.
16. "Program services" means:
(a) New jobs training, including training development costs, for an actual training period of up to twelve months from the date the job is first filled by an employee.
(b) Adult‑based education and job-related instruction.
(c) Vocational and skill-assessment services and testing.
(d) Training equipment and administrative expenses of educational institutions for new jobs training programs.
(e) Materials and supplies.
(f) Subcontracted services with educational institutions or federal, state or local agencies.
(g) Contracted or professional service.
(h) Direct investments in educational and related workforce development institutions, for improvements to workforce development, human capital, training expertise and infrastructure.
41-1541.01. Administration
A. The director shall administer this article and the impact program.
B. The director shall:
1. Encourage Arizona basic enterprises having similar training needs to cooperate in establishing impact projects.
2. Coordinate the impact program with other job training programs administered by the department.
3. Provide opportunities for coordination and cooperation of IMPACT projects with other job training activities in this state.
4. Adopt rules prescribing review standards and priorities for approval of proposed agreements under this article, including appropriate incentives for cooperation among projects, in order to maximize the number of new jobs created with respect to individual Arizona basic enterprises that will remain in this state.
5. Adopt rules prescribing limits on program costs and on project and program size in relation to the number of new jobs created and wages of new jobs.
B. The director may:
1. Make direct investments in educational and related workforce development institutions to promote improvements in workforce development, human capital, training expertise and infrastructure.
2. On a case by case basis, approve project agreements for the purpose of preserving and retaining existing jobs in an Arizona basic enterprise.
3. Adopt additional rules that are required to administer this article.
C. The director shall provide written notice of the approval of each project and program and an annual report of the number of jobs created under this article to the governor, the president of the senate, the speaker of the house of representatives and the chairpersons of the senate committee on commerce and economic development and the house of representatives committee on commerce, or their successor committees. The director shall provide a copy of this report to the secretary of state.
41-1541.02. Project agreements between educational institutions and employers
A. Subject to the director's approval, an educational institution may enter into an agreement to establish an impact project and provide program services to an employer. As soon as possible after initial contact between the educational institution and employer, the educational institution shall inform the director about the potential project. The director may also enter directly into agreements with employers for benefits under this article.
B. The director shall not approve any agreement that provides for program costs of a project of more than fifty per cent of an amount equal to the estimated withholding tax applied to the estimated amount of gross wages of all new jobs under the project over a ten-year period.
C. The director shall not approve any agreement with an employer that is receiving benefits under the Arizona quality jobs program pursuant to article 5.1 of this chapter unless the director determines that participation in both an impact project under this article and the Arizona quality jobs program would generate, over the term of the agreement, an economic and fiscal impact in excess of the amount of the employer's withholding tax allocated to both programs.
D. A project agreement must include provisions:
1. Requiring each employer participating in the agreement to bear at least twenty-five per cent of the program costs, including deferred costs.
2. Regarding payment of the remaining program costs, including deferred costs, which may be paid from one or more of the following sources:
(a) The program services account of the IMPACT program fund.
(b) Tuition, student fees or special charges assessed by the educational institution to defray all or part of the program costs.
(c) Grants or donations available from federal sources or other public or private sources.
3. Requiring each employer participating in the agreement to submit information to the director regarding the number and wages of, and withholding taxes paid from, new jobs.
4. Establishing any tuition and fees to be paid from program costs.
5. Addressing any additional issues determined to be necessary.
E. The agreement shall specify that if the employer fails to comply with the terms and conditions in the agreement or fails to comply with this article:
1. The director may terminate the agreement.
2. As of the date the agreement is terminated:
(a) The employer is not entitled to any further incentive payments under section 41-1541.04.
(b) The employer must remit to this state an amount equal to the incentive payments already paid to the employer under section 41-1541.04.
F. Any payment required to be paid by an employer under a project agreement is a lien on the employer's business property until paid that has equal precedence with ordinary taxes and that shall not be divested by a judicial or nonjudicial sale. Property subject to the lien may be sold for sums due and delinquent at a tax sale, with the same forfeitures, penalties and consequences as for nonpayment of taxes. Purchasers at the sale take the property subject to the remaining payments.
G. The payment of program costs incurred under any project agreement shall not be deferred for a period longer than ten years from the date of the commencement of the project.
41-1541.03. Review of proposed project agreement
A. The director shall review applications for proposed agreements submitted by employers according to the standards and guidelines prescribed by this article and rules adopted pursuant to this article. Each application for approval of a proposed agreement shall be accompanied by information about the number and wages of the new jobs created by the employer, documentation of existing training activities of the employer and such other information as the director may require.
B. The director may pool the funding requirements of projects that are the subject of proposed agreements to determine the required funding levels to facilitate the issuance of bonds by the greater Arizona development authority.
41-1541.04. Payments to employers participating in project agreements
A. An employer that participates in an impact project agreement may apply to the director to receive quarterly incentive payments for up to seven years from the impact program fund. the amount of payments is:
1. For Arizona basic enterprises that own property qualifying for tax classification pursuant to section 42-12009, subsection A, paragraph 6, an amount up to one hundred per cent of the state withholding tax on compensation paid by the employer with respect to the new jobs in each CALENDAR quarter, as determined by the director.
2. For all other employers, an amount equal to fifty per cent of the state withholding tax on compensation paid by the employer with respect to the new jobs in each calendar quarter.
B. The application must be on a form prescribed by the director and contain required information to determine if the applicant is qualified.
C. To qualify for incentive payments:
1. The employer must have an annual gross payroll for new jobs of at least two million dollars within twelve months of the first complete calendar quarter after the start date.
2. The number of the employer's full-time equivalent new jobs must be at least seventy-five or twenty‑five per cent of all employee positions of the employer.
41-1541.05. Certification of program funding rates; allocation of withholding tax revenues
A. The director shall determine the amount of monies to be credited to:
1. The program repayment account of the impact program fund in order to satisfy all bond repayment obligations that have been incurred to finance the costs for impact programs.
2. The program services account of the impact program fund in order to finance program costs that are not financed by the greater arizona development authority.
B. The director of the department of commerce shall certify the combined amounts under subsection a of this section to the director of the department of revenue. Each month, the director of the department of revenue shall transfer that amount to the impact program fund from the job recovery withholdings clearing fund established by section 43-409.
41-1541.06. Impact program fund; program repayment account; program services account
A. The impact program fund is established consisting of the program services account and the program repayment account. The director shall administer the fund. On notice from the director, the state treasurer shall invest and divest monies in the respective accounts in the fund as provided by section 35-313, and monies earned from investment shall be credited to the state general fund. Monies in the fund are:
1. Continuously appropriated for the purposes of this article.
2. Exempt from the provisions of section 35-190 relating to lapsing of appropriations.
B. Monies credited to the program services account shall be for all or part of the program costs of projects. Monies in the account that are not required for those purposes may be transferred to the Arizona opportunity fund established by section 41-1545. All expenditures from the account shall be pursuant to vouchers approved by the director. The director shall remit all monies received under this article, including financial assistance from the greater Arizona development authority for the purposes of this article to the state treasurer for credit to the program services account.
C. Monies credited to the program repayment account shall be for payments to the greater Arizona development authority for costs relating to debt service on financial assistance approved by the director under this article, including principal, interest and issuance and redemption costs. All expenditures from the account shall be pursuant to vouchers approved by the director. At the end of each fiscal year, any unencumbered balance in the program repayment account shall be transferred to the state general fund.
41-1541.07. Approval of impact program activities for purposes of financing with greater Arizona development authority bonds
The activities of the director under this article and the costs of approved impact programs are approved purposes for financing through issuance of bonds by the greater Arizona development authority.
41-1541.08. Annual report of impact program activities
The director shall annually report on activities under this article. Each report must contain information regarding the number and characteristics of the new jobs created in the state for which projects have been financed under this article including a report on any such new jobs that do not continue to exist and the circumstances and effect of any such discontinuances. END_STATUTE
41-1541.09. Prohibiting impact program classes or training for purposes of state assistance to educational institutions
No state monies appropriated for assistance to educational institutions, including assistance based in whole or in part on enrollment, may be based on any course, subject or class of instruction or training that is the subject of an agreement or a project under this article. No such course, subject, class or training or the participating students may be counted in determining the amount of tuition to be charged by an educational institution. END_STATUTE
41-1541.10. Program termination
The program established by this article ends on July 1, 2020 pursuant to section 41-3102.
ARTICLE 5. ARIZONA OPPORTUNITY FUND
41-1545. Arizona opportunity fund
A. The Arizona opportunity fund is established as a dedicated account in the state general fund.
B. The Arizona opportunity fund consists of monies derived from:
1. Amounts appropriated by the legislature to the fund for the purposes of this article.
2. Income earned on the investment of monies in the fund.
3. Gifts, grants and other donations received for the purposes of this article.
4. Any available monies received from the federal government including monies from the American recovery and reinvestment act of 2009 (P.L. 111‑5).
5. Fifty per cent of withholding tax revenues derived from new jobs created from participation in the Arizona job training program under article 4 of this chapter and the Arizona quality jobs program under article 5.1 of this chapter.
C. The director of the department of commerce shall administer the fund. On notice from the director, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.
D. Monies in the fund are:
1. Continuously appropriated for the purposes of this article.
2. Exempt from the provisions of section 35-190 relating to lapsing of appropriations.
41-1545.01. Grants from the Arizona opportunity fund; eligibility; grant agreements; economic and fiscal impact statement
A. The governor and the director of the department of commerce may negotiate on behalf of this state regarding awarding, by grant, monies from the Arizona opportunity fund for the purposes of attracting Arizona basic enterprises, as defined in section 41-1541, economic development, infrastructure development and community development. Monies shall not be awarded from the Arizona opportunity fund except for the sole purpose of competing for economic development prospects that have similar recruitment offers from other states.
B. To be eligible to receive a grant under this section, an applicant must:
1. Be in good standing under the laws of the state in which the applicant was formed or organized, as evidenced by a certificate issued by the secretary of state or other state official having custody of the records pertaining to entities or other organization formed under the laws of that state.
2. Owe no delinquent taxes to a taxing jurisdiction in this state.
3. Qualify as an Arizona basic industry, as defined in section 41‑1541.
4. Pay an average annual wage equal to one hundred thirty-five per cent of the wage offer by county as computed annually by the department of economic security research administration division or successor administration.
5. Include health insurance for employees for which the applicant pays at least fifty per cent of the premium or membership cost.
6. Demonstrate by independent analyses that estimated income, property and transaction privilege tax and government fee revenues in this state will exceed state tax credit and incentives by a payback ratio of at least four to one over a ten‑year period.
C. Before awarding a grant from the fund under this section, the governor must enter into a written agreement with the applicant specifying that:
1. A reasonable percentage of the total amount of the grant may be withheld until the recipient meets specified performance targets.
2. If the governor finds that the grant recipient has not met each of the performance targets specified in the agreement as of a date stated in the agreement:
(a) The recipient must repay the grant and any related interest to this state an agreed rate and on agreed terms. The repayment may be prorated to reflect partial attainment of performance targets.
(b) The governor shall not disburse any remaining grant money to the recipient under the agreement.
(c) The governor may assess specified penalties against the recipient for noncompliance.
3. If any part of the grant is used to build a capital improvement, this state may:
(a) Retain a lien or other security interest in the improvement in proportion to the percentage of the grant amount used to pay for the improvement.
(b) Require the recipient, if the improvement is sold, to:
(i) Repay to this state the grant monies used to pay for the improvement, with interest at a rate and according to terms stated in the agreement.
(ii) Share with this state a proportionate amount of any profit realized from the sale.
4. If as of a date stated in the agreement the recipient has not used grant money for the purposes for which it was intended, the recipient must repay that amount and any related interest to this state and the agreed rate and on agreed terms.
D. Before awarding grants from the fund under this section, the governor must transmit copies of the grant agreements, economic and fiscal impact analyses for each proposal and proposed performance measures to:
1. The president of the senate and the speaker of the house of representatives.
2. The joint legislative budget committee for its review and evaluation.
E. After consultation with the president of the senate and the speaker of the house of representatives, the governor must determine:
1. The performance targets and dates required to be included in each grant agreement.
2. If the grant agreement includes withholding a percentage of the grant until the recipient meets the performance targets, the percentage of the grant money to be withheld.
F. Before awarding grants from the fund under this section, the department of commerce must prepare a statement that, specifically and in detail, assesses the direct economic impact that approval of the grant will have on the residents of this state. The statement must include:
1. For the period covered by the grant:
(a) The estimated number of jobs to be created in this state by the potential recipient each biennium.
(b) The estimated median wage of the jobs to be created in this state by the potential recipient each biennium.
2. The additional amount of income tax, property tax, transaction privilege tax and use tax revenues and fee revenues projected to be generated by taxing jurisdictions in this state.
3. The total dollar amount of tax credits and other state and local incentives estimated to be distributed to the potential recipient by taxing jurisdictions in this state.
4. Any other information the department of commerce considers to be NECESSARY for inclusion in the statement.
41-1545.02. Annual report by grant recipient
On or before December 31 of each year, each entity that receives a grant under this article shall submit to the governor, the president of the senate and the speaker of the house of representatives a progress report containing the information compiled during the preceding calendar year regarding the attainment of each of the performance targets in the grant agreement.
41-1545.03. Report on use of monies in the Arizona opportunity fund
A. Before the beginning of each regular session of the legislature, the governor shall submit to the president of the senate and the speaker of the house of representatives a report on grants made from the Arizona opportunity fund under this article. The governor shall provide a copy of the report to the secretary of state. The report shall include:
1. The number of direct jobs each recipient committed to create in this state.
2. The number of direct jobs each recipient created in this state.
3. The median wage of the jobs each recipient created in this state.
4. The amount of capital investment each recipient committed to spend or allocate per project in this state.
5. The amount of capital investment each recipient spent or allocated per project in this state.
6. The total amount of grants made to each recipient.
7. The average amount of money granted from the Arizona opportunity fund for each job created in this state by grant recipients.
8. The number of jobs created in this state by grant recipients in each sector of the north american industry classification system.
9. Of the number of direct jobs each recipient created in this state, the number of positions created that provide health benefits for employees.
B. The report shall not include information that is made confidential by law.
C. The governor may require grant recipients to submit information in a form required to complete the report.
41-1545.04. Program termination
The program established by this article ends on July 1, 2020 pursuant to section 41-3102.
ARTICLE 5.1. ARIZONA QUALITY JOBS
41-1546. Definitions
In this article, unless the context otherwise requires:
1. "Department" means the department of commerce.
2. "Director" means the director of the department of commerce.
3. "New employee" means a person who is newly employed on a regular full-time basis by a qualified company in the company's business operating in this state during the taxable year for which benefits are sought under this article.
4. "Qualified company" means any corporation, partnership or other entity, organized for profit, that meets the requirements prescribed by section 41-1546.01. Except as provided by section 41-1546.01, subsection A, paragraph 2, qualified company does not include:
(a) Any corporation, partnership or other entity identified by any of the following North American industry classification system code groups, sectors or subsectors:
(i) Industry group 7132 or 8131.
(ii) Sector 44, 45, 61, 92 or 221, including water and sewer services.
(iii) Subsector 722.
(b) Any corporation, partnership or other entity that is delinquent in the payment of any unprotested taxes or other amounts due to the federal government, this state or any political subdivision of this state.
(c) Any corporation, partnership or other entity that has filed for or has publicly announced its intention to file for bankruptcy protection.
41-1546.01. Employment requirements in this state; application for reimbursement of withholding taxes
A. To qualify for benefits under this article one of the following conditions must occur:
1. A qualified company must relocate an existing business facility, office, department or other operation located outside this state, whether located in a foreign country or another state, and locate the jobs from that operation to this state.
2. A qualified company must expand an existing business facility, office, department or other operation located in this state. Notwithstanding section 41-1546, paragraph 5, subdivisions (c) and (d), a company may be considered to be a qualified company if its headquarters or administrative offices located in this state serve an international or multistate territory and the company otherwise meets the requirements of this article.
B. To be eligible for benefits under this article:
1. A qualified company must Hire new employees in positions with a payroll of at least two million dollars within six months after the date the COMPANY enters into an agreement with the director pursuant to section 41‑1546.02.
2. The new full-time employment positions at the facility must pay a wage that equals or exceeds one hundred thirty‑five per cent of the wage offer by county as computed annually by the department of economic security research administration division.
3. All net new full‑time employment positions must include health insurance coverage for the employees for which the company pays at least fifty per cent of the premium or membership cost, or an equivalent percentage of the cost for alternative health benefit models that offer standard comprehensive coverage.
C. A qualified company that is eligible for benefits under subsection B of this section is eligible for reimbursement of fifty per cent of the company's withholding taxes of those new employees for a period of:
1. Five years if the new employees are compensated at a rate equal to at least two hundred per cent of the wage offer by county as computed annually by the department of economic security research administration division or successor administration.
2. Six years if the new employees are compensated at a rate equal to at least two hundred ten per cent of the wage offer by county as computed annually by the department of economic security research administration division or successor administration.
3. Seven years if the new employees are compensated at a rate equal to at least two hundred twenty per cent of the wage offer by county as computed annually by the department of economic security research administration division or successor administration.
41-1546.02. Application and agreement for benefits; Arizona quality jobs fund
A. A qualified company that meets the requirements prescribed by section 41-1546.01 may apply to the director for benefits under this article. A qualified company that is already receiving benefits under this article may apply to the director for additional benefits if the company meets the requirements prescribed by section 41-1546.01. The amount of benefit payments is equal to fifty per cent of the state withholding tax on compensation paid by the qualified company with respect to the new jobs in each calendar quarter.
B. The application must be on a form prescribed by the director and contain required information to determine if the applicant is qualified.
C. To qualify for benefits under this article:
1. The qualified company must have an annual gross payroll for new jobs of at least two million dollars within twelve months of the first complete calendar quarter after the start date.
2. The number of the company's full-time equivalent new jobs must be at least twenty‑five per cent of all of the company's employee positions.
D. The director shall either approve or disapprove the application. A qualified company whose application is approved is eligible for benefits under this article as of the date the qualified company enters into an agreement with the director pursuant to this section.
E. On approving an application, the director may enter into an agreement with the qualified company for payment of benefits under this article from the Arizona quality jobs fund established by this section. The agreement shall commit the director of the department of commerce to certify to the director of the department of revenue:
1. That the qualified company is eligible to receive benefits under this article.
2. The number of new employees hired by the qualified company.
3. The amount of gross wages being paid to each new employee.
F. The agreement must be entered into before any benefits may be provided under this article. The agreement shall specify that if the qualified company fails to comply with the terms and conditions in the agreement or fails to comply with this article:
1. The director may terminate the agreement.
2. As of the date the agreement is terminated:
(a) The company is not entitled to any further benefits under this article.
(b) The company must remit to this state an amount equal to the benefits paid to the company under this article.
G. The Arizona quality jobs fund is established consisting of monies paid to the fund each month from the job recovery withholdings clearing fund pursuant to section 43-409. Monies in the fund are:
1. Continuously appropriated to the director for payment of benefits under this article.
2. Exempt from the provisions of section 35-190 relating to lapsing of appropriations.
H. The director shall not approve the application of a qualified company that is a party to an impact project agreement pursuant to article 4 of this chapter unless the director determines that participation in both the impact project and the Arizona quality jobs program would generate, over the period of the benefits under this article, an economic and fiscal impact in excess of the amount of the employer's withholding tax allocated to both programs.
I. The department of commerce, with the cooperation of the department of revenue, shall adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purposes of this article.
41-1546.03. Withholding tax report to department of revenue
A qualifying company that receives benefits under this article must complete and submit to the department of revenue a monthly report of the amount of withholding tax retained with respect to each new employee pursuant to this article. The report shall be submitted on a form, in a manner and according to a schedule prescribed by the department of revenue.
41-1546.04. Annual review of qualified company activities
A. The director shall conduct an annual review of the activities undertaken by each qualified company pursuant to this article to ensure that the company is in compliance with this article and rules adopted pursuant to this article and the benefit agreement under section 41-1546.02. The qualified company must make available for inspection by the director, or the director's agent, its books and records concerning employment, wages and withholding taxes of any employees for which the company or third party has retained withholding taxes.
B. The director of the department of commerce may request the department of revenue to audit the qualified company or third party for purposes of compliance with this article.
41-1546.05. Annual report
A. The director shall make an annual report based on information received from each qualified company receiving benefits under this article describing:
1. The names of qualified companies.
2. The types of qualified companies using this article.
3. The location of qualified companies and the location of the business operations in this state.
4. The number of new employees hired.
5. The wages paid for the new employees.
6. The annual amount of benefits provided under this article.
7. The estimated net state fiscal impact, including the direct and indirect new state taxes derived from the new employees.
8. an estimate of the multiplier effect on the economy of this state from the benefits received under this article.
B. The director shall transmit copies of the report to:
1. The governor.
2. The chairpersons of the senate committees on commerce and economic development and finance, or their successor committees.
3. The chairpersons of the house of representatives committees on commerce and ways and means, or their successor committees.
4. The secretary of state.
41-1546.06. Program termination
The program established by this article ends on July 1, 2020 pursuant to section 41-3102.
Sec. 14. Section 41-1554.01, Arizona Revised Statutes, is amended to read:
41-1554.01. Greater Arizona development authority; board; staff; conflict of interest prohibited; violation; classification
A. The greater Arizona development authority is established. The authority shall be governed by a board of directors consisting of the following members:
1. The director of the department of commerce or the director's designee who shall serve as the chairperson.
2. The director of the department of environmental quality or the director's designee.
3. The director of the department of transportation or the director's designee.
4. The state treasurer or the state treasurer's designee.
5. Five members, one of whom is a representative of a tribal nation of Arizona, appointed by the governor pursuant to section 38‑211. All appointed members shall reside in different counties, and no more than three members may be members of the same political party.
B. Members appointed by the governor serve staggered five year terms.
C. Members of the board are not eligible to receive compensation for their services but are eligible for reimbursement of expenses pursuant to title 38, chapter 4, article 2.
D. Members of the board are public officers for purposes of title 38, chapter 3, article 8 and the authority is a public body for purposes of title 38, chapter 3, article 3.1. The director of the department of commerce or the director's designee shall not participate in any consideration or vote on financial assistance for impact programs pursuant to article 4 of this chapter.
E. No appointed member may serve more than two consecutive terms, except that service for a partial term of less than three years shall not be counted toward the two term limitation.
F. The department of commerce shall provide general administrative support, equipment and office and meeting space to the authority.
G. The department of commerce may hire staff to provide administrative and technical assistance on behalf of the authority. Earnings on the monies in the fund may be used to pay for staff services.
H. Members of the board shall not participate in any direct discussions or actions related to any project financed under this article in which the member has any direct or indirect personal financial interest. For purposes of this subsection, a member of the board who is an employee or official of a participant in or applicant for a loan shall not be considered to have a direct or indirect personal financial interest in a project by virtue of the member's services alone. A violation of this subsection is a class 1 misdemeanor.
Sec. 15. Section 41-1554.02, Arizona Revised Statutes, is amended to read:
41-1554.02. Powers and duties of authority
A. The authority is a body corporate and politic and shall have an official seal that is judicially noticed. The authority may sue and be sued, contract and acquire, hold, operate and dispose of property as necessary to carry out its responsibilities under this article.
B. The authority, through its board, may:
1. Issue bonds to provide financial assistance to political subdivisions, special districts and Indian tribes for acquiring, constructing, improving or equipping infrastructure or for refinancing outstanding bonds or other obligations of the political subdivisions, special districts or Indian tribes that were issued to acquire, construct, improve or equip infrastructure. The bonds shall be in the name of the authority.
2. Provide financial assistance to political subdivisions, special districts and Indian tribes to finance or refinance infrastructure projects.
3. Guarantee debt obligations of political subdivisions, special districts and Indian tribes that are issued to finance or refinance infrastructure projects.
4. Provide technical assistance or short‑term assistance to political subdivisions, special districts, Indian tribes and tribal subdivisions.
5. Provide financing for impact programs for Arizona job training pursuant to article 4 of this chapter.
5. 6. Apply for, accept and administer grants and other monetary assistance from the United States government and from other public and private sources to carry out its responsibilities under this article.
6. 7. Hire professional assistance as needed to carry out this article.
C. The board shall:
1. Approve all policies and procedures of the authority.
2. Approve which projects receive technical and financial assistance.
3. Approve loan repayment agreements entered into with political subdivisions, special districts and Indian tribes.
D. The authority may impose administrative fees and penalties that are necessary to recover the costs incurred in connection with entering into or enforcing a loan repayment agreement or providing financial or technical assistance.
E. The board shall deposit, pursuant to sections 35‑146 and 35‑147, any monies received pursuant to subsection B, paragraph 5 6 of this section in the fund.
Sec. 16. Section 41-1554.03, Arizona Revised Statutes, is amended to read:
41-1554.03. Greater Arizona development authority revolving fund
A. The greater Arizona development authority revolving fund is established consisting of:
1. Monies appropriated by the legislature.
2. Monies received from the United States government to carry out this article.
3. Monies received from political subdivisions, Indian tribes, tribal subdivisions and special districts as loan repayments, technical assistance repayments, interest, administrative fees and penalties.
4. Monies received from the program repayment account of the impact program fund pursuant to section 41-1541.05.
4. 5. Interest and other income received from investing monies in the fund.
5. 6. Gifts, grants and donations received from any public or private source to carry out this article.
6. 7. Any other monies received by the authority.
B. The board shall administer the fund in compliance with the requirements of this article. The board shall separately account for monies received from each source listed in subsection A of this section. Monies received pursuant to subsection A, paragraph 1 of this section shall not be used for any purpose except securing bonds issued by the authority and providing assistance under technical assistance repayment agreements if the amount used for providing this assistance is not more than eight hundred thousand dollars. This subsection does not limit the power of the authority to pledge other monies in the fund to secure bonds issued by the authority or to provide assistance under technical assistance repayment agreements.
C. The board may establish accounts and subaccounts as necessary to properly account for and use monies received by the authority.
D. Monies in the fund may be used for securing bonds of the authority.
E. Monies in the fund received pursuant to subsection A, paragraphs 2, 3, 4, 5, and 6 and 7 of this section may be used for:
1. Providing technical assistance to political subdivisions, special districts, Indian tribes and tribal subdivisions.
2. Providing financial assistance to political subdivisions, special districts and Indian tribes.
3. Providing financing for impact programs for arizona job training pursuant to article 4 of this chapter.
3. 4. Paying the compensation and employment related expenses associated with the employees hired pursuant to section 41‑1554.01, subsection G.
4. 5. Paying the costs to operate the authority, to administer the fund and to carry out the requirements of this article.
5. 6. Paying the costs of professional assistance hired by the authority pursuant to section 41‑1554.02, subsection B, paragraph 6 7.
F. On notice from the board, the state treasurer shall invest and divest monies in the fund as provided by section 35‑313, and monies earned from investment shall be credited to the fund.
G. If the monies pledged to secure the bonds become insufficient to pay the principal and interest on the bonds, the board may direct the state treasurer to divest monies in the fund as may be necessary and may apply those proceeds to make current all payments then due on the bonds. The state treasurer shall immediately notify the attorney general and auditor general of the insufficiency. The auditor general shall audit the circumstances surrounding the depletion of the fund and shall report these findings to the attorney general. The attorney general shall conduct an investigation and report these findings to the governor and the legislature.
Sec. 17. Section 41-1554.06, Arizona Revised Statutes, is amended to read:
41-1554.06. Financial assistance
A. The authority may provide financial assistance to political subdivisions, special districts and Indian tribes in developing, acquiring, constructing, improving, equipping or refinancing infrastructure. The financial assistance shall include:
1. Loans as provided in this section.
2. Credit enhancements purchased for a political subdivision's, special district's or Indian tribe's bonds or other forms of indebtedness.
B. The authority may provide loan financing for impact programs for Arizona job training pursuant to article 4 of this chapter. Any financing agreement must include a legally binding acknowledgement that all repayment obligations are from monies in the program repayment account of the impact program fund under section 41-1541.06, subsection C and are not general or special obligations of the state general fund.
B. C. A loan shall be evidenced by a loan repayment agreement, lease purchase agreement or bonds of a political subdivision, special district or Indian tribe that are delivered to and held by the authority.
C. D. The authority shall prescribe a principal repayment schedule for each loan made. Loan principal payments may be rescheduled at the discretion of the authority but may not be forgiven.
D. E. A loan under this section:
1. Shall be repaid not more than thirty years after the date it is incurred.
2. Shall require that interest payments begin not later than the next date that either principal or interest must be paid by the authority to holders of any of the authority's bonds that provided funding for the loan. The authority may provide that loan interest accruing during construction of the borrower's infrastructure project and up to one year after completion of the construction be capitalized in the loan.
3. Shall be repayable in at least annual principal installments and at least semiannual interest installments.
4. Shall be conditioned on the identification of pledged revenues for repaying the loan. If the infrastructure financed by the loan is part of a municipal utility and the city or town pledges revenues of the utility to repay the loan, the loan shall be treated under section 9‑530, subsection B as a lawful long‑term obligation incurred for a specific capital purpose.
5. To the extent permitted by law, shall be secured by a debt service reserve account that is held in trust and that is in such amount, if any, as determined by the authority.
6. Shall be either:
(a) For a political subdivision, additionally secured by an irrevocable pledge of the shared state revenues due the political subdivision for the life of the loan as provided by a resolution of the board.
(b) For an Indian tribe, conditioned on the establishment of a dedicated revenue source under the control of a tribally chartered corporation or other tribal entity that is subject to suit by the attorney general to enforce the loan contract or be secured by assets that, in the event of default of the loan contract, are subject to execution by the attorney general.
E. F. The authority shall prescribe the rate or rates of interest on loans made under this section, but the rate or rates shall not exceed the prevailing market rate for similar types of loans. A political subdivision or special district may negotiate the sale of its bonds to or a loan repayment agreement with the authority without complying with any public or accelerated bidding requirements imposed by any other law for the sale of its bonds.
F. G. The approval of a loan is conditioned on a written commitment by the political subdivision or special district to complete all applicable reviews and approvals and to secure all required permits in a timely manner.
G. H. The approval of financial assistance to a city or town having a population of more than fifty thousand persons shall be conditioned on approval of its voters. An election is not required if voter approval has previously been received for substantially the same project.
H. I. The approval of financial assistance to a county having a population of more than two hundred thousand persons shall be conditioned on approval of its voters. An election is not required if voter approval has previously been received for substantially the same project.
I. J. By resolution of the board, the authority may impose any additional requirements it considers necessary to ensure that the loan principal and interest are timely paid.
J. K. All monies received from political subdivisions, special districts and Indian tribes as loan repayments, interest and penalties shall be deposited, pursuant to sections 35‑146 and 35‑147, in the fund.
K. L. The attorney general may take whatever actions are necessary to enforce the loan contract and achieve repayment of loans provided by the authority pursuant to this article.
L. M. If a political subdivision fails to make any payment due to the authority under its loan repayment agreement or bonds, the authority shall certify to the state treasurer and notify the governing body of the defaulting political subdivision that the political subdivision has failed to make the required payment and direct a withholding of state shared revenues as provided in subsection M N of this section. The certificate of default shall be in the form determined by the authority, provided the certificate specifies the amount required to satisfy the unpaid payment obligation of the political subdivision.
M. N. On receipt of a certificate of default from the authority, the state treasurer, to the extent not otherwise expressly prohibited by law, shall withhold the monies from the next succeeding distribution of monies pursuant to section 42‑5029 due to the defaulting political subdivision. In the case of a city or town, the state treasurer shall also withhold from the next succeeding distribution of monies pursuant to section 43‑206 due to the defaulting city or town the amount specified in the certificate of default and immediately deposit the amount withheld in the fund. The state treasurer shall continue to withhold and deposit the monies until the authority certifies to the state treasurer that the default has been cured. In no event shall the state treasurer withhold any amount that is necessary, as certified by the defaulting political subdivision to the state treasurer and the authority, to make any required deposits then due for the payment of principal and interest on bonds of the political subdivision that were issued prior to the date of the loan repayment agreement or bonds and that have been secured by a pledge of distributions made pursuant to sections 42‑5029 and 43‑206.
Sec. 18. Section 42-1116, Arizona Revised Statutes, is amended to read:
42-1116. Disposition of tax revenues
A. The department shall promptly deposit, pursuant to sections 35‑146 and 35‑147, all monies it collects from the taxes administered pursuant to this article except the telecommunication services excise tax, separately accounting for each type of tax and each tax classification within each type of tax. At the same time the department of revenue shall also furnish copies of the transmittal schedules to the director of the department of administration.
B. Except as provided by subsection C of this section, the department shall deposit all monies and remittances received under this section to the credit of the following specific funds and accounts:
1. Amounts sufficient to meet the requirements for tax refunds to the tax refund account established in section 42‑1117.
2. Amounts sufficient to meet the requirements of urban revenue sharing to the urban revenue sharing fund established in section 43‑206.
3. Amounts collected pursuant to chapter 5, articles 1 and 5 of this title and section 42‑5352, subsection A to the transaction privilege and severance tax clearing account established by section 42‑5029.
4. Through June 30, 2010 amounts sufficient to meet the requirements of section 42‑3104 to the corrections fund.
5. Amounts sufficient to meet the requirements of section 49‑282, subsection B relating to the water quality assurance revolving fund.
6. Amounts collected as withholding tax sufficient to meet the requirements of title 41, chapter 10, articles 4 and 5.1 to the job recovery withholdings clearing fund established by section 43-409.
6. 7. All remaining monies to the state general fund.
C. From the monies and remittances received under this section, each month beginning July, 2001 the state treasurer shall transmit to the tourism and sports authority, established by title 5, chapter 8, for deposit in its facility revenue clearing account established by section 5‑834 one‑twelfth of the amount reported by the department pursuant to section 43‑209.
Sec. 19. Section 42-2003, Arizona Revised Statutes, is amended to read:
42-2003. Authorized disclosure of confidential information
A. Confidential information relating to:
1. A taxpayer may be disclosed to the taxpayer, its successor in interest or a designee of the taxpayer who is authorized in writing by the taxpayer. A principal corporate officer of a parent corporation may execute a written authorization for a controlled subsidiary.
2. A corporate taxpayer may be disclosed to any principal officer, any person designated by a principal officer or any person designated in a resolution by the corporate board of directors or other similar governing body.
3. A partnership may be disclosed to any partner of the partnership. This exception does not include disclosure of confidential information of a particular partner unless otherwise authorized.
4. An estate may be disclosed to the personal representative of the estate and to any heir, next of kin or beneficiary under the will of the decedent if the department finds that the heir, next of kin or beneficiary has a material interest which will be affected by the confidential information.
5. A trust may be disclosed to the trustee or trustees, jointly or separately, and to the grantor or any beneficiary of the trust if the department finds that the grantor or beneficiary has a material interest which will be affected by the confidential information.
6. Any taxpayer may be disclosed if the taxpayer has waived any rights to confidentiality either in writing or on the record in any administrative or judicial proceeding.
7. The name and taxpayer identification numbers of persons issued direct payment permits may be publicly disclosed.
B. Confidential information may be disclosed to:
1. Any employee of the department whose official duties involve tax administration.
2. The office of the attorney general solely for its use in preparation for, or in an investigation which may result in, any proceeding involving tax administration before the department or any other agency or board of this state, or before any grand jury or any state or federal court.
3. The department of liquor licenses and control for its use in determining whether a spirituous liquor licensee has paid all transaction privilege taxes and affiliated excise taxes incurred as a result of the sale of spirituous liquor, as defined in section 4-101, at the licensed establishment and imposed on the licensed establishments by this state and its political subdivisions.
4. Other state tax officials whose official duties require the disclosure for proper tax administration purposes if the information is sought in connection with an investigation or any other proceeding conducted by the official. Any disclosure is limited to information of a taxpayer who is being investigated or who is a party to a proceeding conducted by the official.
5. The following agencies, officials and organizations, if they grant substantially similar privileges to the department for the type of information being sought, pursuant to statute and a written agreement between the department and the foreign country, agency, state, Indian tribe or organization:
(a) The United States internal revenue service, alcohol and tobacco tax and trade bureau of the United States treasury, United States bureau of alcohol, tobacco, firearms and explosives of the United States department of justice, United States drug enforcement agency and federal bureau of investigation.
(b) A state tax official of another state.
(c) An organization of states, federation of tax administrators or multistate tax commission that operates an information exchange for tax administration purposes.
(d) An agency, official or organization of a foreign country with responsibilities that are comparable to those listed in subdivision (a), (b) or (c) of this paragraph.
(e) An agency, official or organization of an Indian tribal government with responsibilities comparable to the responsibilities of the agencies, officials or organizations identified in subdivision (a), (b) or (c) of this paragraph.
6. The auditor general, in connection with any audit of the department subject to the restrictions in section 42‑2002, subsection D.
7. Any person to the extent necessary for effective tax administration in connection with:
(a) The processing, storage, transmission, destruction and reproduction of the information.
(b) The programming, maintenance, repair, testing and procurement of equipment for purposes of tax administration.
8. The office of administrative hearings relating to taxes administered by the department pursuant to section 42‑1101, but the department shall not disclose any confidential information:
(a) Regarding income tax, withholding tax or estate tax.
(b) On any tax issue relating to information associated with the reporting of income tax, withholding tax or estate tax.
9. The United States treasury inspector general for tax administration for the purpose of reporting a violation of internal revenue code section 7213A (26 United States Code section 7213A), unauthorized inspection of returns or return information.
10. The financial management service of the United States treasury department for use in the treasury offset program.
11. The United States treasury department or its authorized agent for use in the state income tax levy program and in the electronic federal tax payment system.
12. The department of commerce for its use in:
(a) Qualifying motion picture production companies for the tax incentives provided for motion picture production under chapter 5 of this title and sections 43‑1075 and 43‑1163.
(b) Qualifying applicants for the motion picture infrastructure project tax credits under sections 43‑1075.01 and 43‑1163.01.
(c) Qualifying renewable energy operations for the tax incentives under sections 42-12006, 43-1083.01 and 43-1164.01.
(d) Fulfilling its annual reporting responsibility pursuant to section 41‑1511, subsections T and U and section 41-1517, subsections S and T.
(e) Administering the benefits under title 41, chapter 10, articles 4, 5 and 5.1 that are based on withholding tax revenues.
13. A prosecutor for purposes of section 32‑1164, subsection C.
14. The state fire marshal for use in determining compliance with and enforcing title 41, chapter 16, article 3.1.
C. Confidential information may be disclosed in any state or federal judicial or administrative proceeding pertaining to tax administration pursuant to the following conditions:
1. One or more of the following circumstances must apply:
(a) The taxpayer is a party to the proceeding.
(b) The proceeding arose out of, or in connection with, determining the taxpayer's civil or criminal liability, or the collection of the taxpayer's civil liability, with respect to any tax imposed under this title or title 43.
(c) The treatment of an item reflected on the taxpayer's return is directly related to the resolution of an issue in the proceeding.
(d) Return information directly relates to a transactional relationship between a person who is a party to the proceeding and the taxpayer and directly affects the resolution of an issue in the proceeding.
2. Confidential information may not be disclosed under this subsection if the disclosure is prohibited by section 42‑2002, subsection C or D.
D. Identity information may be disclosed for purposes of notifying persons entitled to tax refunds if the department is unable to locate the persons after reasonable effort.
E. The department, upon the request of any person, shall provide the names and addresses of bingo licensees as defined in section 5‑401, verify whether or not a person has a privilege license and number, a distributor's license and number or a withholding license and number or disclose the information to be posted on the department's web site website or otherwise publicly accessible pursuant to section 42‑1124, subsection F and section 42‑3201, subsection A.
F. A department employee, in connection with the official duties relating to any audit, collection activity or civil or criminal investigation, may disclose return information to the extent that disclosure is necessary to obtain information which is not otherwise reasonably available. These official duties include the correct determination of and liability for tax, the amount to be collected or the enforcement of other state tax revenue laws.
G. If an organization is exempt from this state's income tax as provided in section 43‑1201 for any taxable year, the name and address of the organization and the application filed by the organization upon which the department made its determination for exemption together with any papers submitted in support of the application and any letter or document issued by the department concerning the application are open to public inspection.
H. Confidential information relating to transaction privilege tax, use tax, severance tax, jet fuel excise and use tax and rental occupancy tax may be disclosed to any county, city or town tax official if the information relates to a taxpayer who is or may be taxable by the county, city or town. Any taxpayer information released by the department to the county, city or town:
1. May only be used for internal purposes.
2. May not be disclosed to the public in any manner that does not comply with confidentiality standards established by the department. The county, city or town shall agree in writing with the department that any release of confidential information that violates the confidentiality standards adopted by the department will result in the immediate suspension of any rights of the county, city or town to receive taxpayer information under this subsection.
I. The department may disclose statistical information gathered from confidential information if it does not disclose confidential information attributable to any one taxpayer. In order to comply with the requirements of section 42‑5029, subsection A, paragraph 3, the department may disclose to the state treasurer statistical information gathered from confidential information, even if it discloses confidential information attributable to a taxpayer.
J. The department may disclose the aggregate amounts of any tax credit, tax deduction or tax exemption enacted after January 1, 1994. Information subject to disclosure under this subsection shall not be disclosed if a taxpayer demonstrates to the department that such information would give an unfair advantage to competitors.
K. Except as provided in section 42‑2002, subsection C, confidential information, described in section 42‑2001, paragraph 2, subdivision (a), item (iii), may be disclosed to law enforcement agencies for law enforcement purposes.
L. The department may provide transaction privilege tax license information to property tax officials in a county for the purpose of identification and verification of the tax status of commercial property.
M. The department may provide transaction privilege tax, luxury tax, use tax, property tax and severance tax information to the ombudsman‑citizens aide pursuant to title 41, chapter 8, article 5.
N. Except as provided in section 42‑2002, subsection D, a court may order the department to disclose confidential information pertaining to a party to an action. An order shall be made only upon a showing of good cause and that the party seeking the information has made demand upon the taxpayer for the information.
O. This section does not prohibit the disclosure by the department of any information or documents submitted to the department by a bingo licensee. Before disclosing the information the department shall obtain the name and address of the person requesting the information.
P. If the department is required or permitted to disclose confidential information, it may charge the person or agency requesting the information for the reasonable cost of its services.
Q. Except as provided in section 42‑2002, subsection D, the department of revenue shall release confidential information as requested by the department of economic security pursuant to section 42‑1122 or 46‑291. Information disclosed under this subsection is limited to the same type of information that the United States internal revenue service is authorized to disclose under section 6103(l)(6) of the internal revenue code.
R. Except as provided in section 42‑2002, subsection D, the department of revenue shall release confidential information as requested by the courts and clerks of the court pursuant to section 42‑1122.
S. To comply with the requirements of section 42‑5031, the department may disclose to the state treasurer, to the county stadium district board of directors and to any city or town tax official that is part of the county stadium district confidential information attributable to a taxpayer's business activity conducted in the county stadium district.
T. The department shall release confidential information as requested by the attorney general for purposes of determining compliance with and enforcing section 44‑7101, the master settlement agreement referred to therein and subsequent agreements to which the state is a party that amend or implement the master settlement agreement. Information disclosed under this subsection is limited to luxury tax information relating to tobacco manufacturers, distributors, wholesalers and retailers and information collected by the department pursuant to section 44‑7101(2)(j).
U. For proceedings before the department, the office of administrative hearings, the board of tax appeals or any state or federal court involving penalties that were assessed against a return preparer or electronic return preparer pursuant to section 42‑1103.02 or 42‑1125.01, confidential information may be disclosed only before the judge or administrative law judge adjudicating the proceeding, the parties to the proceeding and the parties' representatives in the proceeding prior to its introduction into evidence in the proceeding. The confidential information may be introduced as evidence in the proceeding only if the taxpayer's name, the names of any dependents listed on the return, all social security numbers, the taxpayer's address, the taxpayer's signature and any attachments containing any of the foregoing information are redacted and if either:
1. The treatment of an item reflected on such return is or may be related to the resolution of an issue in the proceeding.
2. Such return or return information relates or may relate to a transactional relationship between a person who is a party to the proceeding and the taxpayer which directly affects the resolution of an issue in the proceeding.
V. The department may disclose to the attorney general confidential information received under section 44‑7111 and requested by the attorney general for purposes of determining compliance with and enforcing section 44‑7111. The department and attorney general shall share with each other the information received under section 44‑7111, and may share the information with other federal, state or local agencies only for the purposes of enforcement of section 44‑7101, section 44‑7111 or corresponding laws of other states.
W. The department may provide the name and address of qualifying hospitals and qualifying health care organizations, as defined in section 42‑5001, to a business classified and reporting transaction privilege tax under the utilities classification.
Sec. 20. Section 42-12006, Arizona Revised Statutes, is amended to read:
42-12006. Class six property
For purposes of taxation, class six is established consisting of:
1. Noncommercial historic property as defined in section 42‑12101 and valued at full cash value.
2. Real and personal property that is located within the area of a foreign trade zone or subzone established under 19 United States Code section 81 and title 44, chapter 18, that is activated for foreign trade zone use by the district director of the United States customs service pursuant to 19 Code of Federal Regulations section 146.6 and that is valued at full cash value. Property that is classified under this paragraph shall not thereafter be classified under paragraph 7 of this section.
3. Real and personal property and improvements that are located in a military reuse zone that is established under title 41, chapter 10, article 3 and that is devoted to providing aviation or aerospace services or to manufacturing, assembling or fabricating aviation or aerospace products, valued at full cash value and subject to the following terms and conditions:
(a) Property may not be classified under this paragraph for more than five tax years.
(b) Any new addition or improvement to property already classified under this paragraph qualifies separately for classification under this paragraph for not more than five tax years.
(c) If a military reuse zone is terminated, the property in that zone that was previously classified under this paragraph shall be reclassified as prescribed by this article.
(d) Property that is classified under this paragraph shall not thereafter be classified under paragraph 4 or 7 of this section.
4. Real and personal property and improvements that are located in an enterprise zone, that are owned or used by a small manufacturing or small commercial printing business that is certified by the department of commerce pursuant to section 41‑1525.01 and that are valued at full cash value, subject to the following terms and conditions:
(a) Property may not be classified under this paragraph for more than five tax years.
4. Personal property and improvements that are constructed or undergo a major renovation from and after June 30, 2010 through June 30, 2016, and real property on which the personal property and improvements are located and owned by a business that is certified by the department of commerce pursuant to section 41-1525.01, and valued at full cash value as follows:
(a) For property located in a city or town with a population of fifty thousand persons or more:
(i) A business making a capital investment of at least five million dollars, but not more than fifteen million dollars, within three years after first being certified under section 41-1525.01, and employing at least twenty-five new employees, the property may be classified under this paragraph for up to three tax years.
(ii) A business making a capital investment of more than fifteen million dollars, but not more than fifty million dollars, within three years after first being certified under section 41-1525.01, and employing at least fifty new employees, the property may be classified under this paragraph for up to five tax years.
(iii) A business making a capital investment of more than fifty million dollars within three years after first being certified under section 41-1525.01, and employing at least seventy-five new employees, the property may be classified under this paragraph for up to ten tax years.
(b) For property located in any other location:
(i) A business making a capital investment of at least two million dollars, but not more than four million dollars, within three years after first being certified under section 41-1525.01, and employing at least fifteen new employees, the property may be classified under this paragraph for up to three tax years.
(ii) A business making a capital investment of more than four million dollars, but not more than eight million dollars, within three years after first being certified under section 41-1525.01, and employing at least thirty new employees, the property may be classified under this paragraph for up to five tax years.
(iii) A business making a capital investment of more than eight million dollars within three years after first being certified under section 41-1525.01, and employing at least sixty new employees, the property may be classified under this paragraph for up to ten tax years.
(b) (c) Property that is classified under this paragraph shall not thereafter be classified under paragraph 3 or 7 of this section.
5. Real and personal property and improvements or a portion of such property comprising a qualified environmental technology manufacturing, producing or processing facility as described in section 41‑1514.02, valued at full cash value and subject to the following terms and conditions:
(a) Property shall be classified under this paragraph for twenty tax years from the date placed in service.
(b) Any addition or improvement to property already classified under this paragraph qualifies separately for classification under this subdivision for an additional twenty tax years from the date placed in service.
(c) After revocation of certification under section 41‑1514.02, property that was previously classified under this paragraph shall be reclassified as prescribed by this article.
(d) Property that is classified under this paragraph shall not thereafter be classified under paragraph 7 of this section.
6. That portion of real and personal property that is used on or after January 1, 1999 specifically and solely for remediation of the environment by an action that has been determined to be reasonable and necessary to respond to the release or threatened release of a hazardous substance by the department of environmental quality pursuant to section 49‑282.06 or pursuant to its corrective action authority under rules adopted pursuant to section 49‑922, subsection B, paragraph 4 or by the United States environmental protection agency pursuant to the national contingency plan (40 Code of Federal Regulations part 300) and that is valued at full cash value. Property that is not being used specifically and solely for the remediation objectives described in this paragraph shall not be classified under this paragraph. For the purposes of this paragraph, "remediation of the environment" means one or more of the following actions:
(a) Monitoring, assessing or evaluating the release or threatened release.
(b) Excavating, removing, transporting, treating and disposing of contaminated soil.
(c) Pumping and treating contaminated water.
(d) Treatment, containment or removal of contaminants in groundwater or soil.
7. Real and personal property and improvements constructed or installed from and after December 31, 2004 through December 31, 2010 and owned by a qualified business under section 41-1516 and used solely for the purpose of harvesting, transporting or the initial processing of qualifying forest products removed from qualifying projects as defined in section 41‑1516. The classification under this paragraph is subject to the following terms and conditions:
(a) Property may be initially classified under this paragraph only in valuation years 2005 through 2010.
(b) Property may not be classified under this paragraph for more than five years.
(c) Any new addition or improvement, constructed or installed from and after December 31, 2004 through December 31, 2010, to property already classified under this paragraph qualifies separately for classification and assessment under this paragraph for not more than five years.
(d) Property that is classified under this paragraph shall not thereafter be classified under paragraph 2, 3, 4 or 5 of this section.
8. Real and personal property and improvements to the property that are used specifically and solely to manufacture from and after December 31, 2006 through December 31, 2016 biodiesel fuel that is one hundred per cent biodiesel and its by-products and that are valued at full cash value. This paragraph applies only to the portion of property that is used specifically for manufacturing and processing one hundred per cent biodiesel fuel, or its related by-products, from raw feedstock obtained from off-site sources, including necessary on-site storage facilities that are intrinsically associated with the manufacturing process. Any other commercial or industrial use disqualifies the entire property from classification under this paragraph.
9. Real and personal property and improvements that are certified pursuant to section 41‑1511, subsection C, paragraph 2 and that are used for renewable energy manufacturing or headquarters operations as provided by section 42‑12057. This paragraph applies only to property that is used in manufacturing and headquarters operations of renewable energy companies, including necessary on-site research and development, testing and storage facilities that are associated with the manufacturing process. Up to ten per cent of the aggregate full cash value of the property may be derived from uses that are ancillary to and intrinsically associated with the manufacturing process or headquarters operation. Any additional ancillary property is not qualified for classification under this paragraph. No new properties may be classified pursuant to this paragraph from and after December 31, 2014. Classification under this paragraph is limited to the time periods determined by the department of commerce pursuant to section 41‑1511, subsection C, paragraph 2, subdivision (a) or (b). Property that is classified under this paragraph shall not thereafter be classified under any other paragraph of this section.
Sec. 21. Section 42-12009, Arizona Revised Statutes, is amended to read:
42-12009. Class nine property
A. For purposes of taxation, class nine is established consisting of:
1. Improvements that are located on federal, state, county or municipal property and owned by the lessee of the property if:
(a) The improvements become the property of the federal, state, county or municipal owner of the property on termination of the leasehold interest in the property.
(b) Both the improvements and the property are used primarily for athletic, recreational, entertainment, artistic, cultural or convention activities.
2. Improvements that are located on federal, state, county or municipal property and owned by the lessee of the property if:
(a) The improvements become the property of the federal, state, county or municipal owner of the property on termination of the leasehold interest in the property.
(b) Both the improvements and the property are:
(i) Used for or in connection with aviation, including hangars, tie‑downs, aircraft maintenance, sales of aviation related items, charter and rental activities, parking facilities and restaurants, stores and other services located in a terminal.
(ii) Located on a state, county, city or town airport or a public airport operating pursuant to sections 28‑8423, 28‑8424 and 28‑8425.
3. Property that is defined as "contractor-acquired property" or "government-furnished property" in the federal acquisition regulations (48 Code of Federal Regulations section 45.101) and that is leased to or acquired by the government and used to perform a government contract.
4. Property of a corporation that is organized by or at the direction of this state or a county, city or town to develop, construct, improve, repair, replace or own any property, improvement, building or other facility to be used for public purposes that the state, county, city or town pledges to lease or lease-purchase with state, county or municipal special or general revenues and that is not otherwise exempt under chapter 11, article 3 of this title.
5. Real property and improvements, including land, buildings, furniture and equipment, regardless of ownership, that are leased for the entire valuation year to, and used exclusively by, a nonprofit organization that is recognized under section 501(c)(3) of the internal revenue code and that operates on the premises as a charter school pursuant to section 15‑183. If only part of a parcel of real property or improvements to real property is leased for operation of a charter school as provided by this paragraph, only the portion so leased qualifies for classification under this section. A property owner who leases property to a charter school shall file an affidavit with the county assessor stating that the charter school shall be the sole beneficiary of the change in property tax classification pursuant to this section and that the lease rate that is charged to the charter school is consistent with the lease rates that are charged to other tenants of the property or a fair market rate.
6. Personal property and improvements that are constructed or undergo a major renovation from and after June 30, 2010 through June 30, 2016, and real property on which the personal property and improvements are located and owned by a business that is certified by the department of commerce pursuant to section 41‑1525.01 and that is making a capital investment of at least two hundred fifty million dollars within three years after first being certified under section 41-1525.01 and employing at least one hundred fifty new employees. The property may be classified under this paragraph for up to ten tax years. Property that is classified under this paragraph shall not thereafter be classified under section 42-12006.
B. Improvements that are located in an area defined as a research park pursuant to section 35‑701 may not be classified under this section.
C. All property classified as class nine is subject to valuation at full cash value.
Sec. 22. Section 42-15001, Arizona Revised Statutes, is amended to read:
42-15001. Assessed valuation of class one property
The assessed valuation of class one property described in section 42‑12001 is the following percentage of its full cash value or limited valuation, as applicable:
1. Twenty‑five per cent through December 31, 2005.
2. Twenty‑four and one‑half per cent beginning from and after December 31, 2005 through December 31, 2006.
3. Twenty‑four per cent beginning from and after December 31, 2006 through December 31, 2007.
4. Twenty‑three per cent beginning from and after December 31, 2007 through December 31, 2008.
5. Twenty‑two per cent beginning from and after December 31, 2008 through December 31, 2009.
6. Twenty‑one per cent beginning from and after December 31, 2009 through December 31, 2010.
7. Twenty per cent beginning from and after December 31, 2010 through December 31, 2011.
8. Nineteen per cent beginning from and after December 31, 2011 through December 31, 2012.
9. Eighteen per cent beginning from and after December 31, 2012 through December 31, 2013.
10. Seventeen per cent beginning from and after December 31, 2013 through December 31, 2014.
11. Sixteen per cent beginning from and after December 31, 2014 through December 31, 2015.
12. Fifteen per cent beginning from and after December 31, 2015.
Sec. 23. Section 42-15006, Arizona Revised Statutes, is amended to read:
42-15006. Assessed valuation of class six property
The assessed valuation of class six property described in section 42‑12006 is based on the following percentages to the full cash value or limited valuation of class six property, as applicable:
1. Property described in section 42‑12006, paragraphs 1, 2, 3, 5, 6, 7, 8 and 9, five per cent.
2. Property described in section 42‑12006, paragraph 4:
(a) For primary property tax purposes, five per cent.
(b) Except as provided in subdivision (c), for secondary property tax purposes:
(i) Twenty-five per cent through December 31, 2006.
(ii) Twenty-four per cent beginning from and after December 31, 2006 through December 31, 2007.
(iii) Twenty‑three per cent beginning from and after December 31, 2007 through December 31, 2008.
(iv) Twenty-two per cent beginning from and after December 31, 2008 through December 31, 2009.
(v) Twenty-one per cent beginning from and after December 31, 2009 through December 31, 2010.
(vi) Twenty per cent beginning from and after December 31, 2010 through December 31, 2011.
(vii) Nineteen per cent beginning from and after December 31, 2011 through December 31, 2012.
(viii) Eighteen per cent beginning from and after December 31, 2012 through December 31, 2013.
(ix) Seventeen per cent beginning from and after December 31, 2013 through December 31, 2014.
(x) Sixteen per cent beginning from and after December 31, 2014 through December 31, 2015.
(xi) Fifteen per cent beginning from and after December 31, 2015.
(c) If subdivision (b) is finally adjudicated to be invalid, for secondary property tax purposes, five per cent.
Sec. 24. Section 43-206, Arizona Revised Statutes, is amended to read:
43-206. Urban revenue sharing fund; allocation; distribution
A. There is established an urban revenue sharing fund. The fund shall consist of an amount equal to fifteen per cent of the net proceeds of the state income taxes for the fiscal year two years preceding the current fiscal year but without regard to any withholding tax remitted to the job recovery withholdings clearing fund established by section 43-409. The fund shall be distributed to incorporated cities and towns as provided in this section, except that a city or town shall receive at least an amount equal to what a city or town with a population of fifteen hundred or more persons would receive. The transfer of net proceeds prescribed by section 49‑282, subsection B does not affect the calculation of net proceeds prescribed by this subsection.
B. Each city or town shall share in the urban revenue sharing fund in the proportion that the population of each bears to the population of all. Except as provided by sections 42‑5033 and 42‑5033.01, the population of a city or town as determined by the most recent United States decennial census plus any revisions to the decennial census certified by the United States bureau of the census shall be used as the basis for apportioning monies pursuant to this subsection.
C. The treasurer, upon on instruction from the department, shall transmit, no later than the tenth day of each month, to each city or town an amount equal to one‑twelfth of that city's or town's total entitlement for the current fiscal year from the urban revenue sharing fund as determined by the department.
D. A newly incorporated city or town shall share in the urban revenue sharing fund beginning the first month of the first full fiscal year following incorporation.
E. On receipt of a certificate of default from the greater Arizona development authority pursuant to section 41‑1554.06 or 41‑1554.07, the state treasurer, to the extent not otherwise expressly prohibited by law, shall withhold from the next succeeding distribution of monies pursuant to this section due to the city or town the amount specified in the certificate of default and immediately deposit the amount withheld in the greater Arizona development authority revolving fund. The state treasurer shall continue to withhold and deposit the monies until the authority certifies to the state treasurer that the default has been cured. In no event shall the state treasurer withhold any amount that is necessary, as certified by the defaulting political subdivision to the state treasurer and the authority, to make any required deposits then due for the payment of principal and interest on bonds of the political subdivision that were issued prior to the date of the loan repayment agreement or bonds and that have been secured by a pledge of distributions made pursuant to this section.
Sec. 25. Section 43-222, Arizona Revised Statutes, is amended to read:
43-222. Income tax credit review schedule
The joint legislative income tax credit review committee shall review the following income tax credits:
1. For years ending in 0 and 5, sections 43-1074, 43‑1075, 43‑1075.01, 43‑1079.01, 43‑1087, 43‑1088, 43‑1090.01, 43-1161, 43‑1163, 43‑1163.01, 43‑1167.01, 43‑1175 and 43‑1182.
2. For years ending in 1 and 6, sections 43‑1074.02, 43‑1083, 43‑1085, 43‑1164 and 43‑1183.
3. For years ending in 2 and 7, sections 43‑1073, 43‑1079, 43‑1080, 43‑1086, 43‑1089, 43‑1089.01, 43‑1089.02, 43‑1090, 43‑1167, 43‑1169, 43‑1176 and 43‑1181.
4. For years ending in 3 and 8, sections 43‑1074.01, 43‑1081, 43‑1168, 43‑1170 and 43‑1178.
5. For years ending in 4 and 9, sections 43‑1076, 43‑1081.01, 43‑1083.01, 43‑1084, 43‑1162, 43‑1164.01, and 43‑1170.01 and 43‑1184.
Sec. 26. Title 43, chapter 4, article 1, Arizona Revised Statutes, is amended by adding section 43-409, to read:
43-409. Job recovery withholdings clearing fund
A. The job recovery withholdings clearing fund is established consisting of up to one hundred per cent of withholding tax revenues on new jobs created pursuant to title 41, chapter 10, articles 4 and 5.1. On notice from the director of the department of commerce on the first day of each month, the director of the department of revenue shall credit to the fund sufficient monies each month to meet the requirements of the Arizona job training, Arizona opportunity fund and Arizona quality jobs programs.
B. On the last day of each month, the department of revenue shall notify the state treasurer to transfer monies from the job recovery withholdings clearing fund to the impact program fund established by section 41-1541.06, the Arizona opportunity fund established by section 41-1545 and the Arizona quality jobs fund established by section 41‑1546.02.
Sec. 27. Section 43-1011, Arizona Revised Statutes, is amended to read:
43-1011. Taxes and tax rates
There shall be levied, collected and paid for each taxable year upon on the entire taxable income of every resident of this state and upon on the entire taxable income of every nonresident which that is derived from sources within this state taxes determined in the following manner:
1. For taxable years beginning from and after December 31, 1996 through December 31, 1997:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.90% of taxable income
$10,001 - $25,000 $290, plus 3.30% of the excess over $10,000
$25,001 - $50,000 $785, plus 3.90% of the excess over $25,000
$50,001 - $150,000 $1,760, plus 4.80% of the excess over $50,000
$150,001 and over $6,560, plus 5.17% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.90% of taxable income
$20,001 - $50,000 $580, plus 3.30% of the excess over $20,000
$50,001 - $100,000 $1,570, plus 3.90% of the excess over $50,000
$100,001 - $300,000 $3,520, plus 4.80% of the excess over $100,000
$300,001 and over $13,120, plus 5.17% of the excess over $300,000
2. For taxable years beginning from and after December 31, 1997 through December 31, 1998:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.88% of taxable income
$10,001 - $25,000 $288, plus 3.24% of the excess over $10,000
$25,001 - $50,000 $774, plus 3.82% of the excess over $25,000
$50,001 - $150,000 $1,729, plus 4.74% of the excess over $50,000
$150,001 and over $6,469, plus 5.10% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.88% of taxable income
$20,001 - $50,000 $576, plus 3.24% of the excess over $20,000
$50,001 - $100,000 $1,548, plus 3.82% of the excess over $50,000
$100,001 - $300,000 $3,458, plus 4.74% of the excess over $100,000
$300,001 and over $12,938, plus 5.10% of the excess over $300,000
3. For taxable years beginning from and after December 31, 1998 through December 31, 2005:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.87% of taxable income
$10,001 - $25,000 $287, plus 3.20% of the excess over $10,000
$25,001 - $50,000 $767, plus 3.74% of the excess over $25,000
$50,001 - $150,000 $1,702, plus 4.72% of the excess over $50,000
$150,001 and over $6,422, plus 5.04% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.87% of taxable income
$20,001 - $50,000 $574, plus 3.20% of the excess over $20,000
$50,001 - $100,000 $1,534, plus 3.74% of the excess over $50,000
$100,001 - $300,000 $3,404, plus 4.72% of the excess over $100,000
$300,001 and over $12,844, plus 5.04% of the excess over $300,000
4. For taxable years beginning from and after December 31, 2005 through December 31, 2006:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.73% of taxable income
$10,001 - $25,000 $273, plus 3.04% of the excess over $10,000
$25,001 - $50,000 $729, plus 3.55% of the excess over $25,000
$50,001 - $150,000 $1,617, plus 4.48% of the excess over $50,000
$150,001 and over $6,097, plus 4.79% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.73% of taxable income
$20,001 - $50,000 $546, plus 3.04% of the excess over $20,000
$50,001 - $100,000 $1,458, plus 3.55% of the excess over $50,000
$100,001 - $300,000 $3,233, plus 4.48% of the excess over $100,000
$300,001 and over $12,193, plus 4.79% of the excess over $300,000
5. For taxable years beginning from and after December 31, 2006 through December 31, 2010:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.59% of taxable income
$10,001 - $25,000 $259, plus 2.88% of the excess over $10,000
$25,001 - $50,000 $691, plus 3.36% of the excess over $25,000
$50,001 - $150,000 $1,531, plus 4.24% of the excess over $50,000
$150,001 and over $5,771, plus 4.54% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.59% of taxable income
$20,001 - $50,000 $518, plus 2.88% of the excess over $20,000
$50,001 - $100,000 $1,382, plus 3.36% of the excess over $50,000
$100,001 -$300,000 $3,062, plus 4.24% of the excess over $100,000
$300,001 and over $11,542, plus 4.54% of the excess over $300,000
6. For taxable years beginning from and after December 31, 2010 through December 31, 2011:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.53% of taxable income
$10,001 - $25,000 $253, plus 2.81% of the excess over $10,000
$25,001 - $50,000 $674, plus 3.28% of the excess over $25,000
$50,001 - $150,000 $1,443, plus 4.13% of the excess over $50,000
$150,001 and over $5,627, plus 4.43% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.53% of taxable income
$20,001 - $50,000 $505, plus 2.81% of the excess over $20,000
$50,001 - $100,000 $1,347, plus 3.28% of the excess over $50,000
$100,001 -$300,000 $2,985, plus 4.13% of the excess over $100,000
$300,001 and over $11,253, plus 4.43% of the excess over $300,000
7. For taxable years beginning from and after December 31, 2011 through December 31, 2012:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.46% of taxable income
$10,001 - $25,000 $246, plus 2.74% of the excess over $10,000
$25,001 - $50,000 $657, plus 3.19% of the excess over $25,000
$50,001 - $150,000 $1,455, plus 4.03% of the excess over $50,000
$150,001 and over $5,486, plus 4.32% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.46% of taxable income
$20,001 - $50,000 $492, plus 2.74% of the excess over $20,000
$50,001 - $100,000 $1,314, plus 3.19% of the excess over $50,000
$100,001 -$300,000 $2,911, plus 4.03% of the excess over $100,000
$300,001 and over $10,972, plus 4.32% of the excess over $300,000
8. For taxable years beginning from and after December 31, 2012 through December 31, 2013:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.40% of taxable income
$10,001 - $25,000 $240, plus 2.67% of the excess over $10,000
$25,001 - $50,000 $640, plus 3.11% of the excess over $25,000
$50,001 - $150,000 $1,419, plus 3.93% of the excess over $50,000
$150,001 and over $5,349, plus 4.21% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.40% of taxable income
$20,001 - $50,000 $480, plus 2.67% of the excess over $20,000
$50,001 - $100,000 $1,281, plus 3.11% of the excess over $50,000
$100,001 -$300,000 $2,838, plus 3.93% of the excess over $100,000
$300,001 and over $10,698, plus 4.21% of the excess over $300,000
9. For taxable years beginning from and after December 31, 2013:
(a) In the case of a single person or a married person filing separately:
If taxable income is: The tax is:
$0 - $10,000 2.34% of taxable income
$10,001 - $25,000 $234, plus 2.60% of the excess over $10,000
$25,001 - $50,000 $624, plus 3.04% of the excess over $25,000
$50,001 - $150,000 $1,384, plus 3.83% of the excess over $50,000
$150,001 and over $5,215, plus 4.10% of the excess over $150,000
(b) In the case of a married couple filing a joint return or a single person who is a head of a household:
If taxable income is: The tax is:
$0 - $20,000 2.34% of taxable income
$20,001 - $50,000 $468, plus 2.60% of the excess over $20,000
$50,001 - $100,000 $1,249, plus 3.04% of the excess over $50,000
$100,001 -$300,000 $2,767, plus 3.83% of the excess over $100,000
$300,001 and over $10,430, plus 4.10% of the excess over $300,000
Sec. 28. Section 43-1074, Arizona Revised Statutes, is amended to read:
43-1074. Credit for new jobs in enterprise zones; definitions
A. A credit is allowed against the taxes imposed by this title for net increases in full-time employees hired in qualified employment positions of residents of this state by a business located in an enterprise zone established under title 41, chapter 10, article 2 as certified by the department of commerce pursuant to section 41-1525, except employment positions at a zone location where more than ten per cent of the business conducted at the location consists of retail sales of tangible personal property, measured by either the number of employees assigned to retail sales or the square footage of the facility used for retail sales activities at the location in the zone. Retail sales and retail sales activities do not include:
1. Food and beverage for consumption on the premises solely by employees and occasional guests of employees at the location.
2. Promotional products not available for sale and displaying the company logo or trademark.
3. Products sold to company employees.
B. Subject to subsection E of this section, the amount of the credit is equal to:
1. Three thousand dollars for each full-time employee hired by an Arizona basic enterprise, as defined by section 41-1541, for the full taxable year in a qualified employment position in each of the first three years of employment, but not more than four hundred employees in any taxable year.
2. One thousand five hundred dollars for each full-time employee hired by any other taxpayer for the full taxable year in a qualified employment position in each of the first three years of employment, but not more than four hundred employees in any taxable year.
1. One‑fourth of the taxable wages paid to an employee in a qualified employment position, not to exceed five hundred dollars, in the first year or partial year of employment.
2. One‑third of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand dollars per qualified employment position, in the second year of continuous employment.
3. One‑half of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand five hundred dollars per qualified employment position, in the third year of continuous employment.
C. To qualify for a credit under this section:
1. A Taxpayer must:
(a) Relocate its operation from outside this state to a location in this state or expand its in-state operation.
(b) Create at least twenty-five new full-time employment positions in a city or town with a population of fifty thousand persons or more or at least fifteen new full-time employment positions in any other location.
1. 2. All of the employees with respect to whom a credit is claimed must reside in this state.
2. 3. Thirty‑five per cent of the employees with respect to whom a credit is claimed for the first year of employment must reside on the date of employment in an enterprise zone that is located in the same county in which the business is located. If an employee for whom a credit was allowed in the first year of employment leaves employment during the second or third year, the taxpayer may substitute another employee who meets the requirements of paragraph 3 4 of this subsection and who was hired during the same year as the original employee. If the original employee was counted toward the residency requirement under this paragraph, the substitute employee must also have resided in a zone at the time the substitute was hired.
3. 4. A qualified employment position must meet all of the following requirements:
(a) The position must be a minimum of one thousand seven hundred fifty hours per year of full‑time and permanent employment.
(b) The job duties must be performed primarily at the zone locations of the business. If an eligible employee in a qualified employment position is transferred or assigned to work in the taxpayer's workplace at a different location that is also located in an enterprise zone and qualifies as a zone location, it may be considered to be continuous employment if it continues to meet all qualified employment position requirements.
(c) The employment must include health insurance coverage for the employee for which the employer pays at least fifty per cent of the premium or membership cost. If the taxpayer is self‑insured, the taxpayer must pay at least fifty per cent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.
(d) The employer must pay compensation at least equal to one hundred seventy-five per cent of the wage offer by county as computed annually by the department of economic security research administration division or successor administration.
(e) The employee must have been employed for at least ninety days during the first taxable year. An employee who is hired during the last ninety days of the taxable year shall be considered a new employee during the next taxable year. A qualified employment position that is filled during the last ninety days of the taxable year is considered to be a new qualified employment position for the next taxable year.
(f) The employee must not have been previously employed by the taxpayer within twelve months before the current date of hire.
D. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was allowed and claimed by the taxpayer on the original first and second year tax returns. For the purposes of this subsection, the requirement to claim the credit on the original tax return does not apply to qualified employment positions created before January 1, 2002 and certified to the department of commerce.
E. The net increase in the number of qualified employment positions is the lesser of the total number of filled qualified employment positions created in the zone during the tax year or the difference between the average number of full‑time employees in the zone in the current tax year and the average number of full‑time employees during the immediately preceding taxable year. The net increase in the number of qualified employment positions computed under this subsection shall not exceed two four hundred qualified employment positions per taxpayer each year.
F. A taxpayer who claims a credit under section 43‑1077, 43‑1079 or 43-1083.01 shall not claim a credit under this section with respect to the same employment positions.
G. If the allowable tax credit exceeds the income taxes otherwise due on the claimant's income, or if there are no state income taxes due on the claimant's income, the amount of the claim not used as an offset against income taxes may be carried forward as a tax credit against subsequent taxable years' income tax liability, not to exceed five fifteen taxable years, provided the business remains in an enterprise zone.
H. Co‑owners of a business, including partners in a partnership and shareholders of an S corporation, as defined in section 1361 of the internal revenue code, may each claim only the pro rata share of the credit allowed under this section based on the ownership interest. The total of the credits allowed all such owners of the business may not exceed the amount that would have been allowed for a sole owner of the business.
I. If a person purchases a business in a zone or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for one or more qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete. If a person purchases a taxpayer that had qualified for first or second year credits or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets other eligibility requirements of this section. Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.
J. A failure to timely report and certify to the department of commerce and the department of revenue the information prescribed by section 41‑1525, subsection B C, paragraphs 1, 2 and 3 and in the manner prescribed by section 41‑1525, subsection C D disqualifies the taxpayer from the credit under this section. The department of revenue shall require written evidence of the timely report to the department of commerce.
K. The termination of an enterprise zone does not affect the credit under this section with respect to:
1. Taxpayers who have employees in the second and third years of employment in qualified employment positions under subsections A, B and C of this section if the business remains in the location that was in the enterprise zone.
2. Amounts carried forward into subsequent taxable years under subsection G of this section.
L. K. The department may adopt rules necessary for the administration of this section.
M. L. For the purposes of this section:
1. "Assigned to retail" means working more than twenty‑five per cent of an employee's time in one or more retail sales activities.
2. "Location" means a single parcel or contiguous parcels of owned or leased land, the structures and personal property contained on the land or any part of the structures occupied by a taxpayer.
2. 3. "Retail sales" means the sale of tangible personal property to an ultimate consumer.
3. 4. "Retail sales activities" means all activities persons operating a retail business normally engage in, including taking orders, filling orders, billing orders, receiving and processing payment and shipping, stocking and delivering tangible personal property to the ultimate consumer, except drop shipments by a company acting on behalf of an unrelated company that has made a sale to a final consumer.
4. "Zone location" means a single parcel or contiguous parcels of owned or leased land, the structures and personal property contained on the land or any part of the structures occupied by a taxpayer.
Sec. 29. Section 43-1111, Arizona Revised Statutes, is amended to read:
43-1111. Tax rates for corporations
There shall be levied, collected and paid for each taxable year upon on the entire Arizona taxable income of every corporation, unless exempt under section 43-1126 or 43-1201 or as otherwise provided in this title or by law, taxes in an amount of 6.968 per cent of net income or fifty dollars, whichever is greater. the greater of fifty dollars or:
1. For taxable years beginning through December 31, 2010, 6.968 per cent of net income.
2. For taxable years beginning from and after December 31, 2010 through December 31, 2011, 6.476 per cent of net income.
3. For taxable years beginning from and after December 31, 2011 through December 31, 2012, 5.984 per cent of net income.
4. For taxable years beginning from and after December 31, 2012 through December 31, 2013, 5.492 per cent of net income.
5. For taxable years beginning from and after December 31, 2013, five per cent of net income.
Sec. 30. Section 43-1139, Arizona Revised Statutes, is amended to read:
43-1139. Allocation of business income
A. Except as provided in subsection B of this section, the taxpayer shall elect to apportion all business income to this state for taxable years beginning from and after:
1. December 31, 2006 through December 31, 2007 by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is two times the property factor plus two times the payroll factor plus six times the sales factor, and the denominator of which is ten.
2. December 31, 2007 through December 31, 2008 by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is one and one‑half times the property factor plus one and one‑half times the payroll factor plus seven times the sales factor, and the denominator of which is ten.
3. December 31, 2008 through December 31, 2014 by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus eight times the sales factor, and the denominator of which is ten.
4. December 31, 2014 through December 31, 2015 by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus eighteen times the sales factor, and the denominator of which is twenty.
5. December 31, 2015 by either:
(a) Multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus two times the sales factor, and the denominator of which is four.
(b) Multiplying the income solely by the sales factor.
B. All business income of a taxpayer engaged in air commerce shall be apportioned to this state by multiplying the income by a fraction, the numerator of which is the revenue aircraft miles flown within this state for flights beginning or ending in this state and the denominator of which is the total revenue aircraft miles flown by the taxpayer's aircraft everywhere. This subsection applies to each taxpayer, including a combined group filing a combined return or an affiliated group electing to file a consolidated return under section 43‑947, if fifty per cent or more of that taxpayer's gross income is derived from air commerce. For the purposes of this subsection:
1. "Air commerce" means transporting persons or property for hire by aircraft in interstate, intrastate or international transportation.
2. "Revenue aircraft miles flown" has the same meaning prescribed by the United States department of transportation uniform system of accounts and reports for large certificated air carriers (14 Code of Federal Regulations part 241).
Sec. 31. Section 43-1161, Arizona Revised Statutes, is amended to read:
43-1161. Credit for new jobs in enterprise zones; definitions
A. A credit is allowed against the taxes imposed by this title for net increases in full-time employees hired in qualified employment positions of residents of this state by a business located in an enterprise zone established under title 41, chapter 10, article 2 as certified by the department of commerce pursuant to section 41-1525, except employment positions at a zone location where more than ten per cent of the business conducted at the location consists of retail sales of tangible personal property, measured by either the number of employees assigned to retail sales or the square footage of the facility used for retail sales activities at the location in the zone. Retail sales and retail sales activities do not include:
1. Food and beverage for consumption on the premises solely by employees and occasional guests of employees at the location.
2. Promotional products not available for sale and displaying the company logo or trademark.
3. Products sold to company employees.
B. Subject to subsection E of this section, the amount of the credit is equal to:
1. Three thousand dollars for each full-time employee hired by an Arizona basic enterprise, as defined by section 41-1541, for the full taxable year in a qualified employment position in each of the first three years of employment, but not more than four hundred employees in any taxable year.
2. One thousand five hundred dollars for each full-time employee hired by any other taxpayer for the full taxable year in a qualified employment position in each of the first three years of employment, but not more than four hundred employees in any taxable year.
1. One‑fourth of the taxable wages paid to an employee in a qualified employment position, not to exceed five hundred dollars, in the first year or partial year of employment.
2. One‑third of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand dollars per qualified employment position, in the second year of continuous employment.
3. One‑half of the taxable wages paid to an employee in a qualified employment position, not to exceed one thousand five hundred dollars per qualified employment position, in the third year of continuous employment.
C. To qualify for a credit under this section:
1. A Taxpayer must:
(a) Relocate its operation from outside this state to a location in this state or expand its in-state operation.
(b) Create at least twenty-five new full-time employment positions in a city or town with a population of fifty thousand persons or more or at least fifteen new full-time employment positions in any other location.
1. 2. All of the employees with respect to whom a credit is claimed must reside in this state.
2. 3. Thirty‑five per cent of the employees with respect to whom a credit is claimed for the first year of employment must reside on the date of hire in an enterprise zone that is located in the same county in which the business is located. If an employee for whom a credit was allowed in the first year of employment leaves employment during the second or third year, the taxpayer may substitute another employee who meets the requirements of paragraph 3 4 of this subsection and who was hired during the same year as the original employee. If the original employee was counted toward the residency requirement under this paragraph, the substitute employee must also have resided in a zone at the time the substitute was hired.
3. 4. A qualified employment position must meet all of the following requirements:
(a) The position must be a minimum of one thousand seven hundred fifty hours per year of full‑time and permanent employment.
(b) The job duties must be performed primarily at the zone locations of the business. If an eligible employee in a qualified employment position is transferred or assigned to work in the taxpayer's workplace at a different location that is also located in an enterprise zone and qualifies as a zone location, it may be considered to be continuous employment if it continues to meet all qualified employment position requirements.
(c) The employment must include health insurance coverage for the employee for which the employer pays at least fifty per cent of the premium or membership cost. If the taxpayer is self‑insured, the taxpayer must pay at least fifty per cent of a predetermined fixed cost per employee for an insurance program that is payable whether or not the employee has filed claims.
(d) The employer must pay compensation at least equal to one hundred seventy-five per cent of the wage offer by county as computed annually by the department of economic security research administration division or successor administration.
(e) The employee must have been employed for at least ninety days during the first taxable year. An employee who is hired during the last ninety days of the taxable year shall be considered a new employee during the next taxable year. A qualified employment position that is filled during the last ninety days of the taxable year is considered to be a new qualified employment position for the next taxable year.
(f) The employee must not have been previously employed by the taxpayer within twelve months before the current date of hire.
D. A credit is allowed for employment in the second and third year only for qualified employment positions for which a credit was allowed and claimed by the taxpayer on the original first and second year tax returns. For the purposes of this subsection, the requirement to claim the credit on the original tax return does not apply to qualified employment positions created before January 1, 2002 and certified to the department of commerce.
E. The net increase in the number of qualified employment positions is the lesser of the total number of filled qualified employment positions created in the zone during the tax year or the difference between the average number of full‑time employees in the zone in the current tax year and the average number of full‑time employees during the immediately preceding taxable year. The net increase in the number of qualified employment positions computed under this subsection may not exceed two four hundred qualified employment positions per taxpayer each year.
F. A taxpayer who claims a credit under section 43‑1164.01, 43‑1165 or 43‑1167 may not claim a credit under this section with respect to the same employment positions.
G. If the allowable tax credit exceeds the income taxes otherwise due on the claimant's income, or if there are no state income taxes due on the claimant's income, the amount of the claim not used as an offset against income taxes may be carried forward as a tax credit against subsequent years' income tax liability for the period, not to exceed five fifteen taxable years, provided the business remains in an enterprise zone.
H. Co‑owners of a business, including partners in a partnership, may each claim only the pro rata share of the credit allowed under this section based on the ownership interest. The total of the credits allowed all such owners of the business may not exceed the amount that would have been allowed for a sole owner of the business.
I. If a person purchases a business in a zone or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim first year credits only for one or more qualified employment positions that it created and filled with an eligible employee after the purchase or reorganization was complete. If a person purchases a taxpayer that had qualified for first or second year credits or changes ownership through reorganization, stock purchase or merger, the new taxpayer may claim the second or third year credits if it meets other eligibility requirements of this section. Credits for which a taxpayer qualified before the changes described in this subsection are terminated and lost at the time the changes are implemented.
J. A failure to timely report and certify to the department of commerce and the department of revenue the information prescribed by section 41‑1525, subsection B C, paragraphs 1, 2 and 3 and in the manner prescribed by section 41‑1525, subsection C D disqualifies the taxpayer from the credit under this section. The department of revenue shall require written evidence of the timely report to the department of commerce.
K. The termination of an enterprise zone does not affect the credit under this section with respect to:
1. Taxpayers that have employees in the second and third years of employment in qualified employment positions under subsections A, B and C of this section if the business remains in the location that was in the enterprise zone.
2. Amounts carried forward into subsequent taxable years under subsection G of this section.
L. K. The department may adopt rules necessary for the administration of this section.
M. L. For the purposes of this section:
1. "Assigned to retail" means working more than twenty‑five per cent of an employee's time in one or more retail sales activities.
2. "Location" means a single parcel or contiguous parcels of owned or leased land, the structures and personal property contained on the land or any part of the structures occupied by a taxpayer.
2. 3. "Retail sales" means the sale of tangible personal property to an ultimate consumer.
3. 4. "Retail sales activities" means all activities persons operating a retail business normally engage in, including taking orders, filling orders, billing orders, receiving and processing payment and shipping, stocking and delivering tangible personal property to the ultimate consumer, except drop shipments by a company acting on behalf of an unrelated company that has made a sale to a final consumer.
4. "Zone location" means a single parcel or contiguous parcels of owned or leased land, the structures and personal property contained on the land or any part of the structures occupied by a taxpayer.
Sec. 32. Laws 1996, chapter 344, section 12, as amended by Laws 2001, chapter 370, section 8 and Laws 2006, chapter 387, section 5, is amended to read:
Sec. 12. Delayed repeal
Title 41, chapter 10, article 2, Arizona Revised Statutes, and sections 20-224.03, 43-1074 and 43-1161, Arizona Revised Statutes, are repealed from and after June 30, 2011 2016.
Sec. 33. Short title
This act shall be known as the "Arizona's Economic and Job Recovery Act".
Sec. 34. Legislative intent
It is the intent of the legislature that:
1. This state provide appropriate incentives to support establishment of basic industries that hold the promise of significant development of the economy of this state.
2. The amount of incentives provided pursuant to this act in connection with a particular business:
(a) Be directly related to jobs created as a result of the business locating or expanding in this state.
(b) Not exceed the estimated net direct state benefits that will accrue to the state as a result of the business locating or expanding in this state.
3. The department of commerce and the department of revenue implement the provisions of this act and exercise all powers as authorized by this act.
4. The incentives and benefits authorized by this act are enacted with the goal of accomplishing essential public purposes.
5. This act not be construed to constitute a guarantee or assumption by this state of any debt of an individual, company, corporation or association or to authorize the credit of this state to be given, pledged or loaned to any individual, company, corporation or association.
Sec. 35. Continuation of enterprise zone tax incentives from prior law
The changes made by this act to the requirements for qualifying for tax incentives for investment and employment in enterprise zones do not affect the prior qualification under previous law with respect to:
1. Property classified as class six pursuant to section 42-12006, paragraph 4, Arizona Revised Statutes, as in effect before the effective date of this act. Property that previously qualified for classification under that provision may maintain that classification for the original term of up to five tax years if it continues to meet the original terms of qualification.
2. Insurers and taxpayers who have employees in the second and third years of employment in qualified employment positions under section 20‑224.03, subsection A, paragraphs 2 and 3, Arizona Revised Statutes, section 43-1074, subsections A, B and C, Arizona Revised Statutes, and section 43-1161, subsections A, B and C, Arizona Revised Statutes, including any excess credit amounts carried forward from prior taxable years.
