1. What we ask of you; What you can get from us Georganna Meyer Chief Economist Office of Economic Research & Analysis Arizona Department of Revenue 1

2. PUBLIC SERVICE ANNOUNCEMENT  URGENT: SWINE FLU UPDATE  The Center for Disease Control has issued this alert:  Please discontinue the following activity: 2

3. he Center for Disease Control has issued this alert: Please avoid the following activity 3

4. OFFICE OF ECONOMIC RESEARCH & ANALYSIS  Elaine Smith  Karen Jacobs  Darlene Teller  Diane Sosinski  Nick Buta  Me 4

5. WHAT WE ASK FOR  Bonded Indebtedness/Lease Purchase Reports  Letters sent out annually in July  Nagging occurs till early November  Then we give up if you haven’t reported and put you down as noncompliant.  All cities and towns reported bonded indebtedness and lease purchase information for fiscal year 2008/2009 5

6. WHAT WE ASK FOR  Property Tax Oversight Commission requirements  Must notify PTOC in writing within 10 days of receiving your levy limit worksheet agreement or disagreement with the final worksheet  Few ever comply with this  Involuntary torts due to us on or before the first Monday of July  Within 3 days of a truth in taxation hearing, you must mail a copy of the notice, a statement of its publication and the result of the governing body’s vote. 6

7. WHAT YOU GET FROM US  Numbers  Assistance  Numbers 7

8. TRANSACTION PRIVILEGE TAX  ADOR collects and distributes city and county imposed taxes in addition to the state TPT.  FY09 - $1.2 billion in city and county taxes  We collect for all 15 counties and 75 cities and towns.  The collection and distribution of city and county taxes includes auditing and collection of compliance money, including A/R, billing and collections. 8

9. TRANSACTION PRIVILEGE TAX  ADOR budget cuts seriously impacted the audit and collections process.  Money still came in because it was in the pipeline already.  However, nothing new was funneled into the pipeline.  Received $3M for this fiscal year only to hire collectors to reduce the backlog of collections (more than $400 million). 9

10. TRANSACTION PRIVILEGE TAX – SERVICES TO COMMUNITIES  Provide Transaction Privilege Tax licenses to businesses  Around 200,000 monthly, quarterly and annual filers  Revenue sharing estimates for proposed annexations and incorporations  Tax base estimates for proposed annexations and incorporations 10

11. TRANSACTION PRIVILEGE TAX – SERVICES TO COMMUNITIES  Annual projections for revenue sharing  Required by statute by the first Monday in July  Estimates for proposed county level taxes 11

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13. TRANSACTION PRIVILEGE TAX  Cities and Towns received 13.4% less in TPT revenue sharing in FY2009 than they received in FY2008. $447M down to $387M  Of the 75 cities and towns for which ADOR collected city sales tax in FY08 and FY09, the total collected declined 12.1% 13

14. TRANSACTION PRIVILEGE TAX CITY SALES TAX  15 of the 75 cities/towns actually had increases in their city sales tax collections  Douglas (tax increase), Duncan, Eagar, Gila Bend, Mammoth, Pima, St. Johns, San Luis (tax increase), Springerville, Superior, Taylor, Tolleson, Wellton, Willcox, Winslow  All 3 cities in Apache County? What’s up with that? 14

15. TRANSACTION PRIVILEGE TAX CITY SALES TAX  The cities and towns with declines (60 of the 75)  Ranged in decline from (0.4%) in Thatcher  To (44.6%) in Maricopa  9 with declines of greater than 20%  20 with declines of 10% to 20%  20 with declines of 5% to 10%  11 with declines of 0.4% to 5% 15

16. TRANSACTION PRIVILEGE TAX – COUNTY REVENUE SHARING  $627.2M shared in FY09  $724.4M shared in FY08 – decline of 13.4%  But the share of TPT revenues a county gets in a fiscal year varies based on several factors so some counties fared better than others 16

17. TRANSACTION PRIVILEGE TAX – COUNTY REVENUE SHARING Apache-11.6%Mohave-9.3% Cochise-9.9%Navajo-11.2% Coconino-10.8%Pima-13.1% Gila-12.6%Pinal-13.8% Graham-11.4%Santa Cruz-12.8% Greenlee-37.1%Yavapai-11.9% La Paz-11.2%Yuma-9.1% Maricopa-14.0% 17

18. TRANSACTION PRIVILEGE TAX – COUNTY REVENUE SHARING  Good News – No county received less revenue sharing in FY08/09 than they did in FY03/04.  Bad News – FY07 was a bubble. It burst. It’s gone. 18

19. TRANSACTION PRIVILEGE TAX – COUNTY TAX COLLECTIONS  One county saw growth in county tax collections  Apache 2.9%  All other counties saw declines in their county tax collections in FY09  From -3.3% to -17.4% 19

20. TRANSACTION PRIVILEGE TAX – COUNTY TAX COLLECTIONS Cochise-4.4%Mohave-9.1% Coconino-6.0%Navajo-10.6% Gila-7.3%Pima-10.9% Graham-12.2%Pinal-17.4% Greenlee-5.4%Santa Cruz-9.2% La Paz-8.4%Yavapai-14.1% Maricopa-14.0%Yuma-3.3% 20

21. TRANSACTION PRIVILEGE TAX- How a city can maximum revenue sharing  Pursue a certified Census count update when you annex property with population.  Populations used for revenue sharing are from years ending in 0 and 5.  Promote compliance with the next decennial Census.  If you do not make efforts to take advantage of any gains you have in population, you will lose revenue sharing 21

22. TRANSACTION PRIVILEGE TAX – How a city can maximize city privilege tax collections  Provide ADOR with rate change information IMMEDIATELY.  We no longer have the budget to send notification of rate changes to taxpayers. If you are willing to pay for notification, we can still send them.  We will update our website and so should you! 22

23. TRANSACTION PRIVILEGE TAX – How a city can maximize city privilege tax collections  Understand the delay that occurs between a rate going into effect and money being distributed to you.  If the taxpayer isn’t told early enough, you won’t get your money right away.  Pay attention to the amount of money you receive each month.  Pay attention to which taxpayers that are not paying. 23

24. URBAN REVENUE SHARING  15% of net individual and corporate income tax two years prior  2004-05 $365.1M  2005-06 $373.1M  2006-07 $425.2M  2007-08 $684.5M  2008-09 $727.7M  2009-10 $628.6M  2010-11 $474M estimated 24

25. INDIVIDUAL INCOME TAX  Income tax abstract by city and county  Tax year 2004 is on our website  Tax year 2005 will be on our website within a month 25

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28. INCOME TAX CREDITS  Maybe you pay no attention to income tax credits, but are you aware that income tax credits can bring money into your community, promote purchases in your community?  We have an abundance of tax credits in Arizona for a variety of different purchases or donations.  Downside – reduces income tax collections which reduces urban revenue sharing 28

29. SOLAR INCOME TAX CREDITS  Individual Solar Income Tax Credit  Tax credit for the lesser of 25% of the cost of solar equipment installed on your home or $1000.  Commercial & Industrial Solar Income Tax Credit  Tax credit for the lesser of 10% of the cost of solar energy devices installed for commercial or industrial purposes in the taxpayer’s trade or business or $25,000 29

30. SOLAR INCOME TAX CREDITS  Solar Hot Water Heater Plumbing Stub-Outs & Electric Vehicle Recharge Outlets Credit  $75 for each installation of solar hot water heater plumbing stub-outs or electric vehicle recharge outlets.  Renewable Energy Tax Incentive  Legislation just passed this last session  Refundable income tax credit and property tax incentives for certain capital investment levels and creation of new jobs in Arizona for manufacturers of solar energy equipment. 30

31. INDIVIDUAL INCOME TAX CREDIT FOR CHARITIES THAT PROVIDE ASSISTANCE TO THE WORKING POOR  Individual income tax credit for donations to charities that provide basic needs to low income families 31

32. INCOME TAX CREDIT FOR EMPLOYMENT OF TANF RECIPIENTS  Credit for businesses that increase their qualified employment of recipients of temporary assistance for needy families. 32

33. ENTERPRISE ZONE CREDIT  Income tax credit for net increases in qualified employment positions of Arizona residents by a qualified business located in an enterprise zone.  Parts of every county in the state is an enterprise zone  All of some counties in this state are an enterprise zone 33

34. WATER CONSERVATION SYSTEMS CREDIT  Credit for installing a graywater recycling systems or a rainwater harvesting system  25% of the cost of the system, up to $1000  Last year 60% of the credit approvals were for residents of Tucson. 34

35. PRIVATE SCHOOL TAX CREDIT  Individual income tax credit for donations to school tuition organizations that provide scholarships to private schools  No restrictions as to who can receive the scholarships  Corporate income tax credit for donations to school tuition organizations that provide scholarships to private schools  Income restrictions on scholarship recipients 35

36. PRIVATE SCHOOL TAX CREDIT  63% of the scholarships, $35.8M, went to schools in Maricopa County in 2008  None of the scholarships went to Greenlee County  Are there no private schools in Greenlee County?  $677 in scholarships went to La Paz County  Just because the majority of the money is donated in Maricopa County doesn’t mean that the scholarships have to stay in Maricopa County 36

37. PUBLIC SCHOOL EXTRA CURRICULAR ACTIVITY CREDIT  Credit for donations to public schools for extra curricular activities  63% of the donations went to Maricopa County schools 37

38. HEALTH INSURANCE PREMIUM TAX CREDIT  Provides a tax credit for insurance companies that provide insurance premium reductions for individuals or small businesses which have been certified by the Arizona Department of Revenue and have obtained health insurance within 90 days after certification is issued. Certifications are issued on a first come, first served basis and may be reissued up to two times. 38

39. HEALTH INSURANCE PREMIUM TAX CREDIT  For individuals, the premium reduction is the lesser of $1000 for single person coverage, $500 for child coverage or $3000 for family coverage OR 50% of the health insurance premium. For small businesses, the premium reduction is the lesser of $1000 for single person coverage or $3000 for each employee electing family coverage OR 50% of the health insurance premium. 39

40. HEALTH INSURANCE PREMIUM TAX CREDIT  Eligible applicants include AZ small businesses in existence for at least 1 calendar year with 2 to 25 employees in the most recent calendar year and that have not provided health insurance to their employees for at least 6 consecutive months before the application. Individual applicants must earn less than 250% of the federal poverty level, must be a legal resident of AZ and a U.S. citizen or a legal resident alien, has not been covered under a health insurance policy for at least 6 consecutive months before application and is not enrolled in AHCCCS, Medicare or any other state or federal government health insurance program. 40

41. EXPENDITURE LIMITATIONS  OERA is responsible for staffing the Economic Estimates Commission which is responsible for calculating expenditure limitations for cities and counties.  Likewise, we are responsible for reducing your share of urban revenue sharing when the Auditor General determines you have spent more than your limitation. 41

42. DEBT OVERSIGHT COMMISSION  OERA is responsible for staffing the Debt Oversight Commission  The Debt Oversight Commission is supposed to “review” OERA’s work in compiling information on debt for all political subdivisions in the state  Counties  Cities  Community Colleges  School districts  Special districts  State Agencies 42

43. BONDED INDEBTEDNESS/LEASE PURCHASE DATA  Outstanding debt by county Pima$757,621,667Gila$1,625,000 Maricopa$167,750,000Yuma$1,345,000 Pinal$158,310,000Apache$1,030,000 Yavapai$25,375,000La Paz$335,000 Coconino$16,180,000Graham$0 Mohave$15,355,000Greenlee$0 Cochise$7,030,000Santa Cruz$0 Navajo$5,340,000 43

44. BONDED INDEBTEDNESS/LEASE PURCHASE DATA  Per Capita Debt by County Pima$755.18La Paz$15.56 Pinal$483.14Apache$13.64 Coconino$119.94Yavapai$13.31 Mohave$75.22Yuma$6.68 Cochise$51.24Graham$0 Navajo$46.93Greenlee$0 Maricopa$42.93Santa Cruz$0 Gila$28.57 44

45. BONDED INDEBTEDNESS/LEASE PURCHASE DATA  City debt as of 6/30/2008  Phoenix $6,310,662,171  Mesa $1,154,446,000  Scottsdale $1,114,224,960  Tucson $1,009,012,144  Glendale $926,447,502  Tempe $651,395,000  Gilbert $383,845,000  Chandler $351,435,000 45

46. BONDED INDEBTEDNESS/LEASE PURCHASE DATA  City debt as of 6/30/2008  Clifton $40,000  Pima $105,000  St. Johns $147,853  Huachuca City $151,000  Colorado City $190,205  Patagonia $217,931  Jerome $261,896  Tombstone $534,000 46

47. BONDED INDEBTEDNESS/LEASE PURCHASE DATA  No debt as of 6/30/2008  Carefree, Dewey-Humboldt, Gila Bend, Globe, Hayden, Litchfield Park, Mammoth, Maricopa, Miami, Springerville, Star Valley, Wellton, Winkelman, Youngtown 47

48. CONSTITUTIONAL DEBT LIMITS  Who is closest to their debt limit for general obligation bonds?  Tolleson – 69.8% of debt limit used  Goodyear – 65.4% of debt limit used  Tempe – 65.3% of debt limit used  Glendale – 43.8% of debt limit used  Phoenix – 33.6% of debt limit used  Lake Havasu City – 31.2% of debt limit used  Scottsdale – 30.5% of debt limit used 48

49. BONDED INDEBTEDNESS/LEASE PURCHASE DATA  Per Capita City Debt as of 6/30/2008  Cave Creek $10,078  Williams $9,485  Queen Creek $8,320  Sedona $6,472  Tolleson $6,246  Cottonwood $5,221  Scottsdale $4,640  Tempe $3,880 49

50. PROPERTY TAX LEVY LIMITS  Crib sheets for property tax levy limits  Technical Assistance  Including help with truth in taxation  The September 2008 meeting  Sierra Vista did not limit their 2008 levy as required for not holding a truth in taxation hearing in 2007  Pima over-collected by $790  Casa Grande over-collected by $39,751  Coolidge over-collected by $58,343 50

51. PROPERTY TAX LEVY LIMITS  September 2008 meeting  Truth in taxation violators  Benson, Douglas, Miami, Gila Bend, Holbrook, Mammoth, Superior, Apache County  Call us for help!!!!!!!! 51

52. TRANSFERS FOR WHICH OERA IS RESPONSIBLE  Rio Nuevo  Phoenix International Raceway  Tribal Community Colleges  Phoenix Convention Center  Sports and Tourism Authority 52

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