Governor vetoes revenue allocation districts bill

Due to concerns that a municipality could avoid constitutional debt limits the Governor vetoed House Bill 2469, which would have created a process of cities and towns to establish revenue allocation districts.

The Governor’s letter informing the legislators of the veto cited that fact that “the proposal specifies that owners of taxable real and personal property are allowed to vote, but the votes are allocated based on the land owned by each taxpayer. A taxpayer may have a significant amount of personal property, but no land, and that taxpayer would be denied a vote.”

The Governor said that proponents of the legislation “revealed very little detail regarding projects that may be undertaken with this new governmental entity.”

Special taxing districts, often referred to as special districts, are usually created to fill a need and to enable the provision of services in an area that might otherwise be limited from receiving those services for various reasons, including size, location, financial limitations or unavailability of other government support. The formation of a special taxing district creates a funding stream to pay for the desired or needed services by placing the responsibility on those who benefit from that service.

Most special taxing districts are funded by ad valorem taxes levied on all real property within the district limits. A special taxing district levy is a secondary levy and is based on the full cash valuation of the property. Statute usually requires these taxes to be assessed at the same time and in the same manner as county taxes. Many districts can also issue bonds to cover district expenses.

House Bill 2469 was estimated to have no state General Fund impact. Revenue allocation districts can only be financed through local bond sales or through the diversion of local tax revenue that otherwise would have been collected by the city or town responsible for creating the district. As a result, only cities or towns that choose to create an authority would be impacted.

The bill would have allowed a district to be dissolved if “the property owned by the district has been or will be conveyed to the city or town, if the district has no obligations or the city or town has assumed all obligations, and if all bonds issued by the district supported by a pledge of property tax revenues have been paid in full.”

At almost the same time the City of Tucson created a new central business district. It will allow selected business owners to have their property taxes abated. It was approved unanimously by the City Council on Tuesday.

The new district includes the area around downtown, including North Stone Avenue, North Oracle Road, the Interstate 10 frontage road both north and south of downtown and the west side of Aviation Parkway south to East 22nd Street.
The first beneficiary of the district is expected to be Humberto Lopez, owner of the dilapidated Hotel Arizona.

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