Text of Proposition 100

OFFICIAL TITLE

SENATE CONCURRENT RESOLUTION 1001

A CONCURRENT RESOLUTION

PROPOSING AN AMENDMENT TO THE CONSTITUTION OF ARIZONA; AMENDING ARTICLE IX, CONSTITUTION OF ARIZONA, BY ADDING SECTION 12.1; RELATING TO TEMPORARY TRANSACTION PRIVILEGE AND USE TAXES.

TEXT OF PROPOSED AMENDMENT

Be it resolved by the Senate of the State of Arizona, the House of Representatives concurring:

1. Article IX, Constitution of Arizona, is proposed to be amended by adding section 12.1 as follows if approved by the voters and on proclamation of the Governor:

12.1. Temporary taxes; repeal from and after May 31, 2013

SECTION 12.1. A. A TEMPORARY TAX IS LEVIED FOR THE PURPOSE OF RAISING STATE REVENUES FOR PRIMARY AND SECONDARY EDUCATION, HEALTH AND HUMAN SERVICES AND PUBLIC SAFETY.

B. THE TEMPORARY TAX IS LEVIED AND SHALL BE COLLECTED BEGINNING ON JUNE 1, 2010 AND SHALL CONTINUE FOR THIRTY-SIX CONSECUTIVE CALENDAR MONTHS, AFTER WHICH THE TEMPORARY TAX IS REPEALED.

C. THE TEMPORARY TAX IS LEVIED AS A SEPARATE RATE INCREMENT IN ADDITION TO THE STATE TRANSACTION PRIVILEGE TAX RATES AND THE USE TAX RATE. THE RATE OF THE TEMPORARY TAX IS ONE PER CENT OF THE TAX BASE FOR EACH TRANSACTION PRIVILEGE CLASSIFICATION THAT IS SUBJECT TO A RATE OF FIVE PER CENT OR MORE AND ONE PER CENT OF THE TAX BASE FOR THE USE TAX.

D. THE TEMPORARY TAX IS SUBJECT TO THE SAME EXEMPTIONS, DEDUCTIONS AND EXCLUSIONS AS PROVIDED BY LAW FOR EACH TRANSACTION PRIVILEGE TAX CLASSIFICATION AND FOR THE USE TAX.

E. THE NET REVENUES DERIVED FROM THE TEMPORARY TAX IMPOSED BY THIS SECTION ARE NOT SUBJECT TO DISTRIBUTION TO COUNTIES, MUNICIPALITIES OR OTHER GOVERNMENTAL ENTITIES BUT SHALL BE CREDITED TO, AND SEPARATELY ACCOUNTED IN, THE STATE GENERAL FUND AND APPROPRIATED AS FOLLOWS:

1. TWO-THIRDS OF THE REVENUES SHALL BE APPROPRIATED FOR PUBLIC PRIMARY AND SECONDARY EDUCATION.

2. ONE-THIRD OF THE REVENUES SHALL BE APPROPRIATED FOR HEALTH AND HUMAN SERVICES AND PUBLIC SAFETY PURPOSES.

F. THE TEMPORARY TAXES UNDER THIS SECTION ARE DUE AND PAYABLE AT THE SAME TIME AND IN THE SAME MANNER, AND ARE SUBJECT TO THE SAME PROVISIONS FOR ADMINISTRATION AND ENFORCEMENT, AS PROVIDED BY LAW FOR OTHER TRANSACTION PRIVILEGE AND USE TAXES.

G. THE REPEAL OF THE TEMPORARY TAX UNDER THIS SECTION DOES NOT AFFECT THE CONTINUING VALIDITY OF OUTSTANDING AND UNPAID TAX OBLIGATIONS THAT ACCRUE UNDER THIS SECTION, INCLUDING ANY PENALTIES AND INTEREST THAT ACCRUE THEREAFTER BY LAW ON THE UNPAID OBLIGATIONS.

H. THE TEMPORARY TAX UNDER THIS SECTION IS REPEALED FROM AND AFTER MAY 31, 2013.

2. The Secretary of State shall submit this proposition to the voters at a special election called to be held for that purpose on May 18, 2010 as provided by article XXI, Constitution of Arizona.

ANALYSIS BY LEGISLATIVE COUNCIL

Beginning June 1, 2010, Proposition 100 would amend the Arizona Constitution to temporarily increase the state transaction privilege and use taxes ("state sales tax") by one cent per one dollar for three years. For most purchases, the state sales tax would increase from the current 5.6 cents per one dollar to 6.6 cents per one dollar. The monies collected from the temporary tax would be separately accounted for in the state general fund and would be allocated as follows:

1. Two-thirds would be appropriated for public primary and secondary education.

2. One-third would be appropriated for health and human services and public safety purposes.

Under Proposition 100, the temporary tax would be administered and enforced in the same manner as the existing state sales tax and would be subject to the same exemptions, deductions and exclusions as the existing state sales tax, except that the current distribution to cities and counties of a portion of the existing state sales tax would not include any temporary tax revenue.

The temporary tax is repealed on May 31, 2013.

FISCAL IMPACT STATEMENT

State law requires the Joint Legislative Budget Committee (JLBC) Staff to prepare a summary of the fiscal impact of Proposition 100. Beginning June 1, 2010, Proposition 100 would amend the Arizona Constitution to temporarily increase the state transaction privilege and use taxes ("state sales tax") by one cent per one dollar for three years.

Proposition 100 is projected to increase state sales tax revenues by $918 million in the first year. The proposition is projected to increase state sales tax revenues by $968 million in the second year and $1.06 billion in the third year.