Legislative Update – April 11, 2019

Arizona State Capitol - Mario Recchia

We are now several weeks past the date to introduce bills. It is now a matter of bills getting out of committee, moving to the floor for a vote, and assuming the bill passes, then the whole process starts over in the other legislative body.

To refresh your memory on how a bill becomes a law in Arizona, you may watch the video AAR and I put together a few years ago.

Tax Conformity – The first attempt to conform Arizona’s 2018 income tax to the new Federal rules failed as the Governor vetoed SB 1143 and its House version sponsored by WeMAR member, Representative Ben Toma.

I asked Ben to give us an update and last week he sent this email message:

With both the House and Senate finishing up committee work, the focus of session now shifts to the state budget. This year tax conformity is a topic of much discussion as our state makes changes to conform to the recent federal tax reforms.

If Arizona doesn’t work to pass legislation to offset or reform, taxpayers will see an increase in their taxes and the state will see an increase in revenue. Earlier this year, Governor Ducey vetoed an identical version of my legislation offered by Sen. Mesnard which would have provided an offset and would have protected taxpayers from being blindsided by an increased tax bill.

This legislation would have reduced all income tax rates by .11% for an overall reduction of $157M to achieve budget neutrality in tax year 2018.

As it stands, we are in the process of a robust negation between both chambers of the Legislature and the Governor. We are analyzing the best path forward for taxpayers from tax year 2018 and on. At this time with negotiation ongoing, I cannot provide much detail, but I look forward to updating you in the near future.

Whatever the end result, my priority is to fight to make certain any changes we make are significant and not just a simple offset. My focus is on the long-term and not a short-term fix.

SB 1437 – According to Nicole LaSlavic (AAR VP Government Affairs) this bill is dead. This bill would have prohibited employers with 15 or more employees and state agencies from inquiring about an applicant’s criminal record until the applicant has a verbal interview.

HB 2115 – According to Nicole LaSlavic, this bill looks like it will become law. This bill states the Arizona Tenant Landlord Act places regulation of landlord and tenant rights with the State and not local ordinance. If this bill goes into law, cities and local jurisdictions will not be able to enact ordinances or local rules outside the Tenant Landlord Act. Ordinances in place as of December 31, 2018 are exempt.

HB 2358 – Sponsored by Rep. Ben Toma, this bill provides that acceptance of housing assistance payments does not constitute partial payment acceptance and a landlord does not waive the right to terminate a rental agreement breached by the tenant. Nicole LaSlavic believes this bill has a high likelihood of becoming law.

HB 2445 – Signed by the Governor 4/9/19. This bill provides that cities must mail notices of newly established or increased TPT to each rental property licensee and to the rental property address at least 60 days prior to the effective date.

HB 2484 – Signed by Governor 2/20/19. Provides that persons with grandfathered water rights to withdraw groundwater may use that water to water container plants. Requires separate measurement of groundwater used for irrigation and for containers.

SB 1218 – Signed by Governor 3/22/19. Provides that the real property interest transferred by a Beneficiary Deed is separate property and not community property. Also provides a Beneficiary Deed is void if the beneficiaries named in the Beneficiary Deed predecease the owner, unless provided otherwise.

SB 1333 – Signed by Governor 3/22/19. Redefines “standards of professional appraisal practice” as appraisal practice “promulgated by the Appraisal Standards Board of the Appraisal Foundation”. Modifies duties of Superintendent. Removes 60-day exception to removing an appraiser from appraisal panel without notification. Other changes included.

HB 2569 – Signed by Governor 4/10/19. Provides occupational and professional license and certificate reciprocity. Arizona regulating agency may impose Arizona Specifics education and testing.

SB 1543 – Would have provided minimum Arizona corporate income tax be $1,000. This bill did not move out of committee.

HB 2371 – Sponsored by Ben Toma. Provides a real estate licensee may use a nickname in advertising that is a derivative of their legal name or a nickname they are known by. Licensee must inform the Az DRE of the nickname.

SB 1085 – Defines Association Health Plans and membership requirements. This would allow Association Health Plans to be offered in Arizona.

One note of caution, The DC Circuit Court struck down the Department of Labor’s final ruling under ERISA (Employee Retirement income Security Act of 1974) allowing an alternate pathway so that associations could offer health plans to their members. The two provisions of the DOL’s final ruling were:
1 – Whether the employers share a commonality of interest and
2 – Whether the employer members have control over both the association that sponsors the plan and the benefit plan itself.

The court further concluded that self employed people are not employees further making them ineligible under ERISA to take part in an association health plan. The case is New York v Department of Labor.

SB 1460 – TPT on Digital Goods and Services. This bill does not appear to be moving forward. Would have created a new TPT category and taxes on prewritten software and digital goods.

HB 2027 – Online Lodging TPT. Provides that cities, towns and other taxing jurisdictions may impose and online lodging marketplace and online lodging operators tax to be uniform with other taxpayers engaging in the same activity.

HB 2672 – Vacation Rental Regulation. Allows cities to regulate number of occupants, number of adults per sleeping room, require installation of safety and monitoring equipment that monitors and detects level of noise and number of occupants, and transmits that information to the owner or property manager. Someone must be available 24/7. Operator must have a TPT license. Owner must provide local government owner’s information or owner’s designee. Provides penalty amounts.

HB 2095 – Agricultural Property Classification Water Reduction. Signed by Governor 4/9/19. Sponsored by Representatives Dunn and Cook this bill provides that agricultural land required to become inactive due to mandated reduction in water supply may maintain its agricultural designation.

SB 1030 – Online Notarization. Signed by Governor 4/10/19. Requires Az Secretary of State to provide rules for remote online notarization by July 1, 2020.

In Arizona most laws become effective 90 days after the end of the legislative session (sine dei, Latin for Without Day).

Check the bill status of legislation you are interested in at www.azleg.gov. Make sure the session drop down shows 2019 – Fifty fourth Legislature at the top, then click on bill search.