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AGENDA ORO VALLEY TOWN COUNCIL SPECIAL & STUDY SESSION JUNE 14, 2000 ORO VALLEY TOWN COUNCIL CHAMBERS 11,000 N. LA CANADA DRIVE SPECIAL SESSION CALL TO ORDER — AT OR AFTER 6:30 PM ROLL CALL EXECUTIVE SESSION — AT OR AFTER 6:30 PM To obtain legal advice pursuant to ARS 38-431.03 regarding OV12-00-03 Rancho Vistoso Neighborhood 3, Phase 1 Preliminary Block Plat RESUME SPECIAL SESSION 1. CONSIDERATION OF CONDITIONS OF APPROVAL FOR OV12-00-03 RANCHO VISTOSO NEIGHBORHOOD 3, PHASE 1 PRELIMINARY BLOCK PLAT FOR LOTS ON EITHER SIDE OF THE COMMERCE LOOP ALIGNMENT SOUTH OF RANCHO VISTOSO BOULEVARD (FROM MAY 17, 2000) ADJOURN SPECIAL SESSION STUDY SESSION CALL TO ORDER — AT OR AFTER 7:00 PM ROLL CALL 1. Discussion regarding 2000 International Building Codes and Fee Schedules — Terry Vosler, Building Administrator 2. Town Project Review: a. Street Improvement Projects - Bill Jansen, Town Engineer b. Water Infrastructure Improvements - Alan Forrest, Water Director c. Naranja State Land Acquisition - Chuck Sweet, Town Manager 3. 2000-2001 Tentative Budget - Discussion ADJOURNMENT The Town of Oro Valley complies with the Americans with Disabilities Act (ADA). If any person with a disability needs any type of accommodation, please notify the Oro Valley Town Clerk at 229-4700. POSTED: 06/09/00 4:30 p.m. RG TOWN OF ORO VALLEY SPECIAL SESSION ITEM 1 COUNCIL COMMUNICATION MEETING DATE: June 14, 2000 TO: HONORABLE MAYOR& COUNCIL FROM: Bryant Nodine, AICP, Planning and Zoning Administrator SUBJECT: OV12-00-03 RANCHO VISTOSO NEIGHBORHOOD 3 PHASE 1 PRELIMINARY BLOCK PLAT FOR LOTS ON EITHER SIDE OF THE COMMERCE LOOP ALIGNMENT SOUTH OF RANCHO VISTOSO BOULEVARD: REQUEST FOR RECONSIDERATION OF CONDITIONS OF APPROVAL SUMMARY Mr. Richard Maes of Vistoso Partners, L.L.C. has submitted a letter (attached) requesting reconsideration of Condition 4b in Exhibit A (also attached), which as amended by Council, states: All of the southern area of Neighborhood 4, up to the proposed southern access, will be designated as open space in exchange for the open space encroachment in Phase I of Neighborhood 3. Mr. Maes proposes that the trade area be at a 1:1 proportion to the encroachment. The proposed encroachment not already balanced by trade areas in Neighborhood 3 is 8.2 acres and 15.1 acres is stipulated as the trade area by the above condition. BACKGROUND The following provides the rationale behind condition 4b as presented in the May 17th Council report. The open space limits of the Rancho Vistoso PAD are based on riparian areas and steep slopes (over 25%). This plat delineates several areas where open space, regulated by the PAD, has been proposed for development. These areas are labeled as "Open Space Encroachment" and discussed in Note # 34 on Sheet 1. Because the open space boundaries on the PAD are approximate (the scale of the original map did not allow detailed and accurate delineation of these areas), it has been a practice of Staff's review of development in the PAD to allow encroachment in these areas as long as the applicant designates a developable areas as open space in trade. The following criteria are used to evaluate a trade: • The trade should be at least 1:1. • The areas that are encroached upon should not include areas that meet the criteria in the PAD for inclusion as open space (significant vegetation or 25% or steeper slopes). • The trade must create meaningful open space that helps to improve the PAD and the community. ANALYSIS The mesquite bosque (Area A, as shown on the attached aerial photo) starts approximately 250' to the south of the proposed access road opposite the entrance to Catalina State Park. It is 9.6 acres. Neither the Riparian Habitat Ordinance, which may regulate this area, nor the Native Plant Salvage Ordinance preservation require of the area they both require strong mitigation (replacement of vegetation) measures for any destruction. Thus there is some potential for development in this area. Area A clearly meets the above criteria used to evaluate trade areas. It has a much higher habitat value to the Town than the upland areas that are proposed for encroachment. r TOWN OF ORO VALLEY COUNCIL COMMUNICATION Page 2 of 3 The trade area designated by the Council in the above condition includes Area A, B and C. Area B (3.0 acres) is an area that has been disturbed for agriculture adjacent to Oracle Road; Area C, also disturbed for agriculture, is 2.8 acres on the south side of the proposed entry to the development. Overall, the applicant proposes to encroach into 9.4 acres of open space in Phase I of Neighborhood 3, but with areas deleted from encroachment by condition 4d of Exhibit A and with areas provided as trade in Neighborhood 3, there are 8.2 acres of trade area that still need to be provided. To meet this, they propose to designate the same amount of developable area at the southern tip of Neighborhood 4 (a portion of Area A) as open space. RECOMMENDATION Although Area A is somewhat protected by the above ordinances, it is important that measures are taken to ensure that it is not impacted by development. Thus, Staff recommends that this area be designated as the trade area for encroachment in Phase I Neighborhood 3. Though it is more than the area required (9.6 acres versus 8.2) the above ordinances would not allow its full development, at least not without significant mitigation costs. In regards to Area B, Staff recommends that this be designated as the receipt area for any further encroachment in the development of Neighborhood 3 or 4. Though this are is already disturbed, and therefore has virtually no habitat value, its designation as open space will eliminate the potential for a long linear commercial area along Oracle Road. Its designation as open space will also will protect the existing mesquirte bosque from commercial development and buffer it from Oracle Road. Staff does not recommend Area C as a designated trade area. At the intersection of the proposed loop road and Oracle Road, its value for commercial uses is very high, while as a disturbed area, its value as habitat is low. Therefore staff recommends that condition 4b be amended as follows: The entire mesquite bosque in Neighborhood 4 will be designated as the open space in trade for encroachment in Phase 1 of Neighborhood 3. The remainderof the developable areas east of the mesquite bosque in Neighborhood 4 Parcel E up to 250' from the proposed southern access, will be designated as the primary receipt area for any additional open space encroachment in Neighborhood 3 and 4. SUGGESTED MOTION: The Council may wish to consider one of the following motions: I move to approve OV 12-00-03 Rancho Vistoso Neighborhood 3 Phase I Preliminary Plat, effective on the date of satisfaction of attached conditions listed in Exhibit A, attached herewith, with the above amendment to condition 4b. OR I move to approve OV 12-00-03 Rancho Vistoso Neighborhood 3 Phase I Preliminary Plat, effective on the date of satisfaction of attached conditions listed in Exhibit A, attached herewith, with the above amendment to condition 4b and the following added conditions: OR I move to deny 0V12-00-03 Rancho Vistoso Neighborhood 3 Phase I Preliminary Plat, finding that: TOWN OF ORO VALLEY COUNCIL COMMUNICATION Page 3 of 3 Attachments: 1. Letter from Mr. Maes to Mayor Loomis dated May 25. 2000 2. Trade Area Aerial Photo 3. Exhibit A as presented on May 17th Pl. '- t and Zoning Administrator )11.-±A, Community Development Director AttiA7 own Manager F:\ov\ov12\2000\12-00-03\TC PP Reconsider 6-14-00.doc VISTOSO PARTNERS, L. L.C. 1121 WEST WARNER ROAD • SUITE 109 • TEMPE, ARIZONA 85284 (480) 831-2000 • FAX (480) 893-1604 May 25, 2000 Via Facsimile Paul Loomis, Mayor TOWN OF ORO VALLEY 11000 North La Canada Drive Oro Valley, Arizona 85737 Re: Request for Reconsideration Dear Mayor Loomis: As you know, on May 17, 2000, the Town Council approved a preliminary block plat for Neighborhood 3 of Rancho Vistoso. One of the stipulations to the plat approval required that Vistoso Partners dedicate to the Town 12 acres in the southern portion of Neighborhood 4 and designated by the Town as mesquite bosque, in exchange for encroaching into 9.36 acres of PAD open space in Phase 1 of Neighborhood 3. Vistoso Partners respectfully requests that the Council reconsider requiring this dedication as a stipulation of approval of the plat. The open space boundaries on the Rancho Vistoso PAD map are approximations only. Thus, it has been the practice of the Town and Vistoso Partners to permit encroachment into the mapped open space if an area mapped as developable is "traded" and left as open space. In the prior dozen or so times that this has occurred, both the Town and Vistoso Partners have agreed that a one-to-one acreage trade ratio is appropriate. With the preliminary block plat approval for Neighborhood 3, however, the Town is requiring a greater acreage trade ratio. This requirement is troublesome for several reasons. First, requiring a greater acreage trade ratio penalizes Vistoso Partners for proposing to develop land that the Town considers less important from an environmental perspective, and preserving land that the Town considers more important. Second, it takes land currently planned for commercial uses (which is more valuable to Vistoso Partners and, from a sales tax perspective, more valuable to the Town) and designates it as open space. Finally, it violates the Town's previous policy, as established over the last several years. Paul Loomis, Mayor May 25, 2000 Page 2 Vistoso Partners recognizes the Town's desire to preserve as much of the mesquite bosque as possible. Accordingly, in the interest of resolving this issue and in the spirit of cooperation, we are prepared to dedicate 9.36 acres of the mesquite bosque located in Neighborhood 4 to the Town as trade for 9.36 acres in Neighborhood 3 we are planning to develop. We will work with Town staff to identify the appropriate 9.36 parcel. If this proposal is unacceptable, we will be forced to appeal the stipulation attached to Council's May 17, 2000 plat approval pursuant to A.R.S. §9-500.12. The Council's actions are administrative in nature, and thus qualify for consideration by the Town's hearing officer. We do not believe that the Town will be able to demonstrate that the required dedication of 12 acres of high value and environmentally sensitive land is roughly proportional to the impact of developing 9.36 acres of mapped open space with a lower environmental value. I appreciate your consideration, and hope that we can resolve this issue as outlined in this letter. Sincerely, PA:(i6J 111\l'qA/ Richard Maes RM:mpf EXHIBIT A CONDITIONS OF APPROVAL OV I2-00-03 Rancho Vistoso Neighborhood 3 Preliminary Plat 1r Drainage Report a) The drainage concept plan shall be revised to match the preliminary plat. b) Nationwide permit 14 from the US Army Corp. is no longer issued. The engineer shall contact the US Army Corp. for direction how to proceed. Provide the Town with copies of all written communication from the Army Corp. c) The final plat will not be scheduled for Town Council until an approvable drainage report for phase 1 has been reviewed and approved by the Town Engineer. Other comments will follow pending our review of the drainage report for phase 1 and the master report for all of Neighborhoods 3 and 4. d) A floodplain use permit (FUP) shall not be issued until the CLOMR report has been approved by the Town and Pima County, and Pima County has permitted issuance of the FUP. e) A FUP shall be required to be in force until the LOMR is approved by FEMA. 2. Native Plant Salvage Plan a) Provide a restoration plan for areas outside future development areas in Neighborhood 4 to restore the riparian area and areas impacted by grazing cattle and to create a buffer between the future development and the Big Wash riparian area. This plan will be reviewed and accepted by staff prior to salvage within Neighborhood 4. b) Change General Note #5 to indicate that all plants salvaged from Neighborhood 4 will be used in the above restoration plan. c) Field inspection prior to commencement of salvage operations will determine the salvageability of significant vegetation within areas proposed for grading. Any of these plants determined to be salvageable will be salvaged. 3. Preliminary Plat(PP) (Zoning Code section references are shown) a) All Sheets • On the title block for each sheet, delete reference to Neighborhood 4 and list only the lots that pertain to Phase I. • On sheets 2-11G, correct the OV number to be OV 12-00-03, and show the latest revision date. • The 100-year flood limits for all drainage-ways exceeding 50 CFS in a 100-year event are to be delineated. • 4-305-E-l d; show all 100-year street flows at critical points. • 4-305-E-4; the 100-year street flows must contained within the curbs. b) Sheet 1 of 11; • Note 1, include only those areas associated with phase 1 • Note 3, the total number of lots is 6. • Note 4; add the information from note 36 then delete note 36. • Note 16; include just the miles of public streets in phase 1 only. • Note 30 the correct soils report number is 2920JM073-1. • Delete note 37. • In the location map and the project overview map show Street B and F aligned. • ON the project overview map replace the Phase I label for Neighborhood 4 with "Fill Area" c) Sheet 3 of 11, show the relocation of the Trico easement on lot 7 and in the proposed right-of-ways. d) Sheet 5 of 11, Is the proposed sewer extension on lot 5 public or private? If public show a sewer easement. The regional detention basin line is in error; the southern boundary shall be the north boundary of the drainage channel. A 10-ft access easement shall be required for the channel. e) Sheet 7 of 11, correct the delineation of the regional detention basin. f) Delete sheet 8 from the phase 1 PP. g) Sheet 9, delete the agreed on areas from the grading operation. h) Sheet 10, add another detail to the sheet that shows the proposed bank protection, 20-ft maintenance road and the normal cross section of the proposed road, maintenance access down into the wash shall be provided. Provide a revised cross section for Discovery Way that includes 5-ft bike lanes and 4-ft sidewalks on each side of the road. i) Sheet 11a, Show the agreed to boundary for phase 1. Provide ties from section corners to Phase I and the boundary closure calculations. j) Delete sheet 11 b from the phase 1 PP. k) Sheet 11c, correct this data based on the review of the paving plans. 1) Sheet 1 ld & e, correct the floodplain limits per discussions with David, label the FEMA floodplain study area and the corresponding water surface elevations. 4. Rancho Vistoso PAD a) Small areas of greater than 25% slope in lots 2 and 3 may be graded as long as equal areas of developable areas are exchanged as open space. b) The southern area of Neighborhood 4, up to 250' from the proposed southern access, will be designated as the primary receipt area for all proposed open space encroachment in Neighborhood 3 and 4. c) Label all areas of open space and 25% slope encroachment within Phase I and the areas that are proposed for exchange. Include all areas within Phase I and delete all outside Phase I from the open space encroachment table. Recalculate encroachment and exchange areas and revise Note #34 accordingly. d) Remove the area of open space encroachment southwest of Discovery Way on Sheet#3 from the gradeable area. 5. Prior to approval of the grading and improvement plans and issuance of a grading permit for fill in Neighborhood 4: a) Submit documentation that the fill along Big Wash will be placed no closer than 40' to the limits of the PAD designated developable area. b) Submit a dust control plan for review by both the Town and PCDEQ and acceptance by the Town. c) Submit an erosion control plan for acceptance by the Town. d) Submit a letter from the Corps indicating that all 404 issues have been addressed. e) Work with Game and Fish to develop a plan to minimize impacts on raptors. This plan must be accepted by the Town. f) A floodplain use permit shall be required (see #1 above). 6. Any revisions to the preliminary plat approved by Council must be submitted on a revised preliminary plat prior to submittal of the final plat. P:\OV\OV12\2000\12-00-03\TC PP Reconsider 6-14-00.doc STUDY SESSION ITEMS STUDY SESSION ITEM 1 TOWN OF ORO VALLEY COUNCIL COMMUNICATION MEETING DATE: June 14, 2000 TO: HONORABLE MAYOR & COUNCIL FROM: Terry Vosler, Building Safety Administrator SUBJECT: 2000 International Building Code, International Residential Code, International Fire re CodezInternational Plumbing Code, International Mechanical Code, International Fuel Gas Code, International Energy Conservation Code, International Property Maintenance Code, 1999 National Electric Code, 1997 Uniform Administrative Code. Recomendation of amendments to the named above codes. Recomendation of fee schedules for the above named codes. SUMMARY: The Town is currently enforcing the 1994 Uniform Building Code, Uniform PlumbingCode, Uniform norm Mechanical Code, Uniform Administrative Code, Uniform Code for the Abatement of i Dangerous Buildings ldings the 1995 edition of the Model Energy Code, and the 1996 National Electric Code, all with local amendments. New, updated editions, of the Model Codes will no longer be published and are being replaced by the body of called the International Codes. The development of the International Codes has been in takingplace for the last five (5)years. This has been a national effort to provide one set of model codes to be used throughout g out the country. In the United States, there are three main code writing organizations. In the ast each published their p own series of model codes; the International Conference of Building Officialspublished of the (ICBOO Uniform Codes, Building Officials and Code Administrators International, Incorporated (BOCA) the� publishedNational Building Codes and the Southern Building Code Congress International, Incorporated (SBCCI) published the Southern Building Codes. ICBO, BOCA and SBCCI jointly developed and write the International Codes. A joint agreement and contract between these organizations impose a condition that ICBG BOCA and SBCCI will no longer publish individual codes, but will jointly promote, publish, and distribute the International Codes as of the year 2000. The adopted model codes presently in effect were adopted by the Town in 1976. Traditionally, the Town, the City of Tucson and Pima County have followed a three year adoption procedure since 1976. The current 1997 editions of the model codes, were not adopted by the Town. It is the intent of the buildingdepartments within p the Greater Tucson area, to adopt the 2000 International codes within the same time frame in the interest of uniformity in codes used and enforced in this region. Adoption of the 1997 Uniform Administrative Code provides the Town with updated fee tables for all construction permits. Currently the Building Safety Division is using the fee schedules out of the 1991 Uniform Building Code (UBC). The fees assessed in the UBC are based from total construction cost of thero'ect. The � construction cost is determined from a table entitled "Building Valuation Data" contained within the Building Standard Magazine published by ICBO. • The Table the Building Safety Division is using is from a January 1986 edition of Building Standards. • The fee schedule in the 1991 UBC is the same fee schedule as in the 1985 UBC. • The 1986 "Building Valuation Data"table is not current with today's valuations for the cost of construction. • Cost of living adjustments have not been made in the Building Safety fee schedules for 15 1/2Y ears. • The cost of all other fees, services and products have increased with inflation. TOWN OF ORO VALLEY COUNCIL COMMUNICATION Page 2 of 2 • The fee increase using the 1997 UAC, would result in an increase of $584.51 in building permit and plan review fees for a$100,000 home, $757.63 for a$150,000 home and $ 1004.26 for a $250,000 home. • The 1997 UAC fee schedules are the same fee schedules used by the City of Tucson. • Pima County is planning on adopting the 1997 UAC fee schedules with the adoption of the "I" Codes. • The Towns of Marana and Sahurita will be requesting their Councils to adopt the 1997 UAC fee schedules. • The plan review fee for the review of model homes constructed from approved model plans is proposed to be increased from $10.00 per model home to $70.00. This is delineated by footnote 6 in Table 3-A of the 1997 UAC. ATTACHMENTS: 1. Exhibit A, 1994 Uniform Building Code, Town OF Oro Valley Amendments, pages 1, 2, 8 & 9. 1. Exhibit B: Town of Oro Valley Amendments To The Uniform Administrative Code Table 3-A as proposed • B{6ilding fety Administrator eAit_ Community Development Director OrliA taLe- Town Manage F:\individ\tv\council\2000 codes .ita•a7. lopted: (0)95-85 lte: 1-1-96 EXHIBIT A 1994 UNIFORM BUILDING CODE TOWN OF ORO VALLEY AMENDMENTS CHAPTER 1 SECTION 101 TITLE, PURPOSE AND SCOPE 1. Sec. 101.3. -Add to the end of the 2nd Paragraph: "See uniform Administrative Code for additional code provisions. " 2. Sec. 101.3 . Revise the last sentence to read: The appendix is hereby adopted as shin below and including modifications as listed. Chapter 3 Delete Division III. Chapter 3, Division I - Detention & Correctional. Facilities Chapter 3, Division II - Agricultural Buildings. Chapter 4, Division II - Aviation Control Towers Chapter 4, Division III- Regulation governing fallout shelters, with rrcdif ications. Chapter 9 Basement Pipe Inlets. Delete entire chapter. Chapter 11 Delete entire chapter. Chapter 12, Division II - Sound Transrnission Control. Delete entire chanter and substitute local modifications. Chapter 13 Energy conservation in New Building Construction. Delete chapter as written and adopt 1995 Model Energy Code as amended. Chapter 15 Re-Roofing. Delete entire chapter. Chapter 16, Division II - Earthquake Recording Instrumentation. 1 forseismic 16, Division III - Earthouake Regulations seis is i:Olaf ed structures. 1 ^� Chapter 18 Waterproof i rg and Da rpprcof rg Foundations Chapter 21 Prescriptive Masonry Construction in Figh-W r-c Areas. Chapter 23 Conventional. Light-Frame Construction Ln High- Wind Areas. Chapter 30 Elevators, Dumbwaiters, Escalators and vii=c Walks, with modifications. See Article 12 Chapter 2, Title 23, A.R.S. for additional requirements. Chapter 31, - Division I - Flood Resistant Construction 31, Chapter Division II Membrane Structures, with modifications. - Chapter 31, Division III Patio Covers. Chapter 33 Excavations and Grading with Modifications Chapter 34, Division I - Life Safety Requirements for existing Buildings, with Modifications Chapter 34, Division II - Special Provisions for Existing Hich-Rise Buildings, with Modifications. Delete Table LA - Building Permit Fees. Insert Table 3A, 1991 Edition of thif orm Building Code. Section 105 - Board of Appeals Section 105.1 - For the purpose of definition, the Board of Appeals and the Oro Valley Board of Adjustment are one and the same. 2 structure. ' Sec. 10 6.3 .3 Add a new sect ion to read as follows: 10 6.3.3 c cc. rentat-cn for Cc�uter Ca c a t_on Submittals. The following documentation shall be furnished. 1. The name of the p_of ect, seal, and signature of the resccnsthle architect or engineer. 2. A synopsis of the commuter program(s) stating briefly, required input, method of solution, approximations used, second-order analyses incorporated, codes used, cases considered, output generated, extend cf previous usage or certification of the program(s) and program aur or(s; . Macro-flow chart(s) may be used to supplement description of solution process if desired. ♦ • . and I . I � � 3. Identification by number, ndex g cross-referencing cf a!l calculation sheets including supplemental longriand calculation sheets. 4. Fully 1 y ;ronti fi ed, dimensioned, and annotated dia earns of each structure being cors i der ed. 5. Clear identification and printing of all input and output values when r ecuested by the Building Official. 6. Identification of the processing unit, input/output devices, storage requirements and supplemental information necessary for evaluation. Sec. 107 - Fees Sec. 107.2 Add to the end of the first sentence " . . . and Tcwn of Gro Valley Resolution No. 274" . Sec. 107.4 - err tion of Plan Review. Add a sentence to the end of this section to read: "Model Home plans intended for re-use will expire 2 years from approval Cate. " Sec. 108 - Inspections Sec. 108.1 After the first sentence of the fourth paragraph, add the following sentence: The corner stakes or =markers shall be permanent and readily identifiable. Sec. 108 - Inspections Sec. 108.1 Peal a fifth paragraph: "Prior to requesting the first ins-vection, the assigned address number for the project shall be posted in such a position as to be plainly visible and 8 legible from the street or road fronting the property. " Sec. 108.5.5 - Mrd sentence at end of paragraph to read: "Lath inspection trust be approved prior to interior (intermediate) inspection(s) . " Sec. 108.9 Work concealed without required inspection. When work is concealed prior to approval by the administrative authority, the work shall be exposed for inspection. No other inspections shall be performed until the Building Official has approved such work. • � "Administrative Appeal" only i f execsing of work The permittee may file an A if cause an undue hardship. Upon receipt of request for administrative ve appeal, which shall be accompanied ed by a letter giving reason for need of such aPPe al, the Building Official will then perform an investigative inspection, g wherein the permittee will be instructed as to the requirements for satisfaction of said inspection (this may include a require r ent to expose work in its entirety) . When requirements are met, the permittee shall then request an irscecticn. If upon inspection, compliance of this provision has been satisfied, thePe rnittee will then be subject to a penalty associated with each inspect ion bypassed. The fee for investigative i aspect ion shall be $60.00 (or the total hourly cost to the jurisdiction, whichever is greatest) , and the penalty will be $30.00 per inspection bypassed. This sub-section is not to be interpreted as license to proceed with inspection through other than normal code provisions. Sec. 109.3 Certificate Issued. Chance the first paragraph to read: "After final inspection, when it is found that the building or structure i substantially complies with the provisions of this code and other laws which are enforced by the code enforcement agency, the building official shall issue a Certificate of Occupancy which shall contain the following: 1. The building permit nor 2. The address of the building. q. The name and address of the owner. 4. A description of that portion of the building for which the certificate is issued. 5. A statement that the described portion of the building complies with the requirements of this code for the group and division of occupancy and the use for which the proposed occupancy is classified. 6. The name of the building official.. TABLE 3-A of 1991 U.B.C. Building Permit Fees. Chance portion under heading c f Other Inspections and Fees to read as follows: 1. Inspections outside of normal business hours (7:00 a.m. to 3:00 p.m.) Inspections (minimum charge - two hours) $60.00 per hr.. 2. Reinspection fee assessed under provisions of Sec 108.8 - $30.00. 9 EXHIBIT B TABLE 3-A--BUILDING PERMIT FEES TOTAL VALUATION FEE $1.00 to$500.00 $23.50 $501.00 to$2,000.00 $23.50 for the first$500.00 plus$3.05 for each additional$100.00,or fraction thereof to and including$2,000.00 $2,001.00 to$25,000.00 $69.25 for the first$2,000.00 plus$14.00 for each additional$1,000.00,or fraction thereof,to and including$25,000.00 $25,001.00 to$50,000.00 $391.75 for the first$25,000.00 plus$10.10 for each additional$1,000.00,or fraction thereof to and including$50,000.00 $50.001.00 to$100,000.00 $643.75 for the first$50,000.00 plus$7.00 for each additional$1,000.00,or fraction thereof to and including$100,000.00 $100.001.00 to$500,000.00 $993.75 for the first$100,000.00 plus$5.60 for each additional$1,000.00,or fraction thereof to and including$500,000.00 $500.001.00 to$1,000,000.00 $3,233.75 for the first$500,000.00 plus$4.75 for each additional$1,000.00,or fraction thereof,to and including$1,000,000.00 $1,000,001.00 and up $5,608.75 for the first$1,000,000.00 plus$3.65 for each additional$1,000.00.or fraction _thereof Other Inspections and Fees: 1. Inspections outside normal business hours(minimum charge-two hours) $47.00 per hour* 2. Reinspection fees assessed under provisions of section 305.8 $47.00 per hour* 3. Inspections for which no fee is specifically indicated(minimum charge one-half hour) $47.00 per hour* 4. Additional plan review required by changes,additions or revisions to plans(minimum charge one-half hour) $47.00 per hour* 5. For use of outside consultants for plan checking and inspections or both Actual Costs** 6. Plan review fee for model home from approved model plan $60.00 *Or the total hourly cost to the jurisdiction,whichever is the greatest.This cost shall include supervision,overhead,equipment.hourly wages and fringe benefits of the employees involved. **Actual costs include administrative and overhead costs. STUDY SESSION ITEM 2a TOWN OF ORO VALLEY COUNCIL COMMUNICATION STUDY SESSION DATE: June 14, 2000 TO: HONORABLE MAYOR& COUNCIL FROM: William A. Jansen, P.E., Town Engineer SUBJECT: Street Improvement Projects Street improvement projects generally have three phases: 1. Design concept: initial planning, environmental and permit reviews, preliminary cost estimates. 2. Design : Development of plans and specifications and project bidding. 3. Construction The time required for the completion of the project can be from 1 year for a very simple project to 6 or more years. The source of funding for the street improvement projects comes from various sources. Each funding source however, carries it's own set of rules and procedures which can greatly impact the time required for project completion. The funding sources normally used by the Town are: 1. The Highway Fund; funds provided to the Town by ADOT from the state gas tax based on population. 2. HURF (Highway Users Revenue Fund); funds allocated to the PAG Region by ADOT and obtained through the TIP (Transportation Improvement Plan). 3. STP; federal funds allocated by ADOT to the PAG Region. 4. Highway Improvement Districts. 5. Townwide Roadway Impact Fees. Street improvement projects presently underway in the Town are described in the attached report. Major Street Improvement projects in the planning and concept phase are described below. + Oracle Road Widening: Oracle Road is planned to be widened to six lanes from Calle Concordia to Tangerine Road by ADOT. Construction start estimated in 2006. The Town is presently establishing an Oracle Road Improvement District (ORID) to widen Oracle Road from Pusch View to La Reserve to six lanes as a result of an ADOT requirement for the approval of the Pusch View/Oracle traffic signal. Commercial properties within the District will be assessed the cost of the improvements. Construction start is estimated late 2001/early2002. + First Avenue widening from Oracle to Tangerine Road: This is a STP funded project and will involve the widening to four lanes including the CDO bridge of First Avenue. Design concept phase is expected to start by December 2000 and construction start by early 2003. •�• Pusch View Extension: DPW is starting the design concept phase to extend Pusch View to Lambert Lane including a new bridge over the CDO Wash. This will be a four lane road that will serve as a base for the widening of Lambert Lane to four lanes. This project will be brought back to the Town Council after the design concept report is completed for authorization to proceed with the project. Funds are presently being programmed in the PAG TIP for the project. •:• La Canada Widening, Lambert Lane south to the Town Limits: This is a Pima County bond project to widen La Canada to four lanes from Lambert Lane to Ina Road. The Town has committed $ 3 million in roadway impact fees to this project. Design has just started. Construction start is estimated to be by early 2003. ❖ La Canada extension, Tangerine Road to Moore Road: The corridor report has been accepted by Council and an important area of right-of-way has been acquired. The design concept phase is expected to commence late this year or early 2001. ❖ Tangerine Road reconstruction, First Ave. to La Canada Drive: This project involves the reconstruction or Tangerine Road including widened travel lanes, paved shoulders, reduction of elimination of the severe vertical problems and improved drainage. This project is in the design concept and permitting phase. Construction start is expected by late 2001. The Town has adopted a five year "Strategic Financial Plan for Road Projects" and a Town-wide "Pedestrian and Bicycle Plan". 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V '� as C = 0 0 v c Q c to 0 o , o c CO V COi o U o O O , CU ♦-+ tea. V OW 0 = 2eCL 0 o ' co a) a- O O coca. O E E > 0 Eo0 QUQ 0 CL ,- C) Q 0co J00 < 1— JNc1 Q � ca STUDY SESSION ITEM 2b TOWN OF ORO VALLEY COUNCIL COMMUNICATION STUDY SESSION: June 14, 2000 TO: HONORABLE MAYOR & COUNCIL FROM: Alan Forrest, Water Utility Director SUBJECT: Water Infrastructure Improvements SUMMARY: In January of this year, the Town Council adopted the Oro Valley Potable Water System Master Plan. This document provides the Town with a comprehensive plan for improvement and expansion of the Oro Valley Water Utility system over a twenty year planning horizon. The Water Utility has experienced significant growth since the Town acquired the systems of Canada Hills Water Company and the Rancho Vistoso Water Company in 1996. These two systems, along with the Oro Valley Water Improvement District #1 (OV-1) service area, have been combined to form one integrated water system, with the exception of the Countryside service area. In addition, the Town has developed new policies, guidelines, and infrastructure construction requirements, setting a higher standard of service for the Utility than did the private water companies. Within the Master Plan, infrastructure improvements required to bring the system into compliance with these new standards and to meet future conditions have been identified. Using the information generated from the Master Plan, a 5-year Capital Improvement Program (CII?) was developed for the Water Utility, the specifics of which are included within the Town of Oro Valley Water Utility Commission Annual Report, May 2000. The first year of the C IP is reflected in the Utility's proposed budget for FY 2000 —2001. Water infrastructure improvements identified within next year's proposed budget include wells, reservoirs, booster stations, transmission mains, fire hydrants and telemetry equipment. A breakdown of these projects by need (existing or expansion) and funding source is provided for your information. ATTACHMENTS: 1) 1-YEAR EXISTING SYSTEM IMPROVEMENTS TO BE FINANCED BY SALE OF BONDS (REPAID WITH WATER RATES) 2) 1-YEAR EXISTING SYSTEM IMPROVEMENTS TO BE FINANCED WITH WATER SALES REVENUE 3) 1-YEAR EXPANSION RELATED IMPROVEMENTS TO BE FINANCED BY SALE OF BONDS (REPAID WITH IMPACT FEES) 40. Water Utility Di ctor OLI Town Manager Oro Valley Water Utility 1-Year Capital Improvements Plan Prepared: June 5, 2000 1-YEAR EXISTING SYSTEM IMPROVEMENTS TO BE FINANCED BY SALE OF BONDS (REPAID WITH WATER RATES) Project No. Project Name Zone Category Total ($) Wells 1 RV Well #2 Replacement E Upgrades 437,500 2 RV Well#3 Replacement E Upgrades 437,500 Subtotal $ 875,000 Reservoirs 3 Countryside 0.8 MG CS Upgrades 700,000 4 WP#13 1.0 MG F Upgrades 1,625,000 5 WP#14 0.8 MG G Upgrades 1,300,000 Subtotal $ 3,625,000 Mains 6 16" Main Extension WP#13 F Upgrades 412,500 7 16" Main From RV to WP#14 G Upgrades 343,750 8 Wells 2 & 3 12" Interconnects E Upgrades 210,000 Subtotal $ 966,250 TOTAL $ 5,466,250 Oro Valley Water Utility 1-Year Capital Improvements Plan Prepared: June 5, 2000 1-YEAR EXISTING SYSTEM IMPROVEMENTS TO BE FINANCED WITH WATER SALES REVENUE Project No. Project Name Zone Category Total ($) Boosters 1 Countryside Booster Upgrades CS Upgrades 312,000 Subtotal $ 312,000 Mains 2 Deer Run -Allied Signal Interconnect D Upgrades 75,000 3 Honeybee Bridge Main Supports G Upgrades 100,000 4 Valve Replacements ALL Upgrades 50,000 5 PRV Stations OV#1 Upgrades 23,800 6 8" Mains Calle Loma Linda OV#1 Upgrades 30,700 7 8" Mains Greenock Dr. OV#1 Upgrades 118,700 8 8" Mains Eagleston Dr. OV#1 Upgrades 43,900 9 8" Mains Valle Del Oro OV#1 Upgrades 268,000 10 8" Mains Golf View Dr. OV#1 Upgrades 331,300 Subtotal $ 1,041,400 Hydrants 11 2 Hydrants Calle Loma Linda OV#1 Upgrades 7,500 12 3 Hydrants Greenock Dr. OV#1 Upgrades 11,300 13 2 Hydrants Eagleston Dr. OV#1 Upgrades 7,500 14 7 Hydrants Valle Del Oro OV#1 Upgrades 26,300 15 9 Hydrants Golf View Dr. OV#1 Upgrades 33,800 Subtotal $ 86,400 Machinery& Equipment 16 Billing Software N/A Upgrades 30,000 . Subtotal $ 30,000 Structures/Walls 17 Block Wall - RV WP#10 F Upgrades 60,000 18 Block Wall - RV WP#24 F Upgrades 30,000 Subtotal $ 90,000 Vehicles 19 New Vehicle 4x4 N/A N/A 25,000 20 Light Bars for vehicles N/A N/A 3,000 Subtotal $ 28,000 Telemetry 21 Sheraton (JO-( Bstr) OV#1 Upgrades 21,000 22 CDO Booster Station OV#1 Upgrades 21,000 23 Tangerine E Upgrades 20,000 24 Telemetry rollover from FY 99/00 Upgrades 57,500 Subtotal $ 119,500 TOTAL I F $ 1,707,300 Oro Valley Water Utility 1-Year Capital Improvements Plan Prepared: June 5, 2000 1-YEAR EXPANSION RELATED IMPROVEMENTS TO BE FINANCED BY SALE OF BONDS (REPAID WITH IMPACT FEES) Project No. Project Name Zone Category Total ($) Boosters 1 WP#14 H-Zone Booster H Expansion 343,750 Subtotal $ 343,750 Mains 2 12-inch Steampump C Expansion 127,500 3 12-inch Steampump D Expansion 72,500 4 12-inch Oracle Crossing D Expansion 156,250 5 16-inch Oracle Main (20%) F Expansion 300,000 Subtotal $ 656,250 TOTAL $ 1,000,000 TOWN OF ORO VALLEY STUDY SESSION ITEM 2c COUNCIL COMMUNICATION MEETING DATE: June 14, 2000 TO: HONORABLE MAYOR & TOWN COUNCIL FROM: Chuck Sweet, Town Manager SUBJ: Historical Perspective - Naranja State Land Site BACKGROUND In 1994, the 173 acres of state land located between Naranja and Tangerine Road was identified in the Parks Open Space & Trails Master Plan as a potential site available for a regional park facility that could start to address the demands of the present and future population projects for Oro Valley. Below is a historical perspective on the events that have followed: September 1996 - Town of Oro Valley submitted an application to purchase the state land parcel. February 1999 - Town contracts with Professional Archaeological Services and Technologies (PAST) for an Archaeological Field Inspection. The field work consisted of intensive on-foot coverage of the property in order to identify and locate any cultural resources, historic or prehistoric, within the property boundaries. Results of the survey indicated no archaeological findings. April 1999 - Town contracts with Environmental Engineering Consultants to conduct a Phase I Environmental Assessment on the state land property. Assessment consisted of obtaining public information concerning environmental conditions of the property, obtaining and reviewing aerial photographs to determine the historic development of property and performing visual reconnaissance of the property to discover presence of contamination. Report indicated that there is no evidence of recognizable environmental contamination, with the exception of some existing asphalt debris and miscellaneous construction debris that was present at the time of the site visit. Report reflects the remedial work which took place in 1994 and 1996 when CalMat Industries excavated petroleum-contaminated soil and included this material in the asphalt used for paving. Report further recommends a limited Phase II inventory be conducted. February 2000 - Town contracts with Zonge Engineering to conduct a limited Phase II Electromagnetic Survey on the property for buried drum detection on the state land. The intent of the survey was to eliminate the possibility of buried tanks or other metallic objects on the property site and thus removing any concern regarding toxic materials remainingunderground. Results of the data indicate that it is unlikelythat a trench g containing buried drums or an underground storage tank is present in the property. However, three anomalies were noted which, according to Zonge, merit further investigation. COUNCIL COMMUNICATION PAGE 2 OF 2 June 2000 - Town contracts with Barnett & Shore Contractors to conduct an exploratory excavation on the two sites identified by Zonge Engineering. Ex Exploratory excavation to occur June 16, 2000. OLAA1p Town Manager MEMORANDUM TO: Mayor and Council FROM: Chuck Sweet, Town Manager David Andrews, Finance Director -' DATE: June 14, 2000 SUBJ: Follow-up Issues from June 12 Budget Review Session A number of issues were raised during the Mayor and Council's Budget Review Session of June 12. This memorandum serves as staff follow-up to those issues. 1. Issue: Debt Service Payments for Library Construction (15,000 sq. ft./no shell) and Naranja State Land Response: Due to the timing of the actual financing, the Town will make only one rather than two debt service payments for each issue. The cost savings for each project is as follows: Library $98,338 Land 131,116 Total Savings $229,454 2. Issue: Oracle Road Improvement District Response: The Town Engineer will assure that Town staff time and related costs for the project are recovered. 3. Issue: Linda Vista Trail Acquisition — Funding from Users Response: Staff recommends this issue be placed on a regular Town Council agenda if it is the desire of the Council to pursue funding from Trail users. 4. k Issue: Funding for General Plan Update Response: The Planning & Zoning Division's proposed budget includes $386,000 for this item. Due to the actual timing of the process, it is recommended that this amount be reduced by one half. The resultant savings is $193,000. 5. Issue: Ballot Initiative to Eliminate State Income Taxes Response: A separate memorandum from the Town Manager will be distributed on June 14th. 6. Issue: Amount of General Fund Loan to Water Connection Fees Fund Response: Effort to determine this amount is still in progress. 7. Issue: Library Construction Response: Councilmember Wolff suggested a 15,000 square feet facility with a 10,000 square feet shell. The annual debt service would increase by approximately $81,000 ($277K minus $196K) based on the March 2 site analysis cost estimates, assuming a cost differential of $862,000 ($2,954K less $2,092K) would be financed. Staff is seeking direction from Council with regard to planning and budgeting for the facility. 8. Issue: Funding Status of Pima County Regarding $2M Commitment for Library Construction Response: The Community Development Director will report back to the Council with regard to this issue. 9. Issue: Additional Funding for GIS Training Response: A specific list of GIS training and equipment to be developed by June 21 at adoption of the Tentative Budget. 10. Issue: Voluntary Reduction in Budgets by Department Heads Response: Feedback was received from Building Safety, Parks & Recreation and Police with respect to this issue. Pool Personnel $46,622 Building Safety —Vacancy Savings 23,949 Police — Delay copier lease 3,750 COPS Grant — Sept. Hiring Date 16,000 Total Savings $90,321 The Police Department also has suggested delay of the voice recognition unfunded CIP item. 11. Issue: FOP Wage and Benefit Proposal Response: The Town Manager's recommendation includes the following: 2.5% COLA 5.38% pay parity adjustment step increases � (10� A 10% Z. aparityadjustment would increase costs byI pay J ► Staff is seeking Council direction in respect to this issue. 12. Issue: 5% COLA for all Town Employees Response: The budget currently contains a 2.5% COLA for all Town employees. The approximate cost, including retirement and payroll taxes, to increase the COLA to 5% would be as follows: General Fund $180,000 Highway Fund 15,000 Public Transit Fund 4,000 Roadway Impact Fee Fund 2,000 Water Utility Fund 24,000 Total Cost Impact $225,000 13. Issue: Health Insurance Premiums Response: Please refer to the attached memorandum from the Human Resources Director. 14. Issue: Parks and Recreation — FY 1999/2000 C I P Carryforward Items Response: On June 13, via email, Parks and Recreation has requested that the following CIP Items be brought forward to FY 2000/2001. Avian Habitat at Dennis Weaver Park $15,000 Joint Project Amphi Parking Lot Improvements 43,870 Small Tractor 16,000 Backhoe 8,000 Total $82,870 Staff recommends approval of this request and it would be classified as a one-time expenditure along with other carryforward items. Staff appreciates the opportunity to review these items with the Town Council. CC: All Department Heads MEMORANDUM TO: Mayor and Council CC: Chuck Sweet, Townger Manager FROM: 7 fv)( Jeff Grant,Human Resources Director ., DATE: June 14,2000 SUBJ: Health Insurance negotiations—FY 00-01 The Town has offered our employees the choice of two health maintenance organizations (HMO's) since 1996. Prior to 1996 we offered Intergroup, with Partners coverage added as an option late that year. With mergers, acquisitions, and the constantly changing "face" of local carriers, Partners was acquired by United Healthcare last year. United is one of the largest HMO operators in the nation, and as a result of their new focus they have systematically been eliminating unprofitable accounts for the past 8-12 months. In addition, they have been changing the scope of their coverage to make profitable accounts even more profitable. As a result of their deliberations, and despite our frequent requests, they delayed finalizing their quote for the Town's contract until last week. At that time, they surprised us by announcing that they will only renew out contract if we opt to offer them as a single source. The premise could be attractive if they were the less expensive of our two plans, however, last year they raised their rates to levels in excess of Intergroup. In addition, their single source rate quoted for this year will be between 14-18% higher than last year (dependent upon other plan design changes that they are recommending—i.e., higher co- pays, etc.). Practically all of the local health plans have experienced double-digit renewal rates this year, and Intergroup was no exception, increasing their rates by 12% (9% as a single-source plan). As you can see from the attached, 185 Town employees receive their health insurance through the Town(101 with United and 84 with Intergroup). The Town has been able to reap some level of benefit from the competitive nature of the dual-choice arrangement in recent years, and accordingly I would not advise that we opt for a single carrier at this time. However, United's ultimatum places the Town in the position of having to explore other options. As a near-term"fix" I recommend that the Town entertain adding another carrier to replace United for the new fiscal year, while continuing to explore other long- term options. In that light, we are currently obtaining quotes from Blue Cross/Blue Shield and Pacificare. They claim to have the two largest provider listings in the Tucson area. If so, we should be able to provide the majority of our United participants with continuing coverage with their current primary care physicians. (keeping in mind that approximately 50%of the doctors with both Intergroup and United are contracted with both plans. In addition, we will continue to explore the possibility of offering Town employees coverage under the State of Arizona employee benefit plan when it becomes available to us(FY 2001-2002). In any event, we had originally estimated our health care cost increase for FY 2000-2001 to be 10%higher than last year. As the result of the late bid by United, the current Intergroup increase of 12% represents the probable lowest cost option for the new fiscal year. Last year the Town adopted the premise of basing our contributions on the lowest priced plan. If the anticipated quotes from the new providers are higher than the quote from Intergroup,then the 12% increase will be the Town's exposure, necessitating a 2% increase (approximately $12,500) in our original budget estimate. If the quotes from the new provider(s) is(are) lower than Intergroup's quote than we would ultimately base our contribution schedule on that rate, eliminating the need for the increased spending. I recommend that we increase our tentative budget amount for health insurance costs for FY 2000-2001 by $12,462 (the amount depicted in the attached exhibit) > NT O N CO �' N f� / t1; to N. N O N CV LC) J CO CO N CO O) LC) CO CO CO CD Q Q 0 0) O (N ON. Q Q O O O N- CO Lo N. �- .7- CO T' D CD r co c Z ~ 1" (0 LC) N V' Z ~ F- CO N- N N N N- COSO Eft Lo oi Z 0 (1) Eft EA- r- N Z 0 (/) Ef} EA- r- N to to to EF)- (A CDQ 0 EA Eft Q F- 0 EA- Eft 4f3 (J)- Ef- U) 0 U) U H - H. • O Lo f` CO O -I W m Eft O N U) -J w m O CD CO . �-, U j N N 0 Q >- CO O ,-- co o o (n !n J Z Z Eft N N: Lri M J Z z O O N- O Q N DQ 2 O Eft Eft Q Q a. O Eft Ef- Eft + + 0 0 O w w Q Q Z 2 N tL V-cn N z CD O) f-- F-- Q J __I 0) co 0) N Q J J to O (D e-- Q - CO co- 00 '�t' Q D - Ni N dt' N 0) N D Z ( EA- N . 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Et Efti, E3 Z II j 0 O w r" N 1I En- Et NEf _ , Z a. 0) ti co Nt. , 0) vt Co 0 0 O CO r- N CO 0 V" N N O L1J w J p J J O 0) 0 Jc uu z . u z Q w w a) O c) cc > a >-. 4 w � > �w LL : Z w Z LL O 0 O + + w O + + Ce w wwQwwZ 0 w >- >- > w 0 IX >- >- >- Ce W CC w 0 0 0LLI w 0 0 0 O ~ � � � Z o � � � 0 w w w Zo 0 w w w Town of Oro Valley Budget Status as of June 14, 2000 FY 2000/01 Town Budget General Fund General Fund Balanced Budget June 14, 2000 The Town Manager's recommended budget was delivered to the Mayor and Council with the caveat that recurring expenses exceeded recurring revenues by $454,765 and therefore a slight deficit existed. This deficit is due to the timing of Town needs versus the lag in state shared revenues. During the course of the Council's Budget Review Sessions, several issues have come to light, both positive and negative, in terms of the deficit. They may be summarized as follows: Recurring deficit as originally presented $454,765 Community Development — Increased Personnel 8,938 GOVAC Funding 20,000 Decrease in Revenue Estimates (4-Star Hotel) 492,000 Building Safety Reductions <105,000> Town Manager's FOP Recommendation 101 ,050 Janitorial Contract Cost Savings <34,000> GIS Savings <12,635> COPS V Grant — Matching Funds 80,000 COPS More Grant — Matching Funds 18,875 Court Personnel — Savings <35,152> Increased Salary for new Civil Attorney 12,000 Increase in retail sales tax estimates <100,000> Shift in Debt Service Payments <229,454> Unbudgeted Increase in Health Insurance Premiums 12,462 ._- Pool Personnel Savings <46,622> -- Building Safety Vacancy Savings <23,949> -- Police Department Vacancy Savings/Copier <19,750> Revised Deficit @ June 14, 2000 $593,528 General Fund Contingency Reserves The following summarizes the General Fund's contingency reserves as of June 14, 2000: Estimated cash carryforward $9,269,414 Plus: Library Bonds — Reimbursement 144,000 Naranja State Land Bonds 2,700,000 Less: One-Time Expenditures 6,095,070* Revised Deficit @ June 14, 2000 593,528 Contingency Reserve $5,424,816 The required reserve at 25% of recurring expenses would be $3.7M ($14.6M times 25 percent). *"One-Time" Expenditures: General Fund Update $193,000 Unfunded CIP Items 300,000 CIP Carryforward Items (Police) 96,700 Water Connection Fees Fund Loan 1 ,322,500 Dennis Weaver Pool Renovations 1 ,000,000 Linda Vista Trail Acquisition 25,000 Naranja State Land Acquisition 3,075,000 CIP Carryforward Items (Parks) 82,870 Total One-Time Expenditures $6,09070 ____ ..••••••.*•••• _ _ _____ ___ _ _. _ _ ______ _______ _ _ _ _ /3-,______Atit__ ____ the,i'4--10ca #13 aac54rop 1,,,,,c,),...1 �. s", corp S/S 9 5 7S X--1;et",.., 4. 1 Y C. 0 1 [moo, kyr.: (.0 z 5 .L.s-_- S✓5-f-Ftl /s7 895 A ssi),,,„4_ f�7 /S-?y3 __......_____L____ — 7�-�../ ]35 ,L �173GvZ � Ce i L 1,...4i.„ ft? C 4 ay./ ________2L_______L....,, -frpn, .S% Cot. P- #C81333 7:‘,8 333 14.1 „47 6 5403 B� 1y-2, osy. ?73 33y -e /L) A 55i>,„4- /5; )Y2 15 7 Y 3 sç ' ecSj y3, s3 0 Y3- /s3o To-j.,1} .12Y, 6GO Vco)9yo i3s..4,..c4._ i -73/ 6 v.Z 7)3 L y.), ........._/ /0) OA; �22-7� 2yes) 227, 25Y — ivy) W /AC 18th -- $2.11S° y353"0 MEMORANDUM TO: Mayor and Town Council Members FROM: Chuck Sweet, Town Manager DATE: June 14, 2000 SUBJ: Taxpayer Protection Act of 2000 Attached, please find a memorandum from the League dated June 13 highlighting aspects of the State Income Initiative which proposes to eliminate all state and personal and corporate income tax. The red folder was recently distributed at the Pima joint cities meeting and was presented by the Arizonans Against Unfair Tax Schemes whose Chair is a representative of the Phoenix Fire Fighters Association. Should this initiative be successful, the economic impact to the Town of Oro Valley would be in excess of $10 million over a five year period. Please see the attached analysis by Jeff Weir, Economic Development Administrator. ._I Chuck Sweet Town Manager • Attachments (3) Memorandum To: Dave Andrews, Finance Director From: Jeffrey H. Weir, Economic Development Administrator Re: Research Results on Elimination of State of Arizona Income Tax During the Monday, June 12th Budget Study Session the Mayor requested the Financial staff to review the potential impact of a referendum being proposed for the November ballot. The proposed referendum would eliminate ALL State of Arizona Income Taxes (personal and corporate). The current tax applications would be eliminated within four years [no clear definition of how this would be implemented, I have assumed a one/fourth reduction impact]. The 2000 - 2001 Fiscal Year Budget anticipates $ 2,342,000 in Income Taxes as the Town's share of Urban Revenue Sharing. This amount is 7.5% higher than the previous FY Income Tax related receipts. Additionally, it is anticipated that the Town will receive an increase of $ 1,050,000 based on the new Census data. If we project future fiscal years Income Tax receipts based on a 7.5% growth after adjusting for the new Census impact the following revenues could be expected: Total Amount Income Tax After Current ADOR Census Revenue Proposed Fiscal Year Allocation Increase Sharing Reduction 2000-01 $ 2,342,000 $ 0 $ 2,342,000 $ 2,342,000 2001-02 $ 2,518,000 $ 1,050,000 $ 3,568,000 $ 2,676,000 2002-03 $ 2,707,000 $ 1,129,000 $ 3,836,000 $ 1,918,000 2003-04 $ 2,910,000 $ 1,214,000 $ 4,124,000 $ 1,031,000 2004-05 $ 3,128,000 $ 1,305,000 $ 4,433,000 $ 0 5 Year Totals $ 18,303,000 $ 7,967,000 5 Year Revenue Impact ($ 10,336,000) JUN-13-2000 17:28 LEAGUE OF AZ CITIES 6022533874 P.01/06 THE LEAGUE OF ARIZONA CITIES & TOWNS 1820 West Washington Street • Phoenix,Arizona 85007 • Phone (602) 258-5786 Date: June 13, 2000 To: Rachel Bartels From: Becky Hill Subject: Income Tax Repeal This fax has (6)pages. If there is any transmission problem,please contact sender at(602)258-5786. Thank you for your call this morning regarding the "Axe the Tax" Initiative. I should first tellY ou that the letter I said we sent out requesting information regarding your budget should the initiativeP ass has not been mailed yet. It will go out this week. For those who will ask why we are making this request please note that we have had requests about the impact to cities and towns and we would like to have that information on hand. We also believe that individual cities and towns will begin receiving similar requests from interested citizens and the press and having this information ready will assist us all in answeringquestions certain to arise from both sides during the debate. Below are some below points regarding the initiative and I have included a copyof the actual text of the initiative. Primary Provisions • Beginning January 1,2005 the income of individuals,corporations and other legal entities shall not be subject to taxation by the state or any political subdivision. • Any act that provides for a net increase in state revenue must receive a 2/3 vote of the Legislature and a majority of the votes of the qualified electors at the next general election.This includes a new tax, a new tax rate, new fees and reduction in tax credits and deductions and changes in the allocation formulas of shared revenue. (Although obviouslyurban revenue sharing goes away altogether.) Allows for inflationary increases that are not the result of an act by the Legislature. • Encourages candidates for federal office to sign a pledge that theywill advocate for the elimination of the Internal Revenue Service and the federal income tax and support a national PP consumption tax. We have also been asked what the total impact of the Initiative is. Here are the aggreate estimates. g • Income tax is 50% of the state general fund or about $3 billion er year. About 60% of that P currently goes to education and another 30%for corrections, Psafety ublic and health services. • Urban revenue sharing equals 1 5%of the state income tax; for the upcoming fiscal year this is estimated to be in the $400 million range. Please call if you have further questions. JUN-13-2000 17 28 LEAGUE OF AZ CITIES 6022533874 P.02�06 • APEllatincusumuninikilvziaumaaumumiEnnolusa UltilaThaBrja Secretary of Stets 1999 Ci 2S P7 on, 7th Floor �� �' 1700 W.Washington,� . Phoenix,A2 85007 The undersigned intends to circulate SEC::.E.1.\RY OF STATE and file an INITLA -. E or a REFERENDUM (circle the hereby makes application for the issuance of an official appropriate word) petition:and Side of each signature she serial number to be printed in the lower right-hand •' 9 e t of such petition. Pursuant to Arizona Revised corner of eah text, in no less than eight point a of theStatutes � 19-7��, attached hereto is the type, MEASURE or CONSTITUTIONAL AMENDMENTfull intended to be QUITIAIESDor REFERRED (circle circle appropriate word appropriate word) at the, nextgenera a a � on. =QU • A description of no more than one hundred words of the principal provisions of the constitutional amendment or measureproposed that will appear in no less than eightpoint type onA P !aW' sheet to be circulated . • yp the lace of each petition signature The Taxpayer Protection Act of 2000 will: (1) end all Arizona state and local income taxes over a four that anynew taxesyear phaseout period; ( 2) ensure be approved by a majorityof voters; voluntary pledges in favor and (3 ) allow of elimination of the federal income tax and its replacement by a federal sales tax to be placed on election ballots next to the name of all candidates who take that pledge. r ,.'' . alr Sig—lure of Applicant - .,....,,,,_„..' - -- Taxpayer Protection Alliance Name of Organization(if any). '--~ ---- Lori Klein _ Panted Name of Applicant -- 3431 ti,. Thunderbird, Suite 302 P Addres3 MS 13122 N. 21st Dr. Address �- - �. _, State Phoenix AZ 85053 City Zip --- _ Phoenix 0 ( 602 ) - City State Zip Telephone Number — 602) 993-9832 Telephone Number _ R�-hard D. Mahoney, ChairmanName of Officer end Title �~ 1620 N. 11th Ave. --- Address �-*— Phoenix AZ 85007 Ci Date of Application -�- ( jcc — •� Stele Zip ( 602) 253-1202 Signatures Required Telephone Number JeffrySi ger, M.D., Treasurer ------. Name of 0 Nicer end Title .� Deadline for Filing _J4_4 joifin . 4442 E. Horseshoe Rd. Address - -- Serial Number Issued -- C 1 p hoe uix • A Z _____Olas_ City State Zip FOR OFFICE USE ONLY • sa602t _998-2006 Telephone Number JUN-13-2000 17:29 LEAGUE OF AZ CITIES 6022533874 P.03/06 r:',7 ,...'' 7.". ' -: r. An Initiative Measure Dixpaver Prtection A 000 jqq OCT 28 P !?: .r PR (,_i. :,_ !A �'( OF STAOPOSING AN MENT TO THE CONSTITUTION OF ARIZONA: ' �' ... A�END�G ARTICLE IX, SECTIONS 12 AND 22 RELATING TO STATE TAXATION; AMEND ING NDING• ARTICLE VII B Y 19 RELATING TO A VOLUNTARY FEDERAL INCOME TAX ELIMINATION PLEDGE. TEXT QEDIE PROPOSED AMENDMENT Be it enacted by the people of the State of Arizona: The following amendments are proposed to become valid when approved bymajority a of the qualified electors voting thereon and upon proclamation of the Governor. Section 1. T_, This initiative shall be known and may be cited as the "Tax a er Protection Act o PY f 2000.» Section 2. Fines and Declaration of Purpose. A. The state of Arizona's income tax on individuals and co orations•doesn'rp t w ork. i It s a tool of special interest groups. It is complicated, confusing-andstifles economic onomic growth. The state income tax will be eliminated over the Y next four ears. . B. • Any future tax increases of any kind will be submitted to Arizona taxpayers for their approval. No increase can take effect without a majorityof their vote. C. The people of Arizona have a substantial interest in ensuringits citizens are informed prior to the date of each primaryandgeneral election about the position position held by candidates for elected public office, both state and federal, on issues of significance igiuficarice to Arizona voters. Among the issues of significance to the people of Arizona is theositio p n of the candidates for elected federal office on a legislative proposal to replace the . P P p federal income tax with a national consumption tax, defined generally as a tax imposed on thegross receipts from the retail sales of any taxable property or service sold in the United States, but not including a tax calculated at a flat or fixed rate on personal or corporate income, and d thereby to abolish the Internal Revenue Service. D. Arizona's candidates for federal office will be requiredposition . q to state their position on eliminating the federal income tax and replacing it with a nationalconsumption g consumption tax, and thus abolishing the Internal Revenue Service. Theirled p ge shall be stated on the ballot for the Arizona general election until such a tax . consumption tion measure becomes the law of the United States of America. JUN-13-2000 17:29 LEAGUE OF AZ CITIES 6022533874 P.04/06 Section 3. 19M OCT ^z- p 12: 1 _, Article IX, section 12, Constitution of Arizona, is amended as follows: y 7 7, Section 12. Authority to levy and collect taxes; exemption of income from taxation Section 12. The law-making power shall have authority to provide for the levy and collection of license, franchise, gross revenue, excise, income, collateral and direct inheritance, legacy, and succession taxes, also graduated income taxes, graduated collateral and direct inheritance taxes, graduated legacy and succession taxes, stamp,registration,production, or other g � specific taxes. THE LEGISLATURE MAY PROVIDE POR INCOME TAXES THROUGH DECEMBER 31, 2004. BEGINNING JANUARY 1,2005, THE INCOME OF INDIVIDUALS, CORPORATIONS, PARTNERSHIPS AND OTHER LEGAL ENTITIES SHALL NOT BE SUBJECT TO TAXATION BY THIS STATE OR BY A COUNTY, CITY, TOWN OR ANY OTHER POLITICAL SUBDIVISION OF THIS STATE. Section 4. Article IX, Section 22, Constitution of Arizona, is amended as follows: Section 22. Vote required to increase state revenues; applications; exceptions PP � Section 22. (A)An act that provides for a net increase in state revenues as described in Subsection B s MAY BECOME PRELIMINARILY effective en AFTER the affirmative vote of two-thirds of the members of each house of the legislature. If the act receives such an affirmative vote, it _- - ' _ '--.-• -:•: IS PRELIMINARILY EFFECTIVE on the signature of the governor as provided by Article IV,Part I, § I,OR IfIF theg overnor vetoes the measure, it MAY become PRELIMINARILY effective unless AFTER it is approved PP by an affirmative vote of three-fourths of the members of each house of the legislature. AFTER PRELIMINARY APPROVAL AS PRESCRIBED BY THIS SUBSECTION, THE SECRETARY OF STATE SHALL PUBLISH,PRINT AND SUBMIT THE ACT TO THE QUALIFIED ELECTORS AT THE NEXT REGULAR GENERAL ELECTION AS A REFERENDUM AS PROVIDED BY ARTICLE IV,PART I, §I. THE ACT SHALL NOT BECOME EFFECTIVE UNLESS IT IS APPROVED BY A MAJORITY OF THE QUALTIED ELECTORS VOTING ON THE MEASURE. (B) The requirements of this section apply to any act thatrovides for a net increase in revenues in the form of: stateP • 1. The any imposition of P new tax. 2. An increase in a tax rate or rates. • 3. A reduction or elimination of a tax deduction, exemption, exclusion, cr edit or other tax exemption feature in computing tax liability. - -2 - JUN-13-2000 17:29 LEAGUE OF AZ CITIES 6022533874 P.05/06 4. An increase in a statutorily prescribed state fee or assessment or atiiiilett4,20 EP 12: 1 3 statutorily prescribed maximum limit for an administratively set fee, 5. The imposition of anynew state . ) � .� OF S �. P fee or assessment or the authonzaion of any Y new administratively set fee. 6. The elimination of an exemption from a statutorily prescribed state fee or assessment. 7. A change in the allocation among the state, counties or cities in Arizona transaction privilege, severance,jet fuel and use, rental occupancy, or other taxes. 8. Any combination of the elements.described inare ahs 1 through�' P 7. (C) This section does not apply to: 1. The effects of inflation, increasing assessed valuation or any other similar miIar effect that increases state revenue but is not caused by an affirmative act of the legislature. g tore. 2. Fees and assessments that are authorized bystatute,but are not prescribed P nbed by formula, amount or limit, and are set by a state officer or agency. Y 3. Taxes, fees or assessments that are imposed bycounties, cities, towns ad . . . . other political subdivisions of this state. (D) Each act to which this section applies shall include a separate provision provision describing the requirements for enactment prescribed by this section. Section 5. Article VII, Constitution of Arizona, is amended as follows,by adding section 19: 19. Voluntary Federal Income Tax Elimination Pledge g Section 19. A. A CANDIDATE FOR THE OFFICE OF PRESIDENT ENT OF THE UNITED STATES OR THE OFFICE OF UNITED STATES SENATE OR UNITED STATES REPRESENTATIVE FROM THIS STATE MAY, BUT IS NOT REQUIRED TO, EXECUTE AND FILE WITH THE SECRETARY OF STATE THE FEDERAL INCOME TAX ELIMINATION PLEDGE DESCRIBED IN SUBSECTION B. THE PLEDGE MUST BE FILED AT LEAST SIXTY DAYS BEFORE A PRIMARY ELECTION AND AT LEAST TWENTY DAYS BEFORE A GENERAL ELECTION. A C .. �A►NDIDI�TE SHALL NOT BE DENIED PLACEMENT ON AN ELECTION BALLOT FOR FAILURE OR REFUSAL TO SUBMIT A PLEDGE PURSUANT TO THIS SECTION. B. THE TEXT OF THE PLEDGE SHALL BE AS FOLLOWS `PART A: I, VOLUNTARILY PLEDGE TO ADVOCATE AND VOTE FOR THE ELATION OF THE FEDERAL INCOME TAX, .. 3 - JUN-13-2000 17:30 LEAGUE OF AZ CITIES 6022533874 P.06/06 -.;": i 'j ' -- 1999 (;�;r ' THE ELIMINATION OF THE UNITED STATES INTERNAL REVENUE SERVICE ANDS P I -) THE ENACTMENT OF A FEDERAL TAX ON ECONOMIC CONSUMPTIOEcT1 I� PART B: Y AUTHORIZE THAT THE NOTICE "SIGNED THE FEDERAL lNCOME"1 • , TAX ELIMINATION PLEDGE"BE PLACED NEXT TO MY NAME ON THE ELECTION BALLOT AND IN ALL OFFICIAL VOTER EDUCATION PAMPHLETS IN WHICH MY NAME APPEARS AS A CANDIDATE. 1.IIIMIIMIIMI , 4.. .e SIGNATURE OF DATE" CANDIDATE C. THE AUTHORIZED ELECTION OFFICIALS SHALL PLACE THE NOTICE PRESCRIBED IN PART B OF THE PLEDGE NEXT TO THE CANDIDATE'S NAME ON THE PRIMARY OR GENERAL ELECTION BALLOT AND IN ALL OFFICIAL VOTER EDUCATION PAMPHLETS IN WHICH THE CANDIDA'TE'S NAME APPEARS, D. IF A CANDIDATE WHO EXECUTED THE PLEDGE IS NOT ELECTED, THE PLEDGE LAPSES AND IS OF NO FURTHER EFFECT. THE CANDiDATE MAY EXECUTE AND FILE ANOTHER PLEDGE FOR ANY SUBSEQUENT ELECTION. E. ANY RESIDENT OF THIS STATE HAS STANDING TO ENFORCE THE PROVISIONS OF THIS SECTION IN A COURT OF COMPETENT JURISDICTION. Section 6. $ rabLit . If any provision of this initiative or its application to any person br circumstance is held invalid,the invalidity does not affect other provisions or applications of the initiative that can be given effect without the invalid provision or application, and to this end the provisions of this initiative are severable. 61378_t e -4- Trim' o mc ARIZONANS AGAINST UNFAIR TAX SCHEMES TO DEFEAT THE TAXPAYER PROTECTION ACT OF 2000 (TPA-2K) (AN INITIATIVE THAT PROPOSES TO ELIMINATE ALL STATE PERSONAL AND CORPORATE INCOME TAX) • The impact of TPA-2K is a 48% cut of the State General Fund from $6.0 billion to $3.12 billion.* • Education comprises 60% or $3.8 billion of the State General Fund, a 48% cut would cost Arizona's education $1.8 billion.* • The Department of Public Safety receives 1/2 of its $125,000,000 budget, $62,500,000 , from the State General Fund (DPS faces a loss of nearly $31,000,000).* • The Department of Corrections receives its $600,000,000 budget from the State General Fund (DOC faces a loss of nearly $300,000,000).* • State Shared Revenue to Cities and Towns will be eliminated, over $350,000,000 (police and fire fighter jobs will be lost).** • The Department of Health Services and AHCCCS stand to lose $340 million plus hundreds of millions in matching federal funds. • Arizona residents currently pay the 4th lowest personal income tax in the United States.* • Arizona personal income tax has been reduced by 29% since 1991.* Our committee filed with the Secretary of State on January 26,2000. Our present committee members include; Arizona Chamber of Commerce, Arizona Tax Research Association, Arizona Hospital and Healthcare Association, Phoenix Arts Commission, Arizona Community Action Association, Neighborhood Coalition of Greater Phoenix, Neighborhood Activists Inter-Linked Empowerment Movement (N.A.I.L.E.M.), Arizona Conference of Police and Sheriffs, Professional Fire Fighters of Arizona, Arizona Education Association,Valley Interfaith Project,Children's Action Alliance, United Food and Commercial Workers,Tucson Police Officers Association,Arizona Highway Patrolman's Association, and the Phoenix Law Enforcement Association. City,community, and business leadership meetings are currently being scheduled. Many other organizations are in the process of being contacted. Please direct all membership questions and contributions to: ARIZONANS AGAINST UNFAIR TAX SCHEMES Benjamin Marx, Campaign Manager 61 East Columbus Avenue Phoenix, Arizona, 85012 Phone: (602) 212-1631 Fax: (602) 277-0003 Email: bmarx@local493.org Source: *Govemors office of Strategic Planning and Budgeting **Arizona Department of Revenue Paid for by Arizonans Against Unfair Tax Schemes Billy Shields, Chairman Arizona's businesses will suffer the effects of the so-called "Taxpayer Protection Act" by Billy Shields This November's ballot will include an initiative to eliminate the personal and corporate income tax in Arizona. As appealing as that may sound to the voting public,the fact is this is a bad idea that will ultimately injure the state for years to come. The initial surge of public enthusiasm from Arizona voters for lower taxes, however, will give way to a sobering reality -- their plan doesn't work, and the uncertainty of the consequences makes it a dangerous proposition of catastrophic proportion. Combined, personal and corporate income taxes account for $2.9 billion-- nearly half of the state's operating budget. Sixty percent of the state's annual budget is used to fund education(K-12, community colleges and universities). Another 32% is dedicated to the department of corrections, public safety, health services and AHCCCS. Reasonable people understand that the government cannot trim 50% of its budget and that cutting $2.9 billion from basic services cannot be made up for by economic growth. Ted Ferris, former Director of the Joint Legislative Budget Committee, demonstrated that relying on economic dynamism to recoup the loss in state revenues caused bypersonal and corporate income tax repeal would require 80% growth in the economy. That would mean doubling the state population. Ferris also points out that consumption growth virtually parallels population growth—twice as many people means twice as much service. No matter how you cut it, there will always be a 50% shortfall. The gap will have to be filled and legislators will scramble to find new sources of revenue. The two most likely targets: property tax and sales tax. Property Tax To make up the loss of revenue by increasing the property tax, the assessed value would have to be increased by ten dollars per thousand of assessed value, increasing the tax burden for a one-hundredthousand dollar home by one thousand dollars per year. While the proposed initiative includes a provision prohibiting the legislature from increasing state revenue without the approval of voters, the Arizona Tax Research Association believes that the legislature will be able to raise property tax without voter approval because the Constitution mandates it to fund public education. Legislators under pressure to find revenue will naturally turn to this available source. With residential property tax limited to a 1% cap on primary taxes, business property tax would be left to bear the brunt of the increase. For these reasons the property tax is the most likely place to go to replace the loss of income tax revenues. Sales Tax In the event that we rely on sales tax to fill the gap, Arizona could boast the highest sales tax rate in the country. One obvious outcome would be to drive consumers to the internes to avoid sales tax, further handicapping local businesses. The most dramatic impact will be felt by small businesses whose economic livelihood often depends on the patronage of local customers. As small businesses are forced to close their doors, the local economy will ultimately be crippled by the loss. If driving customers elsewhere through tax disincentive isn't enough, the proposed initiative also threatens to burden businesses with plebiscite taxation. As services are eliminated, voters will be asked to approve special taxes to fund everything from prison guards to street landscaping and sidewalk construction. The result will be a ballot nightmare for voters and a bookkeeping gauntlet for businesses. For those who view these as inconveniences of commerce, the impacts on education and Arizona's workforce will hit even closer to home. Education Sixty percent of the state budget funds education and there is no doubt that Arizona schools will take a direct hit. With an education system that is already under-funded and court-ordered to shape up, the initiative will be a step backward. As our state works to attract high tech firms and corporate giants, the University system is already lagging behind. The proposed initiative makes the job of adequately funding higher education even more difficult, and could cause University tuitions to almost double, while Community College tuition would increase by one thousand dollars per year or more. The Aftermath Should the TPA pass, we will never fully recover from the error we've made. Businesses large and small will suffer. We will have sacrificed public education, law enforcement, public safety, health services as well as transportation, libraries, parks and the arts. Our state's infrastructure will be compromised, public health and safety will be at risk, and the state's already insufficient labor pool will have fallen even further behind. Repealing the state personal and corporate income tax may be good for short-term political interests, but it is bad for the long-term quality of life for the people and businesses of Arizona. At the end of the day, it is simply not worth the risk. Billy Shields is the Chairman of Arizonans Against Unfair Tax Schemes. AAUTS is a broad coalition of Arizona's businesses, community and service groups, labor organizations, elected officials and the education community. For more information, or to join the coalition, please call 602-212-1631, e-mail bshields@local493.org. Institute on Taxation and Economic Policy ITEP 1311 L Street,NM. • Washington,D.C.20005 • (202)626-3780 Who Benefits from Repealing Arizona's Income Taxes? Institute on Taxation and Economic Policy April 2000 An initiative currently circulating in Arizona would repeal the state's personal income and corporate income tax. The following analysis examines the consequences of this proposal for Arizona taxpayers at different income levels. Among the principal findings of the analysis are that: # The wealthiest five percent of Arizonans would receive nearly 47 percent of the tax reductions from the proposed initiative, while the poorest 80 percent would realize less than 29 percent of the tax cuts. # If the initiative were to become law, Arizona taxpayers would pay $450 million more in federal taxes. • The personal income and corporate income tax combined are responsible for about 34 percent of all Arizona state taxes; the personal income tax is forecast to raise $2.5 Lillian in fiscal year 2001, while the corporate income tax will raise over $500 million. In addition to eliminating over $3 billion in state revenue which is nearly as much the state budgets for both K-12 and higher education combined the proposed initiative would also require that any tax increase be put to a referendum of the voters. This would make it harder to create new funding sources to replace the revenue loss that would result from passage of the initiative. Since the personal income tax is Arizona's only progressive tax, most of the benefit of repealing it would be enjoyed by the wealthiest Arizonans. In particular: # The richest five percent of Arizona's population those with incomes over $130,000 —would receive nearly 47 percent of the benefit. # The poorest 80 percent those earning less than $64,000—would get less than 29 percent of the benefit. # The wealthiest one percent, with an average income of$888,000, would save an Who Benefits from Repealing Arizona's Personal&Corporate Income Tax? Income Lowest Second Kiddie Fourth Top 20% Group 20% 20% 20% 20% ,Next 15% Next 4% Top 1% Income Less Than $16,000- $26,000 $40,000- $64,000-$130,000- $361,000 Rant e $16 000 $26 000 $40 000 $64,000 $130 000 $361 000 Or More Average Income In Group $9,600 $20,900 $32.500 $51,300 $86,200 $182,000 $888,000 Tax Cut as a%of Income -0.6% -1.1% _ -1.5% -1.8% -2.2% -2.6% -4.0% Avera a Tax Cut $ -54 $ -232 $ -491 $ -928 $-1,911 $ -4,810 $-35,619 Share of Total Tax Cuts I 3.9% 8.4% 15.7% 24.3% 16.4% _ 30.4% 100% , SOURCE Inslute on Taxadan and Economic Policy M rosinxdation Model Marg 2CkX).Data based on statistically-matched IRS samples and the Jan 2000 Biennial Budget Anent to the fY00&FY01 Appropriations Report Arizona Joint Legislative Budget Committee.lnaome analysis is of as Arizona residents in calendar year 2000. 1 average of$35,619, while the poorest 20 percent of the population, with an average income of$9,600, would only save $54. # The middle 20 percent of Arizona residents, those with an average income of $32,500, would receive a tax savings of$491. If the initiative were to become law, Arizona taxpayers would pay $450 million more in federal taxes. The 700,000 Arizona residents who itemize their deductions on their federal return can presently deduct both their state personal income and property taxes. If the income tax is repealed, they lose a substantial deduction, and their federal income tax goes up. In effect, this proposal would take $450 million which otherwise would go to the state of Arizona and send it off to the federal government in Washington, DC. This illustrates an important issue in state and local taxation. States which rely more heavily on taxes deductible on the federal return income and property taxes versus non- deductible taxes (such as sales taxes), can lower their federal tax burden. In 1996 (the latest year available), Arizona ranked 10th highest in the country in its state and local sales and excise tax burden. Arizona's sales and excise taxes were 5.0 percent of personal income, compared with the U.S. average of 4.0 percent. In contrast, Arizona's personal income tax as a share of personal income, 1.8 percent in 1998, ranks 38th nationally, well below the U.S. average of 2.5 percent. Arizona's heavier-than-average sales tax reliance translates into relatively higher federal income taxes for Arizona taxpayers. Eliminating income taxes altogether would not only make the state's tax system one of the most regressive in the nation, but would force many Arizona taxpayers to pay substantially higher federal tax bills. • 2 � � 1 n� '1�� 1 •n1♦n� �A♦��T T � 1 � �� ^r1 ��r 1J U ` ED a 1 �� l 1 1j � ^^ I P.• 1 y� � V��♦i 1 1.i�L .I J 1..���V 1..•� .i�. ..L./ 1��♦ � L 1 2 05/05/00 FRI 12:12 MI 5206212130 ECM & BUS RESEARCH oo2 Q and A about Individual Income Tues A.Which states don't have any iotlrvid income tax! 1asic ,,:3mida,Nevaria,Son&Dakota.Terms, ' k a�ungton,and W�°'�8 do not havein individual income taxis. In addition,New Hampshire and Tcanessee'3 stat :Lccmc tax is limited to dividends and interest mcg. Source:The Fedcmtion of TaxAdntinistrators B. Ido t&states without as uld. . i income tax still impose a corporate income tax? Some do some don't Alaska and Florida impose corporate income tames_ Texas, Washington and Wyoming dome. New Hampshire and Tennessee have carporare income taxes.. South Dakota iniposes corporate income taxes on Bank. Source: Federation of Tax Mministrators C. Where does Arizona's per capita statst=revenue rank among other states? Arizona's per capita mate tax rtvenus is S1,488,which places Arizona 42 auto all 50 stasis in per cite std tai zsveune. State Tu Revenue State Per Capita Rank Alaska $1,932 12 Mozidz 51,509 41 Nevada 31,34; 15 'New Hampshire S 351 50 South Dakota SI,130 49 rrenessee S1,228 47 Texas 51,246 48 Washington $2,075 8 Wyoming S1,779 20 Arzso� $1,453 42 U.S.Avery 51,761 Scar=Federation&TixAdministrators CONCLUSIONS: 1. Even WITH a state income tax,Arizona's per capita grate tai revenue ranks 424 among the 50 start=. 2. curly Alaska,Washington,Nevada,Wyoming have tither higher sales tax yes or=eat tax bases that make up for their lack of as income tax,ginn that they rami 12,11,15,and 20,respectively.in per capita she tax revenue_ 3.Four of the statim without a state income tax rank dead last in tea ofez capita state t x revenue:TennP tsstc,Teras,South Dakota and New Hampshire(47,48,49,and 504,respectively). I �!1_^1 iii 1 ^ �\ T T !.n.•.� •.res FAX HO K1E051 Ts ,-� I � .Ji ��IT�a1t (� �ny� i!J ,'v} 7r+�� ! V� rif� 1i1L111`J1 iL J�Ja.���VL C Ii� 1SV. 3 P. 03/05/00 FRI 12:13 FA 5206212130 ECON & BUS RESEARCH 003 D. If these states don't levy State Income Taxes,fry what sources do they get their tax revenue? 1998 State Tar Collection by Source (Percentage of Total) Property Saxes Selective individual Corporate State Tax Tax Sales Tax Income Tax Income Tax Other Alaska 4.1 --- 9.3 --- 23.2 62.8 --- Florida 4.4 57.4 17.5 5.6 14.8 Nevada 2.2 54.9 30.0 --- ... 12.3 *New Hampshire 0.1 --- 49.4 6.1 23.4 21.0 South Dakota --- 53.1 26.2 .... 4.6 16.1 *Tennessee --- 57.6 13.5 2.3 3.7 13.0 Texas .... 50.6 30.1 ..... 19.3 Washington 17.3 58.5 15.0 --- 9.1 Wyoming 11.6 39.2 7.9 --- --- 41.4 Arizona 3,6 43.9 13.3 26.3 7.6 4.3 US Totals 2,2 32,9 15.0 33.9 6.5 9.4 Source:U.S.Bureau of the Census CONCLUSIONS: 1. Arizona's share of revenues derived from the individual income tax is already 21% below the national average. 2. Each dame states has at least twice as high a peg 8e in"other,"so they have had to look for alternative,perhaps n4raditiooal iotms o revenue sources. 3. AJaska rcccives 63 percent of it's mvezuc kora"ether,"which in their case is the severance tar on oil. 4. Wyoming derives 41.4%from"other,"which is mostly mineral related:severance taxes on crude oil,natural gas and coal;mineral royalties. Even part of their property tax is based on mineral assessments.Source: Wyonsing State Legislature Website, Budget/Fiscal:•/le isw .statc.._yscal!r e.htn; 5.The State ofWashington has a STATE property tax,imposed on all propertyin Washington,theproceeds going to oduca on.Source:State of Washington's Department of Revenue Website:btt,f/dor.wa,govrmaex.asp?tfvvador, 6. Nevada receives almost 83 percent of its steel=Sevenues from the state sales tax or selected sales taxes. This high sales tax revenue is undoubtedly linked to gaming and their hefty hotel/morel/bed taxes and taxes on restaunnt3 to tourist expenditures. Nevadacapturetheir extremely high, has gaming taxa,percentage fees and a casino me:minim=tax that,when combined,exceeds their general sales tax collections. Source:State ofNevada Home Page,G►cneral Revenue Summary-. littp://www.starc.nr.usibudgetirevenneltm. 7. New Hampshire and Alaska impose very high. gh carpotatc income taxes relative to other states in the U.S. Both receive almost a quarter of their revenues front this source. 3. Although New Hampshire shows no general saps tax in this table,their reliance on selective rales tax is very high.They have a communication services tax of 5.5 percent,a meals and rentals tax of&percent,a$.75 per 5100 real estate transom tax and a 5.52 per pack tobacco tax. They also have a static cducatiou property tax of S6.6 per 51,000 equalized value,a utility PrOpCity t is and a local property tax. Additional source:State of New Hampshire,Depattmeat of Revenue Administration Overview of New Hampshire Taxes: titG. osltrvennrlst- ►.htm 2 :4AY-10-'30 'NED 1 :25 ?!il POLITICAL SCIENCE E20 621HE1 , 4 08/05/00 FRI 12:14 FAX 5206212150 ECON & 3tTS RESEARCH 1004 E. 'Without xi income tax,at what IWO do they impose their sales tux? State Sales Tax Rates(excludes local sales tax rates), by states—for those states with no income tax-January 1,2000 Alaska none Florida 6.0%(food and prescription dugs exempt) *New Flarnpshire none Nevada 6.5%(food and prescription drugs cxcmvt) South Dakota 4.0%(prescription drugs exempt) *Tennessee 6.0%(prescription drugs exempt) Texas - 6.25%(food and prescription drugs exempt) Washington 6.5%('hod and prescription drugs exempt) Wyoming 4.0%(prescription drugs exempt)Also,tax rate may be adjusd armually according to a formula based on balances in the unappropriated general fund and the school foundation fund. Arizona 5.0%(food and prescription drugs exempt) CONCLUSION: 1. Five out of the nine states with no income tax have sales rates that are at legit 20 percent greater than Arizona's. 2. Nevada and Washington have state sates tax rates that are 30 percent higher than Arizona's. 3. Texas's sales tax rate is 25 percent higher than Arizona's. 4. Tennessee and Florida's sales tax rates aro 20 perc rat higher than Arizona's. P. So far,this information has dealt ONLY with state tax revenues. That Is only part of the picture because each state has different ways of allocating fiscal responsibility among state and local governments. Homer do the states compare when both state AND local revenue are considered? 1996 State AND Local Revenue . Total Own Source Revenue Total Truces State: Per Capita - Rank Per Capita Rank Alaska S11,880 I. 53,791 4 Florida $3,565 26 52,330 29 *New Hampshire $3,734 36 $2,254 33 Nevada $3,102 14 52,661 16 South Dakota 52,936 48 S1,965 46 'Tenn see 52,832 50 51,878 50 Texas $3,192 39 52,218 41 W $4,050 11 $2,795 11 Wyoming $4,729 4 $2,422 25 Arizona 53,096 43 52,295 30 US Average 53,724 . 52,597 Revenue Total Own Source is inclusive of all taxes and also includes a)current c argea for scrvicca,such as for education,hospitals,park;and b)miscellaneous general revenue,such as Interest,special assessments or sale of property. 3 :iIA`:-:0-J0 WED 1 :25 I'M POLITICAL s'c. :ICE FAX NO. szü o ?. 05/05/00 FRI 12:14 FA.I 5206212150 ECON & BUS RESEARCH 2005 CONCLUSIONS: 1.Arizona is well below US Average in both Total Own Source Rtrvenu a(17%below) and Taal Taxes(12%below). 2.Without it's 28.6 percent of state taxes coming from the individual income tax(Section D above),Arizona's per capita stasz and local revenues W1 by S513(26.3 percent of the per capita sty tax revenue in Section C). That guts Arizona at S1,777 5513 front the S2,295 in the above table)for per capita state and local taxes. This figure would put Arizona well below Tennessee's,which is currently iced 50Lk in per capita stale and local tax revenues, 3. Although New Hawaii=was ranked 50'5 in stair tax rcycTutcs,it is ranks 33"in state and local per capita tax ram:um,3 rankings higher tan ArizA7na. This means that New Hampshire shifts the bulk of its fiscal responsibility to local G. The breakdown of tical responsibility can be sem more clearly In the following sets of numbers. 19%State and Local Own Source Revenues (percentage of total) State Local Alaska 80.5% 19.5% Florida 47.8% 52,2% *New Hampshire 45.1% 54.9% Nevada 54.9% 45.1% South Dakota 55.4% 44.5% *Tennessee 51.6% 48.4% Tests 48.9% 51.1% Washington 59.4% 40.6% Wyoming 53.1% 41.9% Arizona 56.6% 43.4% US Average 55.6% 44.4% Spam:Federation of Tax Adrnimst atcrs CONCLUSIONS: 1. Florida,New Hampshire,Texas and Tennessee(to aim=extent)have shifted substantially more fiscal responsibility onto local governments than Arizona. 4 .SMAl 1 „0 WED 1 . 26 FM POLITICAL E ICE FAX NO. 520 6215051 05105/00 FRI 12:15 FAI 5206212150 ECOY & BUS RESEARCH Z oos H. Combining State and Loin Taxes by Source,the following gives a percentage breakdown of the total. 1996 State and Local Taxes by Sowce (percentage of total) Property General Selective buiividual Corporate Other Tax Sales Tax Saks Tax Income Income Alaska 29.6 4.7 5.7 0.0 14.2 43.9 Florida 35.2 35.1 17.3 0.0 3.0 9.4 Nevada 20.6 35.3 26.3 0.0 0.0 14.3 *New Hampshire 67.4 0.0 16.4 2.0 6.9 7.4 South Dakota 33.8 35.1 13.3 0.0 2.6 10.2 *Tams= 22.7 46.5 14.3 1.1 5.3 10.0 Texas 37.5 32.3 18.4 0.0 0.0 11.$ Washington 30.2 461 13.6 0.0 0.0 9.4 Wyoming 37.4 31.3 6.2 0.0 0.0 24.6 Arizona 30.6 34.0 10.7 14.7 4.4 5.6 US Average 30.4 24.5 11.6 21_3 4.6 7.5 CONCLUSIONS: 1. Arizona already relies more on the general salts tax and less on the individual income tax than other states,on average. 2.New Hampshire funds most of its public services out of local properly taxes. GENERAL CONCLUSIONS: Arizona has several choices: a.It can miraculously End and quickly develop new natural resources(tike Alaska and Wyoming). b.It can legalize gambling(Nevada). c.It can raise its sales tax rata by 20 to 30 percent(Florida,Nevada,Tennessee, Texas,Washington)and still not make up the difference. d..It can combine a higher sales tax rate with a new state property tax (Washington,New Hampshire). e.It can shift fiscal responsan ity to local governments(Texas,Tennessee,New Hampshire,and Florida),which will shift the burden in Arizona primarily onto local property taxes. f It can Lill to dead last in per capita own sourccatotal state and local revenues (below South Dakota and T ranked 4E and 504%respectively). 5 : Ay 10 o WED 1 • 26 M POLITICAL SCIENCE FAX NO. HO 62151151 P. 7 06/05/00 FRI 12:15 FAI 5208212150 ECON & BUS RESEARCH 007 I, Aren't sales taxes than individual income taxes because we can'export"salts taxes when tourists and other visitors buy tags in Arizona. It is nruc that sonic sales takes are"exported"when out-of-statics make purchases in Arizona. Bathe proportion exported is not as high as people may think. For pima County,it has been estimated that only between 13 and 20 percent of the sales tax is exported to people out of the area. Source:"Tax Exportation of the Proposed Half-Ccnt County Excise Tau."Final Report to Pima County Government,October 1998,by Alberta kLChaamey,Ph.D. It is also true that many other taxes are also exported out of the area/state. Property taxes are exported,for example. All property taxes paid by corporations whose 'sects arc held by non-Arizonans ars exported(ananvfacxuri g facilities,destination resorts,etc.). Property taxes paid by nom-resident Arizonans are exported(e.g.,owners of apartment buildings,commercial propesties,land,etc.). Property taxes paid by snow. birds on condominiums and b►oes are=ported. The individual income tax is also"exported."although the word"shifted"is more appropriately applied. A sigmficant portion of our Individual Income tar 1s actually paid by the Federal Government Arizona's individual income taxes are deductible from taxable income on our federal income taxes for those that itemize.This means that the Federal Government pays a portion of our individual income tax. The ave marginal federal income tax rate for Arizonans who itemize is probably greater than 28 percent. Therefore,more than 28 percent of the state income taxes paid by Arizonans who itemize on their federal income tax form is shred to the Federal Government If we eliminate the state tax.itemizas will have to pay more than 28 percent of what they would have paid to the state to the Federal Gtrvcrnmcat. "Note that sale:tames are not.deductible from federal taxable income. In 1997,633,956 out of the 1,966,894 Federal Income Tax returns filed by Arizonans itemized. And those itemizers deducted$2,328,832,000 in Arizona state and local taxes from their Federal Taxable Income. This figure includes a)Arizona state income bates,b)local property taxes,and c)the vehicle license(in lieu property)tax. Itemizers'fcdcrai taxable income is approximately 703 percent of total federal taxable income(estimate,derived from IRS,Statistics of Income Bulletin,Spring 1999). Assume that test federal income tax itemizers also account for 70.3 percent of Arizona taxable income. Tia Arizona is currently shifting approximately 28 percent of 70.3 percent of $2.1 billion(in Arizona individual;pot=taxes),do$413 million,to the Federal Government Therefore,we will lose the ability to shift almost 20 percent of our individual income taxes to the Federal Government as our Federal tax bill increases. 6 MAY-10-00 WE , O ., TQ 'h .�r 1 :27 i?'� POLITICAL tiv:�.t�i. FAX `d0. KO �21EUEi 05/05/00 FRI 12:16 FAI 5206212150 ECO:' & BUS RESEARCH 4j000s J. Proponents of eliminating Arizonz's income tax believe that additional growth in the economy will provide new sales tax revenues to entirely replace lost income taxes in only five years? How reasonable is this assumption? This assumption is not reasonable at all.. The following tablas present Arizona tax watt==from the individual income tax,the corporate income tax and the transaction privilege(sales)tax. ARIZONA INDIVIDUAL AND CORPORATE INCOME TAX REVENUES Individual Income Tax Catpatate Income Tax Combined 1998•-99 = 2,097,990,401 3 545,355.138 S 2.643.084,599 1997-98 3 1,362,514,798 3 528,061.073 $ 2,390,575,871 1915-37 5 1,656,414,355 I 600,890,432 3 2,269,304,787 1918-98 S 1,494,282,274 3 448,030.454 5 1,942,312,758 1994-95 3 1,396,299,528 3 416,711295 $ 2,313,010,821 1993-94 3 1,708,098,853 $ 302,616,297 3 2,010,715,150 1912-93 $ 1,606,910,521 3 239,269,405 $ 1,846,179,928 1991-92 3 1,448,985,375 3 211,445,624 5 1,660,431,499 1990-91 S 1.435,328,781 S 191,572,481 $ 1,627,001,262 . 19190 S 1,174 472,787 3 178,067,102 S 1,352.539,889 Source;State of Arizona 1995 Tax Handbook, 1990-95 Tax Handbook Supplement, 1999 Tax Handbook Supplement,Joint Legislative Budget Committee DISTRIBUTION OF ARIZONA'S INDIVIDUAL AND CORPORATE INCOME TAX REVENUES Urban Revenue X. State General Fund Voluntary Cont. Sharing Funds 1998-99,est 3 340,310,656 12.88% $ 2,302.028,875 3 680,268 1997-98 S 291,243,515 12.18% S 2,098,733.397 $ 698,398 1996-97 5 257,800,543 11.36% $ 2.010.937,159 3 567,080 1995-96 3 218,543,272 11.25% S 1,723,050,577 3 697,909 Source:State of Arizona 1995 Tax Handbook,1996-96 Tax Handbook Supplement 1999 Tax Handbook Supplement,Joint Legislative Budget Committee ARIZONA'S SALES TAX COLLECTIONS 1 D$49,sst. 3 3,119,641,322 1997-18 5 2,863.788,084 1994-97 5 2,688,797,389 19'96-36 3 2.554,305,344 Source:State of ArVona 19951-ax Handbook,1996-96 Tax Handbook Supplement,1999 Tax Handbook Supplement, Joint Legislative Budget Committee DISTRIBUTION OF ARIZONA'S SALES TAX State General Fund Xi Counties 'X. Cities K 1998-99,est. $ 2,417,022,383 77.48% S 434,484,720 13.93% S 268,134,239 8.80% 1,37-95 3 2.214,266,200 77.32% $ 401,645,341 14.03% 5 247,870,243 8.68'/. 1899-97 S 2,074,683,192 77.16% $ 379,767,513 14.12% S 234,368,584 8.72% 1995-96 3 1,985,939,340 76.97% 3 363,833,107 14,24% $ 224,632,897 8.79% Source:State of Arizona 1995 Tax Handbook, 1996-98 Tax Handbook Supplement, 1999 Tax Handbook Supplement,Joint Legislative Budget Committee 7 4 -:u-20 WED 1 : 28 rill !?nj T I 1 1$( a'�1( H FAX NO. 'HO 5215051�1♦ 1IIILU •• i �JL�111V�L VViL♦LVL Mi 05/05/00 FRI 12:17 FAX 5206212150 ECON & At1S RESEARCH i �vuir We can use FY 1999 figures to answer the question:"How fast would Arizona have to grow for the growth in sales taxes to make up for the revenue lost from repeal of the state income tax?* 1. 1f only the individual income tax were repealed,A tiz,oma's taxable sales would have to grow 67 percent in 5 years. That's an average anal compound grit rate of 10.8 percent(Le.,(1.10$) =1.67. This is the result of$3,119,641,322(sales tax collections)having to grow to $3,119,641,322+$2,097,696,461,or 55,217,337,783(the sum of the sales tax collections and the income tax collections. Some may argue that by giving bade the 52,097,696,461 in state income tom,the stat would generate additional sales tax as Arizonans re-spend the moor_ Nonsense. When the state governmens and its agencies spend tax donut.they pay statt salcs taxes on those expenditures. Furthermore,the state government pays state employees who pay sales boas,. Therefore,no additional sales taxes will be gcsier=i from the money not paid in state income taxes. Further,as will be discussed err,Arizonans will have to pay higher Federal ince=taxes lithe state income tax is 2. lithe corporate income tax were also eliminated,Aiiz no's taxable sales would have to grow 85 percent in 5 yearn,or 13.1 percent per year, This is the result of 53,119,541,322 having to grow to$3,119,641,320+$2,097,696,461 +$545,388,138,or 55,762,725,921(the sum of the sales taxa the individual income tax and the corporate income tax collections). 3. But it could be worse than this. When t c Arizona State Legislature makes a tax change,they usually hold cities and counties' armless." That is,they ass=cities and counties that their revenues will not decrease. Thus it is!kelp that the income tax revenue(both individual and corporate)that is currently deposited into the Urban Revenue Sharing Fund to be shared with cities and towns will have to be paid out of Arizona's general dad revenues following the elimination of the income _ In 1998,incorporated cities and towns received an estimated 5340,310,656. Thus,if both.the individual and corporate income taxes were eliminated and cities and towns were held ,"Arizona's table sales would have to grow 96 percent over 5 years,or 14_36 percent per year,compounded. This is the result of 33,119,641,322 having to grow to$5,762,725,921(sum of sales, indvidual inoome and=potato income taxes from above)+$340,310,656,Of S6,103,036,527. 4.Arid worse yet. All these computations assume eithcr that a)there will be no population growth(and therefore no need for additional services)orb) government services won't grow to accommodate the new population:rather,existing levels of government services will be spread over the expanded pcpuiatinn base. These computations will be explored below in more detail,taking into account population growth. 8 :.1AY- 0-+U0 'LVED i :28 :M POLITICAL vC:RICE AX NO. ALO2iU1h " ..LJ v 10 05/05/00 FRI 12:18 FAX 5208212150 ECON & BUS xhstuutt ''-.- 5.And even worse yet. That computations assume there will be no inflation.affecting the cost of providing government services_ Fur her calculations will take inflation into acceunt. Br How fast is Arena's personal income projected to grow over the neat 5 years? According to Marshall J.Vest,erector of the Forecasting Project at too UA Eller College,bona's personal ince is expected to grow approximately 31 percent from 2000 to 2005,or 5.6 percent per year. But in order to generate that growth in income, population will also have to grow. Population is projected to increase by 12 percent from 2000 to 2005(or 2.2 percent per year)and all those people will require additional state and local government services. wlynzr projected personal income is divided by projected popuiatio' a,per capita income will grow by only 18 percent((29,338.8/24,931.2-1).100) over 5 years,or 33 percent per year_ inflation will eat away mare than 10 points of that 18 percent growth in per capita income front 2000 to 2003(assuming as inflation rate of 2 percent annually). When deflated real per capita income is computed,its growth rate is only 6.8 percent over 5 years,or 13 percent per year. Projections for Arizona 2000 2005 P ulation 000'e 4,976.3 1 3 555.6 ^y w Personal Income • (Smillion) 124,064.3 162,995.4 Per capita persons1 income(S) 24 9312 22388.8 Per capita real personal incense ($2000) • _ ,_ 24,931.2 26,618.3 Source:Marshall J.Vest,Arizona's Economy,April2000,Becnomic and Business Research Program,Eller College of Business and Public Administration,The University of Arizona. 'Cotnjuted using inforn ation from Vest ojections and a 2 percent annual inflation rate. In other words,real per capita income is projectedto grow by 1.3 percent per year,but state sales talc revenutS must grow by 67 percent over 5 years or 10.8 percent annually to make up for the loss of the individual income taxes. And this 10.8 percent annual growth must occur with no population growth and no' in order to maintain.the current level of public services. The following table presents the 5-yam and annual growth rates=quint to make up the loss of mecum caned by the elimination of the income tax. Mu=diferent cases arc considered:elimination of the individual income tax,elimination of both the corporate and individual income tax,and elimination of both iso taxes combined with holding incorporatoi cities and towns harmless_ The required growth rates are computed under the assumptions of no population nth and no inflation,population growth but no inflation,and both population gm*th and inflation. 9 :ilAY-10-H WED ..M POLITICAL SCIENCE PAX NO. 500 621505i P. 11 08/03/00 FRI 12:18 FAX 3206212150 ECO3115 RESEARCH moult 5-year and Annual Growth Rates Required for Arizona Taxable Sales to make up the-- Revenue Loss of Elimin the Income Tax hoer Different Circumstances LctL.&1or Population Growth and Inflation No populadon ?ops1ation growth of , Population growth or growth,no inflation, 11;t eager 5 years, 11'l.over 5 years, level of government no inflation,per inflation of 2%per services held capita level of year,per capita level constant i government services of government Which Taxes Will be ! held tunstant services held Eliminated constant r—Elmiiate Individual 67 percent over 5 85 percent over 5 105 cent over 5 Income Taxes years or 101 percent years or 13.6 percent , years or 15.5 percent snnualty j � annually Eliminate individual ' 85 percent over 5 105 percent over 5 127 percent over 5 —I and corporate yeas or 13.1 percent years or 15.5 percent years or 17.8 percent income taxes anallyanimal! annuall Eliminate individual 96 percent over 3 118 percent over 5 1140 percent over 5 and corporate years or 14.4 percent years or 16.8 percent years or 19.2 percent income taxes and annually annually annually hold cities and towns harwilezi 1 L. Would local governments be hurt fiscally if the state individual and corporate income taxes were eliminated. Absolutely. Local governments would be hurt both directly and indirectly. Local goveromeuta would be hurt weedy because fiscal responsibilities inevitably would be shifted from the state to local govemnicnt entities Incorporated cities and towns would lose money directly become currently they receive 15 percent of the individual and corporate income tax collections. According to ARS.43-201_Urban Revenue Shing Fund. An amount equivalent to 12.8 parent of the net prod of state income taxes(individual and corporate)collected two fiscal years prior to the current fiscal year shall be credited to the Urban Revenue Sharing Fund for sharing revenues with incorporated municipalities. Each city or town receives a share of this fund in the proportion their population bears to the total population based on tie last U.S.decennial of special census.The percentage for FX' 2001 and beyond is supposed to increase to 15 percent ofntt income tax receipts. This was supposed to have already happened,but was postponed. Source:State of Arizona 1995 Tax hook prepared by the Joint Legislative Budget Committee,State of Arizona,and the 1996-98 and 1999 Supplements. 10 1940 the taxpayer's watchdog for 60 years. 2000 , 1 ARIZONA TAx RESEARCH ASSOCIATION NEWSLETTER VOLUME 60 NUMBER 2 FEBRUARY. 2000 ATRA OPPOSES INCOME T The Arizona Tax Research Association STATE GENERAL FUND REVENUE REVENUE IMPACTS: The initiative's (ATRA) Executive Committee voted FY 2000 impact on the state general fund is dramatic. unanimously to oppose the initiative being Corporate Income For Fiscal Year(FY)1999 the net collections circulated to eliminate Arizona's personal Tax 9% for individual and corporate income tax were and corporate income tax. This is the first as follows: time ATRA has taken a position on an Individual Income Tax $2.098,349,339 initiative prior to its qualifying for the ballot. Corporate Income Tax $ 545,388,138 Explaining the move to oppose the initiative Total $2,643,737,477 now,ATRA Chairman Dick Foreman said, Individual Sales "Arizona citizens need to be alerted now & Use Iabout the significant damage this initiative will do to the state's budget. Properly Tax Tax distributed as follows: g P - 47% educated, most Arizonans would not lend 39% •S2,302,706,944 06,944 to the state gene:al fund their support for qualifying this initiative for ? •3340,310,656 to city revenue sharing the ballot." •Hr •S719,878 to income tax checkoffs Dubbed the"Taxpayer Protection Act of <'s;'' x.; 2000,"the initiative calls for elimination of taxation of income on individuals, Other Revenue °'o See Income Tax, page 3 corporations, partnerships, and other legal entities after December 31, 2004. In TRA : legislature that result in a net increase in state revenue to be submitted to the voters at the The remarkable impression one gets after perusing ATRA s archives is how little taxpayer issues have changed. Sure budgets and levies have grown. An ATRA Newsletter article next general election.Lastly,the act permits candidates for the offices of President of the in 1944 exclaimed"School Expenditures Soar' and reported that statewide school district United States and the U.S.House and Senate budgets had reached the "huge sum" of S12.6 million. Then, as now, much of ATRA's to sign a pledge to eliminate the federal efforts were in drawing the connection in taxpayers' minds between government spending income tax and the IRS in favor of the and taxation. Another 1944 Newsletter reminded readers that"The time to fight excessive enactment of a federal tax on economic taxation is at the time the budgets of various taxing units are being compiled." consumption. One eyewitness to ATRA's early years was none other `« �` s.•4 4.�.....s.,�::_:.-�"` •`• " .:r'; than Edwvnne C. "Polly" Rosenbaum. Most Arizonans bx _ ,�; . `; t:; Inside . . - know about this widely respected centenarian's 46-year .4 t - • tenure in the Arizona House of Representatives and her ��\ - �� Counties lobby to increase leadership in countless endeavors resulting in the - . • taxes, circumvent levy limits Legislature proclaiming her Arizona's First Lady. What ti through jail 2 few people know is that Polly had a brief tenure on ATRA's pagestaff during the 15th Legislature in 1941. "I would take the .� streetcar from the ATRA office in the old Heard Building t'. - . 11B2333 would cage on Central Avenue, down Washington to the Capitol to '-_':= f-: corporate income tax "�~� -'`' ''- pick up copies of the newly introduced bills," Polly °• . apportionment,page 2 remembers. "Steve Spear was a real task master. Getting • •. -1......‘,.. . the analysis of new bills to members on time was a real . a r � K-12 bills that increase taxes �= pnonty. _�, , and undermine equity,page 3 See Polly, page 4 Polly Rosenbaum, 1949 ARIZONA TAX RESEARCH ASSOCIATION FEBRUARY 2000 Income Tax Inve would result In significantoma Q o s ebudget Continued from page 1 As the pie chart on the page 1 shows,the LMPACTS ON OTI1ER TAXES: popularity at the local level.Fourteen of the individual and corporate income tax revenue If successful, the initiative will clearlyut 15 counties now levy a sales tax on top of account for 48 percent of the state's general P those of 37 cities and towns. overall on the two other major taxes used The o erall fund revenue.Individual income taxes make in Arizona: property and sales taxes. And. sales tax rate in some areas of Arizona up the majority of the income taxes at 39 while increases in the sales tax would have already reaches 3.8 percent. These high percent with corporate income at 9 percent. to be voter approved.increases in property overall rates already provide an incentive Although individual income taxes make taxes would not necessarily require a public to avoid tax through the use of the internet. up a significant portion of the state's general vote. Instead of requiring a public vote on Future growth in the state sales tax rate fund, it is not the result of higher than any act that increases taxes, the initiative would only exacerbate this problem. average income tax burdens.In fact,of the relies merely on the current constitutional THE PROPONENTS: The initiative is being three major taxes(property,sales&income), requirement for a two-thirds legislative vote circulated by a grou callingthemselves the . � P per capita individual income taxes are the for acts that provide for a net increase in Taxpayers Protection Alliance (TPA). lowest. When compared to other states, general fund revenue. The Legislature's TPA's own literature makes clear that Arizona's per capita individual income tax financial relationship with K-12 school Arizona is merely a testing go and for the burden of 5399 ranks Arizona 38te districts actually allows the flexibility to groupsrimary goal;the elimination of the P nationally, 33 percent below the national increase school property taxes without federal income tax and its replacement with average.In recent years,Arizona individual increasing state revenue. Increases in the a national sales tax.TPA boasts of a steering income tax rates have been cut 30 percent g qualifying tax rate (QTR) for schools committee whose members were involved for a reduction of over S500 million. increases school district property taxes and in the successful policy"drugg olic reform" Arizona's corporate income tax rate, decreases state aid to schools. initiatives in 1996 and 1998.TPA notes that although still higher than average,has been Although it could be accomplished the success of those initiatives was the the target of reductions in the last two without voter approval,state policy makers combination issues that "may or may not legislative sessions.Arizona's corporate rate would no doubt be reluctant to increase overlap."The same strategy is employed this has been reduced from 9 to 7 percent. property taxes markedly. Increasing time by combining the elimination of BUDGET LMPACTS: The only recognition homeowner property taxes, in addition to income taxes with the public vote that the initiative creates a massive budget being politically unpopular, has practical requirement for state tax increases and the deficit is that it gives the legislature four limitations because of the 1 percent cap on pledge for officials to eliminate the federal years to wean themselves off the money.As primary taxes. Business property tax income tax. In the coming months ATRA the pie chart on page 4 shows,the majority burdens already place Arizona among the will publish further analysis on the of state budget (61 percent) is spent on top five states nationally. damaging impacts of the initiative. education (K-12 schools, community Sales taxes,which already fund 47 percent colleges and universities). Another 32 of the state budget, have also gown in percent of the budget is dedicated to the department of corrections, public safety, increase K-I 2 bills that-.health services and AHCCCS. taxes and The requirement that any increases in undermine equity taxes in other areas receive statewide voter approval appears to suggest that the HB2 24 schools;adjustment for tuition loss: Allows school districts to increase proponents of the initiative believe that the taxes and spend outside their budget limits to compensate for the loss of students massive budget deficit caused by the who no longer need:to be"tuitioned in"from other districts. initiative should be closed through budget 102233/SB1033 school facilities;ruraldistricts;mileage: Enhances an cuts. Those reductions would have to cut unnecessary entitlement giving statutorily-defined school districts 5%more money heavilyinto education, corrections, and from the School Facilities-Board whether_ they need it or not. health care. ,.. : ,.. . The budget fallout from the initiative BB2283 technological education districts;formation Repealsthe requirement would also likelyaffect local governments that joint technological education districts obtain voter approval for their creation. . a that have financial relationships with the HB2508/'SB1148 school districts;financial autonomy: Allows school districts to state.Because city governments also receive exceed their budget limits by the amount of interest.earned from taxpayer dollars. proceeds of Arizona's income tax, the SB 1095 schools;energy efficient contracts: Extends the ability for..certain school initiative affects them directly. On a per- districts to continue levying property taxes for"energy efficient"contracts..This is capita basis,cities shared in$340.3 million despite the fact the authority for such spending outside the budget limits expired a g P in income tax revenue in FY 99. The City year ago. of Phoenix received$114.8 million,almost 9% of their general fund budget. , 3 ARIZONANS AGAINST UNFAIR TAX SCIFEMEE F A C S I M I E TO FROM DATE # OF SHEETS S INCLUDING COVER COMMENTS 61 East Calumbus avenue • Suita 200 • Phoenix, Arizona 850:2 • an) 602.212,163+ fax) 502.2('.0003 CD (I) MS ill SEM(1) •=MIr- .... E f. RS (1) (I) W O C o 11Z • (13 0 0 N(0) = •- 4., as (11) o N —0 co ...., ai 1.... > , V Q O p .�. O 0C o (")13 o v o C W ''"' '1'1"Iftftft N , 1..• C 4.4 1404 Vs" cin cv) (13 C) 7:3 (/) < '.12' [3- 11%1cp 4D = C i O o crj .� C3 •_. 7:3 EL E- R; ".- N.... Q ,::: ,... 0 p O 411111 N ,,,�,, a, r -� Cl) >, Z1/4..) 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A - Arizona has begun collecting signatures for **** 0.0.— - • --_. the "Taxpayer Protection Act of 2000." **'� Prospectus t t***k This ballot initiative would repeal the state -- personal and corporate income tax over Duestiofs&AnSWerS i four years and allow the voters to decide 4101111110000411himr--- . 1 - l i< on any future tax increases at the ballot Tax Comparisons t box. This initiative would also require tnilT- Wording x candidates for federal from Arizona to be 0101111111111111611 able to pledge to eliminate the Federal Organization Income Tax and IRS and have it stated beside their name on the ballot. The . • - Taxpayer Protection Act of 2000 is chaired by former Arizona Secretary of State, Media Coverage ' Richard D. Mahoney. The Treasurer is Phoenix Physician and political activist, Dr. - . Jeff Singer. Members of the Steering Committee include: Rep. Matt Salmon Quotes / (R-AZ); former Arizona Attorney General, Grant Woods; former U.S. Deputy ► - Secretary of Agriculture, John R. Norton; former Arizona State Republican Party i How You Can Help Chairman Burt Kruglick; and other Arizona community activists. For more - information, please browse the website and do not hesitate to contact us. -_ WE CAN START THE SECOND AMERICAN REVOLUTION HERE IN ARIZONA! _ . _ . - l -. . Taxpayer Protection Alliance Headquarters: (602) 866-2394 1111111 3431 W.Thunderbird,Suite 302 PMB, Phoenix,AZ 85053 _ r . 1 of 1 1/11'7000 12:25 PM ---_.. nrrn:;;„izw,-u•axennerax.nrw,nrnsnecn1.c nTT7 � � -, Freeing .N4 USA r (P4m10.....,SPettLIS:r i • General elections can be classified as"change elections" or "status quo" -• . - elections. "Change elections" are animated by a general public Prospects 1 sR 7 dissatisfaction with the state of affairs—there is a desire to completely ,, change leaders and to re-orient public policy. Examples of"change Questions&Answers ` elections" are the elections of 1980, when Ronald Reagan, promising to "get government off the backs of the people," replaced Jimmy Carter who Tac Comparisons r presided over an era of"malaise;" and 1992, when Bill Clinton promised p ed to Initiative Wording p "focus like a laser beam" on domestic economic issues and replaced George Bush, who was viewed as aloof and disinterested in domestic Organization F issues. "Status quo" elections included the"stay the course" elections of -. _. _. 1984 and 1998. Mia(overage Each "change election" has been colored by some pressing issue of the day, Quotes sometimes fueled by grassroots political activity. In the case of the 1980 - - election, California's Prop. 13, a grassroots effort for major tax reform, - How You Can Help I played a role in setting the agenda in Washington when the new _ -_-- - - administration took office. In 1992, the agenda-setting issue was "balancing -. the budget,"fueled by the third party Presidential campaign of Ross Perot. AMNIA As we approach a new millennium, the public is examining the roads most recentlytraveled, andgrows increasingly concerned ' _ g y with America's future course. Pew Research and Zogby polls show an increasing disaffection with America's political leadership and, despite good economic times, a feeling that something is wrong with the way things are going in Washington. All indications are that the Election of 2000 will be another"change election." America is poised for a new set of leaders in Washington, and is searching for a new direction. This provides an excellent opportunity to influence the national agenda for the next five to ten years. While"tax reform" always appears on lists of voter concerns, lately it has not been near the top of the list of pressing issues. In part, this is due to the fact that the public has grown cynical, and view politicians' promises of"tax cuts" and "tax reform" as empty statements. On closer inspection and more in-depth questioning, however, it is clear that there is a general public disgust with our tax code and the federal income tax system. It is seen as corrupt, confusing, and a tool of special interests. If, on the day America selects a new President and Congress, the passage of a radical tax reform initiative is an accompanying news item, then radical overhaul of the tax system will become one of the top items on the new agenda. The reverberation generated by such an initiative will start a national discussion about scrapping the system. An initiative is not a poll—it is a tangible vote of the people.As such, it resonates more powerfully with elected officials. The Taxpayer Protection Affiance (TPA) is a non-partisan coalition of citizens convinced that the federal income tax can not be reformed. Any revision or restructuring of the tax code that leaves in place an income tax and an IRS amounts to rearranging the chairs on the deck of the Titanic. Unless the system is torn out by its roots, our present tax code monstrosity will inevitably grow back. TPA supports the complete elimination of the income tax and IRS and its replacement with a national retail sales tax on consumption. Americans for Fair Taxation provide an excellent model for I c 3 .;12iX00 Z :30 P.M .��a.�.vvv ar..✓v a a.a tax reform with their"Fair Tax" (H.R. 2525) proposal. The Taxpayer Protection Alliance wants this kind of reform proposal to receive prominent attention and consideration by the next government in Washington. In 1998, operating on a shoe-string budget,we succeeded, with only three months in which to work, in getting the "IRS Elimination Pledge Act of 1998" on the Arizona ballot. With almost no funding for a media campaign, and the "free media' preoccupied with a medical marijuana ballot initiative, the proposition lost respectably 559 -4596. Interestingly, the initiative carried heavily Democratic rural precincts. Many of TPA's steering committees have experience from their involvement in Arizona's landmark drug policy reform initiative passed in 1996 and re-confirmed in 1998. One lesson from those campaigns was that victory is enhanced by crafting an initiative that has multiple components, each appealing to different constituencies—ultimately forming a coalition that insures voters' approval. The drug policy initiative combined the issue of "medical marijuana" and other illicit drugs with non-incarceration (and referral to drug rehab instead) of non-violent drug offenders. Thus, it appealed to those concerned with "medical rights" and those concerned with criminal justice. The unifying theme was: "Our current approach to drug policy is not working—it's time to try another way." This time around, TPA will use the same approach. The "Taxpayer Protection Act of 2000"will do the following: • Completely abolish the Arizona personal and corporate income tax • over four years: • Require that any passed and signed legislation which has the net effect of increasing state revenue be first approved by a voter referendum before it can take effect; • Permit all candidates for federal office, in the primary and the general election to sign a pledge stating they will advocate and vote for the elimination of the federal income tax and IRS to be replaced by a federal tax on economic consumption—and have it so stated next to the candidates name on the ballot. Such an initiative appeals to three constituencies whose principle concerns may or may not overlap: (a) individuals and businesses wishing the elimination of the state income tax; (b) citizens upset with repeated attempts by legislators and politicians to skirt existing law and use taxpayer money to fund stadiums, hotels and other corporate welfare projects; (c) people committed to a national retail sales tax reform proposal. The unifying theme: "Our elected officials have promised for years they will eliminate the state income tax,they repeatedly find ways around the law to channel our money into corporate welfare programs,and they have promised for years to make our federal income tax`simpler,fairer, flatter.' But nothing ever happens.We no longer trust our elected officials with the tax issue.We are taking matters into our own hands. WE,THE PEOPLE HEREBY EUMINATE THE STATE INCOME TAX,INSIST ON REVIEWING ALL STATE REVENUE-ENHANCING MEASURES,AND WANT OUR CANDIDATES FOR U.S.OFFICES TO PUT THEIR POSITION ON TAX REFORM IN WRITING,SO THEY CAN BE HELD ACCOUNTABLE." The Taxpayer Protection Alliance include, on their steering committee, former US Undersecretary of Agriculture, John R. Norton, former Arizona Secretary of State, Richard D. Mahoney, former Arizona State Attorney 2 of 3 ,1 0 311 ��C0 12:32 PM General, Grant Woods, The Honorable Matt Salmon, Member of the U.S. Congress, Tax Attorney and CPA Steven D. Morford, Lori Klein (Executive Director of the Taxpayer Protection Alliance), David Crete (former Maricopa Country Republican Party Chair), Neland D. Nobel (Vice-President of PaineWebber), and Dr. Jeffrey A. Singer(medical doctor, Director of the Maricopa County Medical Society, and political activist). Campaign and media consultant is Sam Vagenas,who specializes in state initiative and referendum campaigns and successfully directed the drug policy reform campaigns of 1996 and 1998. Steven Hayes. President of Citizens for an Alternative Tax System (CATS) endorses our campaign. Leo Linbeck and Jack Trotter of Americans for Fair Taxation, endorse our effort as wee . On September 7, 1999, Fairbank,Maslin, Maulin and Associates completed a poll of 800 registered Arizona voters, in which they asked how they would vote on the proposed initiative. 61% responded in the affirmative. They also broke the sample into two equal-size groups, and told Sample 8 that eliminating the state income tax would eliminate half of the state budget 59%still answered in the affirmative. Sample A was not told that the state income tax accounts for half the state budget. 63% of Sample A answered in the affirmative. Highlights of the poll are included as exhibits in this prospectus. Arizona is a small state with just two major media markets. It has a long history of anti-tax and populist sentiment. In 1996, Steve Forbes scored an upset in the Arizona Presidential Primary largely based on his appeal for major tax reform and his "outsider"status. In 1998, "The IRS Elimination Pledge Act" lost 55-45 with a $120,000 media budget and a 1 week long radio only media campaign. This time around, with a proposition that has multiple attractive components, and with much more lead-time, TPA has an excellent chance for victory. While we can expect opposition from special interest groups concerned about funding losses associated with elimination of the state income tax, the popular appeal of the proposal should carry the day. With a $4 million budget, "The Taxpayer Protection Act of 2000"will pass. On Election Day 2000,after the winning and losing candidates are announced,it will also be announced that Arizonans,fed up with the income tax,voted to eliminate their state's income tax and called on their US Representatives to pledge,in writing,to do the same on the national level.That will spark a national brush fire and focus our new leaders'attention on fundamental tax reform.It will shape the agenda for the next millennium. Arizona and federal law places no limits on the size of contributions that can be made to initiative and referendum campaigns, and corporate contributions to such campaigns are allowed. sack to Top 3 013 : 1/200 .2.5 PM ✓r l�V V V V /fir.✓./ Overview Page 1 of 1 :: Freeing 0 . I se . •- . 4111(111111111 ''' THE USA -. vetitevi _.:,-.....FROM THL, •:' :iNCOMt: .-, .,.... : .• -T Ax WHAT IS THE TAX PAYER PROTECTION ACT OF 2000? R7"•---w- - The "Taxpayer Protection Act of 2000" is a non-partisan state wide initiative to Overview I abolish the state personal and corporate income tax over four years. "The Taxpayer Protection Act" goes further by also requiring any future revenue Question&Answers enhancing measures passed by the legislature be referred to the voters ters for approval before they can take effect (while retaining the �,supermajority,�requirements for Tax CCMparisons legislative passage of such measures.) ) I ainafioraing Furthermore. it calls for our federally elected officials to pledge to abolish the federal .11.. _ _ .. income tax and have it so written on the ballot next to their name if they are a Organizationcandidate for federal office from Arizona. Media Coverage E WHY.� DO WE NEED THE TAXPAYER PROTECTION ACT OF 2000? "` • A state with the quality of life and location of Arizona should be competing far more Quote effectively against other Sunbelt states for new economic business andualitY jobs. q -- . _ But we are weighed down by an income tax. This is why manybusinesses are �f°�Y��(cnd� Y. _ � choosing Austin, Texas, Jacksonville, Florida, Las Vegas, Nevada or Seattle, :. • . Washington for new business locations and passing over Arizona. If we follow the �'� '"-- lead of states like Texas, Florida and Nevada and get rid of our income tax the _4-4_, --boost to our economy will bring Arizona to unprecedented levels of prosperity. It is the right of the citizens of Arizona to have control over their own income. Arizonans should tell the government and politicians at what level they agree to be taxed on consumption. The "Taxpayer Protection Act"will empower the voters to •r require the government to live within its means, and stop spending taxpayer money on items not first approved by the voters. In other words, "NO TAXATION WITHOUT REPRESENTATION." HOW WILL THIS INITIATIVE IMPACT TAX REFORM ON THE NATIONAL LEVEL? By passing this initiative in November, we will send a clear message to the new President of the United States that real tax reform means fundamentally changing the tax system. Our experiment with the income tax since 1913 has been a colossal failure. Even the U. S. House Ways and Means Committee Chairman, Bill Archer(R- TX) is calling for the complete abolition of the federal income tax and IRS to be replaced by a visible national consumption (sales) tax collected by the states. Our initiative in Arizona can set the pace for fundamental tax reform on the national level similar to the way Proposition 13 was used by President Reagan to set the stage for tax cuts back in 1980. HOW CAN WE WIN? We need to collect at least 230,000 signatures by the end of June to qualify for the November 2000 ballot. It will cost us close to $350,000 to cover the cost of circulators and it is estimated that we will need an additional $2 million for a proper media campaign. Needless to say, we could use your financial support and/or help gathering signatures in your neighborhood or clubs. In a recent poll taken regarding "The Taxpayer Protection Act", 63% of Arizona voters polled said they would vote YES to this initiative. We know that we can win and with your help we will win! tack to Top http://axethetax.org/overview.htm 3/29/00 Freeing' T"' USA I & AnswetsFROM THEE. 1 QUESTION:Arizona's state government shares revenue with various --- municipalities and agencies. It we eliminate the state income tax, how will Prospectus these agencies and cities receive their share of state revenue? ANSWER: The Taxpayer Protection Act only deals with the way the state Questions&Answers z collects its revenues-not the way it spends or distributes them.We believe that an income tax is unfair, confusing,corrupt,and a tool of Tax Comparisons Nominnumminir_tspecial interests.That's whythe TPA eliminates it. But there are Cnitiolive Wording currently nine states that have never had an income tax.Some, such as Florida,Texas,and Tennessee,are more populous, diverse, and Organisation complex than Arizona,with more numerous large municipalities and - _ agencies.These states have been operating revenue-sharing Mia Coverage arrangements for years without having an income tax.The Taxpayer Protection Act gives Arizona four years to learn how Florida's state Quotes government shares revenues with cities like Miami,Tampa,Orlando and Jacksonville-and how Texas distributes revenues to Dallas, Houston, • How You Con Help I San Antonio and Austin.If they can do it,then surely we can here in Arizona The important thing to remember is the Taxpayer Protection Act - only deals with the WAY in which revenues are collected-not the way in _ y2 _ which they are next distributed or allocated.To link the two issues is to Erma Ejnfl mix apples with oranges. = QUESTION: If we eliminate the Arizona income tax,won't this lead to an increase in the state sales tax-which can be regressive and hurt the poor? ANSWER:All national sales tax proposals deal with the issue of regressivity by rebating to every American the sales tax paid on the essential necessities of life-so that sales tax is only paid on "discretionary"consumption. But the Taxpayer Protection Act doesn't increase or enact new tax in Arizona.It simply eliminates the state income tax If it becomes necessary to raise or create a new tax in order to offset any loss in revenue that results from repeal of the state income tax,the Taxpayer Protection Act requires that any tax or fee increase passed by the legislature and signed by the governor must next be referred to the voters for their approval before it can become law.So, therefore, no new tax or fee increase can ever be enacted that does not seem fair to the voters of Arizona. QUESTION: It is estimated that the state income tax accounts for anywhere from 1/3 to 1/2 of the revenues collected by the state. How would the state make up for revenues lost by eliminating the income tax? ANSWER: First,it's important to visualize the boom in economic activity that will be generated in Arizona by eliminating the income tax and allowing Arizona to compete on a level playing field against other sunbelt states(like Florida,Texas, Nevada)that don't have income taxes.Seven of the last nine cuts in state taxes resulted in increased revenues to the state-a direct result of increased economic prosperity stimulated by the tax cut So we have no reason to believe that repealing the state income tax will mean a loss of 1/3 to 1/2 of revenues collected by the state.Second, it can not be over-emphasized that the Taxpayer Protection Act requires that any tax or fee increase (direct or indirect) be referred to the voters for their approval before it can take effect-so any attempt to make up for any possible revenue shortfall must be one that 1 of 2 3111,000 1''_38 PM the voters find satisfactory. Finally, here's a novel idea: the state government can look at ways to reduce spending!There certainly must be one or two areas where savings can be realized. QUESTION:Won't the state legislature just raise the property tax or sales tax to make up for the loss of income tax revenues? ANSWER: The Taxpayer Protection Act makes certain that no tax or fee increase (either direct or indirect)can ever occur unless the voters approve. QUESTION: Even though the Taxpayer Protection Act features a provision where candidates for US House,Senate,and Presidency can pledge to advocate and vote for elimination of the federal income tax and IRS-and have it so-stated next to their names on the ballot-.how can we expect any state initiative to lead to repeal of the federal income tax? ANSWER: Passage of the Taxpayer Protection Act sends an important message across the nation:Arizonans eliminated their state income tax, over the objections of the political establishment,and called on their representatives in Washington to do the same for the country. Passage of the Taxpayer Protection Act will make Arizona the first state in US history to have enacted an income tax and later repealed it.It will generate enthusiasm for grassroots organizations in other states to eliminate their states' income taxes.And this puts more power behind a national movement against the corrupt and unfair form of taxation known as the income tax.The Washington politicians are very sensitive to these kinds of messages,and momentum will build in the halls of Congress for eliminating the national income tax. Remember: the federal • income tax did not start in Washington,DC.it started in the states (Wisconsin, under Progressive Governor Robert LaFollette's influence, was the first state to enact a progressive income tax at the dawn of the twentieth century)and percolated up to Washington.In the same way, elimination of the income tax will start in the states and percolate up to Washington.In November 2000,at the dawn of the twenty-first century, Arizona voters can make history by lighting the fuse that will lead to the demolition of the federal income tax and IRS. Back to Top 2 012 ��Z/2000 �2: 1 ✓M ✓,•,�.,vvv a�..�a a a•a ....r.. ••••••....,......................,:..„..:::::::,,....:.:::::.:::. • ..,(irJ_____ . , Freeing • '"' USA - FROM --.INCOZEIE ----.:TAx _ __,.........._., _ Income Tax L Flat Income National Retail Prospectus Tax Sales Tax 0 uestians&Answers -�a=-r•+-" e�-!.'�-,...ma -.w^ Cr1._:a•• yc�^.>ta. --i7.��R. t.r- r�3�•_:w:.: •. 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C. .`ate\�\♦.�•..-\.V.ry♦V�./.\►.V.....• . ,.....,_,_ _ - .. , Freeing TH' USA , initiative aiding FROM T I Ic .--.:TAX - r____ An Initiative Measure Taxpayer Protection Act of 2000 Prospectus Questions&Answers v PROPOSING AN AMENDMENT TO THE CONSTITUTION CF ARIZONA: AMENDING ARTICLE IX, SECTIONS 12 AND 22 RELATING TO STATE TAXATION: AMENDING Tax Comparisons a ARTICLE VII BY ADDING SECTION 19 RELATING TO A VOLUNTARY FEDERAL initiative Wording z INCOME TAX ELIMINATION PLEDGE. Organization r TEXT OF THE PROPOSED AMENDMENT Media Coverage ` Be it enacted by the people of the State of Ar=ena: _ Quote I The following amendments are proposed to become valid when approved by a majority of the qualified electors voting thereon and upon proclamation of the Governor. How You Can Help - Section 1. Title. _ s - = This initiative shall be known and may be cited as the 'Taxpayer Protection fit - Act of 2000." - Section 2. Findings and Declaration of Purpose. A. The state of Arizona's income tax on individuals and corporations doesn't work. It is a tool of special interest groups. It is complicated, confusing and stifles economic growth. The state income tax will be eliminated over the next four years. B.Any future tax increases of any kind will be submitted to Arizona taxpayers for their approval. No increase can take effect without a majority of their vote. C. The people of Arizona have a substantial interest in ensuring its citizens are informed prior to the date of each primary and general election about the position held by candidates for elected public office, both state and federal, on issues of significance to Arizona voters. Among the issues of significance to the people of Arizona is the position of the candidates for elected federal office on a legislative proposal to replace the federal income tax with a national consumption tax, defined generally as a tax imposed on the gross receipts from the retail sales of any taxable property or service sold in the United States, but not including a tax calculated at a flat or fixed rate on personal or corporate income, and thereby to abolish the Internal Revenue Service. D. Arizona's candidates for federal office will be required to state their position on eliminating the federal income tax and replacing it with a national consumption tax, and thus abolishing the Internal Revenue Service. Their pledge shall be stated on the ballot for the Arizona general election until such a consumption tax measure becomes the law of the United States of America. Section 3. 1 of 4 3'1:2000 12:52 P: Article IX, section 12, Constitution of Arizona, is amended as follows: Section 12. Authority to levy and collect taxes; exemption of income from taxation Section 12. The law-making power shall have authority to provide for the levy and collection of license, franchise. gross revenue, excise, income. collateral and direct inheritance, legacy, and succession taxes, also graduated income taxes, graduated collateral and direct inheritance taxes. graduated legacy and succession taxes. stamp, registration, production, or other specific taxes. THE LEGISLATURE MAY PROVIDE FOR INCOME TAXES THROUGH DECEMBER 31, 2004. BEGINNING JANUARY 1,2005, THE INCOME OF INDIVIDUALS, CORPORATIONS, PARTNERSHIPS AND OTHER LEGAL ENTITIES SHALL NOT BE SUBJECT TO TAXATION BY THIS STATE OR BY A COUNTY, CITY, TOWN OR ANY OTHER POLITICAL SUBDIVISION OF THIS STATE. Section 4. Article IX, Section 22, Constitution of Arizona, is amended as follows: Section 22.Vote required to increase state revenues; applications; exceptions (A)An.act that provides for a net increase in state revenues, as described in Subsection B is MAY BECOME PRELIMINARILY effective on AFTER the affirmative vote of two-thirds of the members of each house of the legislature. If the act receives such an affirmative vote, it becomes effectively immediately IS PRELIMINARILY EFFECTIVE on the signature of the governor as provided by Article IV, Part I, § 1, OR If IF the governor vetoes the measure, it shall not MAY become PRELIMINARILY effective unless AFTER it is approved by an affirmative vote of three-fourths of the members of each house of the legislature. AFTER PRELIMINARY APPROVAL AS PRESCRIBED BY THIS SUBSECTION, THE SECRETARY OF STATE SHALL PUBLISH, PRINT AND SUBMIT THE ACT TO THE QUALIFIED ELECTORS AT THE NEXT REGULAR GENERAL ELECTION AS A REFERENDUM AS PROVIDED BY ARTICLE IV, PART I, § 1. THE ACT SHALL NOT BECOME EFFECTIVE UNLESS IT IS APPROVED BY A MAJORITY OF THE QUALIFIED ELECTORS VOTING ON THE MEASURE. (B) The requirements of this section apply to any act that provides for a net increase in state revenues in the form of. 1. The imposition of any new tax. 2. An increase in a tax rate or rates. 3. A reduction or elimination of a tax deduction, exemption, exclusion, credit or other tax exemption feature in computing tax liability. 4. An increase in a statutorily prescribed state fee or assessment or an increase in a statutorily prescribed maximum limit for an administratively set fee. 5. The imposition of any new state fee or assessment or the 2 of,: :.72OOO 12:5.5 5 DM W authorization of any new administratively set fee. 6. The elimination of an exemption from a statutorily prescribed state fee or assessment. 7. A change in the allocation among the state, counties or cities in Arizona transaction privilege, severance. jet fuel and use. rental occupancy, or other taxes. 8. Any combination of the elements described in paragraphs 1 through 7. (C) This section does not apply to: 1. The effects of inflation, increasing assessed valuation or any other similar effect that increases state revenue but is not caused by an affirmative act of the legislature. 2. Fees and assessments that are authorized by statute, but are not prescribed by formula, amount or limit, and are set by a state officer or agency. 3. Taxes, fees or assessments that are imposed by counties, cities, towns ad other political subdivisions of this state. (D) Each act to which this section applies shall include a separate provision describing the requirements for enactment prescribed by this section. Section 5. Article VII, Constitution of Arizona,is amended as follows, by adding section 19: 19.Voluntary Federal Income Tax Elimination Pledge A. A CANDIDATE FOR THE OFFICE OF PRESIDENT OF THE UNITED STATES OR THE OFFICE OF UNITED STATES SENATE OR UNITED STATES REPRESENTATIVE FROM THIS STATE MAY, BUT IS NOT REQUIRED TO, EXECUTE AND FILE WITH THE SECRETARY OF STATE THE FEDERAL INCOME TAX ELIMINATION PLEDGE DESCRIBED IN SUBSECTION B.THE PLEDGE MUST BE FILED AT LEAST SIXTY DAYS BEFORE A PRIMARY ELECTION AND AT LEAST TWENTY DAYS BEFORE A GENERAL ELECTION.A CANDIDATE SHALL NOT BE DENIED PLACEMENT ON AN ELECTION BALLOT FOR FAILURE OR REFUSAL TO SUBMIT A PLEDGE PURSUANT TO THIS SECTION. B. THE TEXT OF THE PLEDGE SHALL BE AS FOLLOWS: PART A: 1, , VOLUNTARILY PLEDGE TO ADVOCATE AND VOTE FOR THE ELIMINATION OF THE FEDERAL INCOME TAX, THE ELIMINATION OF THE UNITED STATES INTERNAL REVENUE SERVICE AND THE ENACTMENT OF A FEDERAL TAX ON ECONOMIC CONSUMPTION. PART B: I AUTHORIZE THAT THE NOTICE "SIGNED THE FEDERAL INCOME TAX ELIMINATION PLEDGE" BE PLACED NEXT TO MY NAME ON THE ELECTION BALLOT AND IN ALL OFFICIAL VOTER EDUCATION PAMPHLETS IN 3 of4 3,1,200012:57PM • .• .. � c:.i...i(i.t;iC171.`JAnan IJIJ. WHICH MY NAME APPEARS AS A CANDIDATE. SIGNATURE OF CANDIDATE DATE C. THE AUTHORIZED ELECTION OFFICIALS SHALL PLACE THE NOTICE PRESCRIBED IN PART B OF THE PLEDGE NEXT TO THE CANDIDATE'S NAME ON THE PRIMARY OR GENERAL ELECTION BALLOT AND IN ALL OFFICIAL VOTER EDUCATION PAMPHLETS IN WHICH THE CANDIDATE'S NAME APPEARS. D. IF A CANDIDATE WHO EXECUTED THE PLEDGE IS NOT ELECTED, THE PLEDGE LAPSES AND IS OF NO FURTHER EFFECT. THE CANDIDATE MAY EXECUTE AND FILE ANOTHER PLEDGE FOR ANY SUBSEQUENT ELECTION. E. ANY RESIDENT OF THIS STATE HAS STANDING TO ENFORCE THE PROVISIONS OF THIS SECTION IN A COURT OF COMPETENT JURISDICTION. Section 6. Severability If any provision of this initiative or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the initiative that can be given effect without the invalid provision or application, and to this end the provisions of this initiative are severable. :atc to Top 014 /1 2000 x :59 DM ✓�LI LSV V V lir.✓/ ♦♦.♦ Organization Page 1 of I .-.. Freeing . -- (66:i...... ... "HE USA - 0(40. Ilt,..n. 110: II.. . _ FROM THE -' ,iNCONIt. .- .:TAX 47, Chairman The Hon. Richard D. Mahoney Overview Treasurer Cr. Jeffrey A. Singer Ouesticns&Answers Campaign Coordinator Sam Vagenas CnpuEsots Executive Director Lori Klein Initiative Wording Y SteeringCommittee Dave Crete Neland P. Nobel Organization J Ron Gawlitta John R. Norton :iia Coverage 1 Dr. Richard Fisher Robert A. O'Leary Quotes F Burt Kruglick David _ E. Reese How I Mac Macpherson Michelle Robson �-,-.....,,,,.„_,:„......:....2.... .�^-"t.~._ Rosa McCurdy The Hon. Matt Salmon ti.A -- Roy Miller Evan Scharf -'itiall --' ..._ . Steven D. Morford Terry Thomas r -.- - ^ -~ Robert J. E2Qert , Sr. Norman P. McClelland John Teets http://axethetax.oraiorg,anization.htm 3/29/00 "- ••\L .,i t•.•.t,t..yt\V\aaV Wr\•VrgI•:\:1\v VV.V.u.V.::W• Freeing I'E USA r Media Covetase FROM --,INCOhTIE ;TAx • Group wants to wipe out state tax ProspectusTucson Citizen. October 29, 1999 Questions&Answers r • Sponsors Say Tax Repeal Would Aid State Tax Comparisons ix Arizona Capitol Times. November 5, 1999 -. Inhii ,±i1 n-„lLIVIA;`i'kt',rlleTAX ora,nii c ut.0 nrrn v aFreeing • • T"t USA Quotes.. FRoAITHE -:-.._INCOME .: TAx "The hardest thing in the world to understand is the income tax." ------- - Albert Einstein Prospectus - - It costs small business $4 in compliance for every $1 eventually sent the Ouesticns&Answers . U.S. Treasury in income taxes." - - • --• -- . Kemp Commission Report Tax Comparisons I The power to tax involves the power to destroy." . Initiative Wording i Chief Justice John Marshall Organization 4 "The IRS has become a symbol of the most intrusive, oppressive, and - __ ty non-democratic institution in our society." Media Coverage t Fred Goldberg Former IRS Commissioner Quotes t >z The income tax has made liars out of more Americans than even golf." Will Rogers . Now You Can Help t -_ -- --- -- _ - "The American people have had ample opportunity to consider the income - - -_ .. . tax and found it sorely wanting... it deserves to die." ___ Rep.Christopher Cox(4th District-CA) • . "The income tax is the most odious, vexatious, inquisitorial and unequal of - • all our taxes... a tax on honesty, it tends to tax the quality out of existence." NY Tribune Editorial 1889 "Indirect(sales taxes) prescribe their own limit, which cannot be exceeded without defeating the end proposed—that is an extension of revenue... this forms a complete barrier against any material oppression of the citizens by taxes of this class... and is itself a natural limitation of the power of imposing them." Alexander Hamilton "When men get into the habit of helping themselves to the property of others,they cannot be easily cured of it." NY Times-1909 Editorial protesting a national income tax "In my opinion, our challenge will be no less than to pull the current income tax code out by its roots so that it can never grow back." Rep.Bill Archer(R-TX) Chairman of the House Ways and Means Committee "The answer is: a national retail consumption levy — a national sales tax... your savings aren't taxed.You determine your own tax burden by deciding what you buy and how much you spend." Jack Valenti President,Motion Picture Academy "It is time that we insist on a tax policy for grown ups and that means abolishing the income tax and replacing it with a tax structure whose first premise is the capacity of American citizens to make their own economic decisions responsibly...We must lead the people to the abolition of the slave tax." Ambassador Alan Keyes ARIZONA INITIATIVE QUOTES 1 of 3 :11;70CH3 1.19 P`1 ' •s..rvu.v.ur.ry i.r... ....u.• • "A state as great as Arizona is not able to compete on a level playing field with other sunbelt states like Florida, Texas and Nevada,where businesses and people are not encumbered by a state income tax? "The Arizona income tax is the Arizona politicians' best friend. It lets them keep their hands in our pockets while dishing out favors to special interests—who then return the favor by financing their careers. "The Arizona income tax has everything backwards— it punishes work, savings and investment—it encourages consumption and waste. Getting rid of the income tax makes good economic sense." "A state as wonderful as Arizona should be much more prosperous than it is today. We should follow the examples of Florida, Texas, Tennessee, Washington, New Hampshire, Nevada,Alaska and others and let our economy soar by abolishing our income tax." "Arizonans, by abolishing our income tax and requiring voter approval of any new taxes,will send a message that will be heard loud and clear across the nation. It's time to bury the income tax and return to the principle on which this nation was founded." Dr.Jeffrey A.Singer "How many times do the politicians expect us to believe them when each election year they promise to phase out the Arizona income tax?They've had their last chance.Arizona voters will do it themselves." Dave Crete former Maricopa Country Republican Chairman "Everyone knows that income taxes always wind up hitting the average guy. The very poor don't pay and the very wealthy get out of paying. This corrupt charade has got to stop. Let's end the income tax." "Getting rid of the Arizona income tax is a pro-growth measure that will help raise wages and create quality jobs." "It's time that Arizona returned to the wisdom of our Founders -who demanded `NO TAXATION WITHOUT REPRESENTATION.'This initiative empowers the people to decide how and at what level they are taxed. It's a progressive idea whose time has come." The Hon.Richard D.Mahoney former Arizona Secretary of State "The collecting of the state income tax is complicated, inefficient and confusing to the taxpayer. It is a deterrent to business and economic development as has been shown in those states that do not have an income tax." John R.Norton former U.S.Deputy Secretary of Agriculture Back to Top 2 of 3 3`1;'2000 1 nM . l y1V WVMar 1.V.�/•V.W.W V..rIV Freeing Th' SSA ( He' illif.1111ftwomuni............ ...11°Vi Yell Can FROM M Thank you for your interest in helping the Taxpayer Protection Alliance. Please • Pro anus spend a moment to complete the form below, indicating whether you would like to . - - volunteer ' some of your time and/or donate to the campalvn. O uestians&Answers t Tax Comnarisvns 3 Please provide the following contact information: f Initiative Wording -_ First Name . Organization Last Name Media Coverage E Title • • • s; Quotes Street Address . How You Can Help Address(cont.) . -• .- r •_ - _Kwr•r."'Cr�.."'�M.I++Y.tiI..'ry.�9rsTYtY/..�•rI�x�..r..761V!,/t'VirY."'.i7t!+..�+/L'EI�W.^'R..w'w'�•!T-Nq"-".P/'R•7T'�7 -s Cjty _ • • . State.Province Zip/Postal Code Occupation ' Organization .. - _ •-• :..►l:ice.-.. 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