Attachment F - State Legislation List.pdf

ATTACHMENT F 
 
Government Relations staff closely monitor State legislation each year and have 
identified bills that if passed could further limit local control, reduce City revenues or 
increase expenditures causing negative impacts to the budget. 
 
Staff have identified top priority bills in the current session actively moving through the 
State Legislature that could have an estimated annual revenue impact of $(69) million 
according to JLBC fiscal notes: 
 
• SB1318 income tax rate; reduction; surplus 
o For each tax year beginning with 2026, the Department of Revenue is 
required to reduce the individual income tax rate for the current tax year 
by 50 percent of a "structural surplus" for the immediately following fiscal 
year.  
• SCR1014 surplus; income tax rate; reduction 
o The 2026 general election ballot is to carry the question of whether to 
amend state statute to require the Department of Revenue to reduce the 
individual income tax rate for the current tax year by 50 percent of a 
"structural surplus" for the immediately following fiscal year. 
• SB1371 income tax; subtraction; retirement distribution 
o For individuals 67 or older, subtracts distributions from pension and 
retirement accounts and non-deductible contributions to individual 
retirement accounts (IRA), excluding Roth IRAs, from the calculation of 
Arizona gross income tax. 
• HB2918 tax rates; reductions 
o Reduces the rates for several tax categories including property tax and 
individual income tax. For the individual income tax rate reduces the rate 
from 2.5% to 2.47% beginning in Tax Year 2026. 
 
Staff have identified the following bills that increase obligations on the City’s General 
Fund: 
 
• HB2689 cancer insurance; retirees; public safety 
o Permits people on the Public Safety Cancer Insurance Program whose 
eligibility is expiring to remain eligible for coverage paying 50% of the 
premium and requiring the employer to pay the remaining amount of the 
premium. 
• SB1365 PSPRS; member contributions 
o Effective January 1, 2026, caps the Tier 3 member contribution rate at 9.5 
percent and requires Public Safety Personnel Retirement System 
employers to pay the difference if the member's contribution rate must be 
higher. 
• SB1288 police vehicles; inspection; requirements 
o Requires police patrol vehicles to be replaced 10 years after the 
manufacture date or when the odometer reaches 115,000 miles.

Staff have identified the following bills that impact Mayor and Council’s ability to balance 
the City’s budget: 
 
• HB2221 law enforcement; defunding; prohibition 
o Prohibits a city from reducing the annual operating budget for a law 
enforcement agency. 
• HB2943 municipal fire departments; defunding; prohibition 
o Prohibits a city from reducing the annual operating budget for a fire 
department. 
• SB1013 municipalities; counties; fee increases; vote 
o Prohibits the common council of a municipality or the board of supervisors 
of a county from increasing an assessment, tax or fee without a two-thirds 
vote of the governing body. 
• SCR1008 municipalities; counties; vote; fee increases 
o The 2026 general election ballot is to carry the question of whether to 
amend state statute to Prohibit the common council of a municipality or 
the board of supervisors of a county from increasing an assessment, tax 
or fee without a two-thirds vote of the governing body. 
 
Staff would also like to bring attention to the following two bills that pose significant 
budgetary risks to the City if passed. While these bills are effectively “dead” they may 
return in the form of amendments or in future legislative sessions. Per JLBC fiscal notes 
the estimated annual impact to the City if signed into law is $(120) million. 
 
• HB2421 corporate income tax rate; reduction 
o Reduces the Corporate Income Tax rate from the current rate of 4.9% to 
2.0% 
• HCR2012 income tax; rate; reduction 
o The 2026 general election ballot is to carry the question of whether to 
amend state statute to reduce the Individual Income Tax rate from the 
current rate of 2.5% to 2.0%, beginning in Tax Year 2027.