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View in browser Print Version Legislative Bulletin: Issue 5 – February 16, 2026 Legislative Update: Welcome to the sixth week of the legislative session. To date, 1,966 bills and an additional 150 memorials or resolutions have been introduced. This Friday marks the final day for bills to be heard insubject-matter committees in their chamber of origin. Governor Hobbs’ Second Veto on Tax Conformity Last Thursday, Governor Hobbs vetoed HB 2785: conformity; internal revenue code; deductions (Olson), the legislature’s second attempt this session to update Arizona’s tax code to conform with recent federal changes. The measure passed both chambers on party-line votes and would have aligned state law with portions of the federal Internal Revenue Code adopted in H.R. 1. In her veto letter, the Governor again urged lawmakers to instead advance her “Middle Class Tax Cuts Package,” which mirrors many federal individual tax changes while excluding certain business deductions. Republican lawmakers have argued the conformity bill is needed to match Arizona tax forms already issued by the Department of Revenue and to deliver broad-based tax relief this filing season. They also contend that failure to conform could create administrative complications for taxpayers and preparers. With the second veto, however, negotiations between the Governor’s office and legislative leadership remain at an impasse over the scope of conformity and its fiscal impact. Absent a compromise, Arizona may need to revise forms or issue guidance later in the filing season, potentially affecting early filers depending on the final outcome. Colorado River Water Negotiations Negotiations among the seven Colorado River Basin states have again stalled, with Arizona and the other Lower Basin states (California and Nevada) confirming ahead of a February 14th federal deadline that no agreement had been reached on a long-term plan to manage shortages after current river operating rules expire at the end of 2026. The states have been working for more than a year to replace interim drought guidelines adopted in 2007 and updated in 2019 as drought and over-allocation continue to reduce flows in the river system that supplies water to roughly 40 million people and supports major agricultural and municipal economies across the Southwest. The central dispute remains how to share future reductions. The Lower Basin has proposed quantified conservation commitments across all seven states to stabilize reservoir levels at Lake Mead and Lake Powell, while the Upper Basin states (Colorado, New Mexico, Utah, and Wyoming) argue their water use is already constrained by hydrology and that downstream states are effectively requesting water that does not physically exist in dry years. Arizona officials and Lower Basin partners have responded that additional cuts cannot fall primarily on the Lower Basin alone and that a basin-wide framework is necessary to avoid deeper crisis conditions. With consensus elusive, the U.S. Bureau of Reclamation is expected to advance federal post-2026 operating guidelines later this year, raising the prospect of imposed allocations or litigation if states cannot reach a voluntary agreement. Upcoming Hearings HB 2292: wildfire prevention authority; fund (Blackman) House Committee on Land, Agriculture & Rural Affairs Establishes the Wildfire Prevention Authority within the Department of Forestry and Fire Management and sets Authority membership, terms, and powers, including developing operational and financial plans and awarding grants for wildfire risk reduction and resilience projects. Creates the Wildfire Prevention Authority Fund and requires $20 million annually from insurer premium tax revenues beginning FY2026-27 to be deposited into the Fund, with monies used for authority operations and grants to local jurisdictions with elevated wildfire risks. Requires the Authority to prioritize funding for jurisdictions that adopt building and land use codes reducing wildfire risk. Position: SUPPORT Hearing: February 16, 2026, at 2:00 p.m. in HHR 3 HB 2429: S/E vacation rentals; short-term rentals; occupancy (Bliss) House Committee on Commerce The strike-everything amendment establishes a statewide maximum occupancy standard for vacation rentals and short-term rentals of two adults per sleeping area plus two additional people (excluding minors). Expands municipal and county licensing authority by allowing denial of a short-term rental license for unpaid fines or civil penalties, extending from 12 to 24 months the period in which three verified violations may trigger license suspension, and adding building code violations that present a serious threat to public health and safety to the list of single verified violations that may result in suspension. Position: SUPPORT Hearing: February 17, 2026, at 2:00 p.m. in HHR 5 SB 1566: malicious delay; enforcement; penalty (Petersen) Senate Committee on Government Prohibits cities, towns, counties, the state, and state agencies from “maliciously” (defined) delaying responses to license, approval, or permit applications or similar requests. Authorizes the Attorney General, and county attorneys for counties, to enforce the prohibition and subjects violators to a civil penalty of $5,000 per violation. Position: OPPOSED Hearing: February 18, 2026, at 7:00 a.m. in SHR 1 HB 2080: municipal general plan; adoption (Bliss) House Committee on Government Allows municipalities with populations between 2,500 and 10,000 whose growth rate did not exceed an average of two percent in the prior decade, and whose current general plan was previously voter approved, to submit a newly adopted general plan to voters for ratification. Position: SUPPORT Hearing: February 18, 2026, at 8:00 a.m. in HHR 5 HB 2375: housing; zoning; historic neighborhoods (Gress) House Committee on Government Exempts historic neighborhoods from the requirement that municipalities authorize middle housing development. Position: SUPPORT Hearing: February 18, 2026, at 8:00 a.m. in HHR 5 HB 2716: vacant; abandoned property; inspection; maintenance (Villegas) House Committee on Government Authorizes a city or town to adopt and enforce ordinances that require registration, inspection, and maintenance of residential and commercial buildings that are vacant or abandoned for more than 150 days. Requires such ordinances to impose owner obligations related to property security, structural safety, sanitation, insurance coverage, inspections, and payment of registration and inspection fees, and authorizes the city or town to use collected fees for public safety, administration, or repair, closure, or demolition of the property. Allows a city or town to place liens on real property to collect delinquent fees and costs and prohibits owners from avoiding compliance by transferring property to affiliated entities. Position: SUPPORT Hearing: February 18, 2026, at 8:00 a.m. in HHR 5 HB 4064: municipal improvement districts; petitions (Bliss) House Committee on Government Requires a governing body, before forming a municipal improvement district, to receive a petition signed by specified property owners in the proposed improvement district. Sets petition thresholds at a majority of taxable property owners and owners of 51 percent or more of assessed valuation for tax-levying districts, and a majority of real property owners and owners of 51 percent or more of acreage for other districts, with exclusions for exempt, public, and rights-of-way property and an exception for community facilities districts issuing special assessment bonds. Authorizes a municipality, if all nonpublic property owners in a proposed improvement district sign the required petition and the governing body approves it, to waive posting, publication, notice, frontage owner requirements, and protest and objection procedures and to immediately adopt resolutions to order the improvement. Requires petitions to include a maximum assessment amount and prohibits assessments from exceeding that amount. Position: SUPPORT Hearing: February 18, 2026, at 8:00 a.m. in HHR 5 HB 2290: TPT; sourcing; business location; receipt (Olson) House Committee on Ways & Means Modifies transaction privilege tax sourcing by specifying that a retail sales order is received only at a seller’s physical business location and that the location of servers transmitting the order does not determine sourcing. Applies to taxable periods beginning on or after the first day of the month following the general effective date. Position: OPPOSED Hearing: February 18, 2026, at 10:00 a.m. in HHR 3 SCR 1027: general election day; all offices (Mesnard) Senate Committee on Judiciary and Elections Session Deadlines Every session has deadlines pertaining to bill submissions and hearings. These are established by Senate and House rule and are subject to change. This year’s schedule is as follows: February Friday 2/20: Last day for consideration of bills in chamber of origin March Friday 3/27: Last day for consideration of bills in opposite chamber April Friday 4/17: Last day for consideration of bills in conference committee Tuesday 4/21: 100th Day of Session Legislative Staff You may contact our legislative division by phone at (602) 258-5786 or by e- mail using the following information: Tom Savage, Legislative Director: tsavage@azleague.org Marshall Pimentel, Senior Legislative Associate: mpimentel@azleague.org Proposes a constitutional amendment to require that general elections for all city, town, and school district offices, be held on the first Tuesday after the first Monday in November of even numbered years. If passed by the Legislature, this legislation will be submitted to the voters at the 2026 general election. Position: OPPOSED Hearing: February 18, 2026, at 1:30 p.m. in SHR 2 HB 2588: municipalities; planned communities; design; prohibition. (Way) House Committee on Rural Economic Development Prohibits a municipality from requiring the creation of a homeowners’ association, shared amenities, gated access, or other perimeter enclosures as a condition of a subdivision or development, except as required by federal law. Prohibits a municipality from adopting or enforcing design, architectural, or aesthetic requirements for single-family homes or accessory dwelling units, including requirements related to materials, colors, façades, layouts, garages, fences, or similar features. Prohibits a municipality from denying or conditioning a permit based on prohibited design requirements, Preserves the applicability of building codes, fire codes, public health and safety regulations, minimum parking requirements, and dark sky ordinances. Position: OPPOSED Hearing: February 19, 2026, at 9:00 a.m. in HHR 4 Megan Didur, Legislative Associate: mdidur@azleague.org Nicholas Medel, Legislative Intern: nmedel@azleague.org League of Arizona Cities and Towns 1820 W Washington Street Phoenix, AZ 85007 info@azleague.org No longer want to receive these emails? Unsubscribe. #Keepup with us on X. Keep up with the issues and events. CLICK HERE What the League is Tracking Stay informed about legislation that affects municipalities throughout the state. Track proposed bills and resolutions, stay updated on their progress, and actively engage in the democratic process. Here are some priority measures the League is tracking: Legislative Bill Monitoring