Arizona Revenue Plan Reduces Contributions to Pension Fund

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A $171-million revenue plan adopted by the Arizona legislature last week would partially suspend payments to the state's retirement fund for teachers and other public employees and require certain school districts to levy a minimum property tax on utility plants within their borders.

The legislature adopted the measure after Gov. Rose Mofford vetoed a $3.2-billion state budget this month, saying that it would leave a $165-million deficit. It was the first such veto in the state's history. (See Education Week, June 14, 1989.)

Shortly after the veto, the legislature readopted an identical spending plan, which includes $1.3 billion for precollegiate education in the fiscal year that begins next month, up from the current level of $1.15 billion.

Governor Mofford has not yet indicated whether she will sign or veto the budget-and-revenue package, according to her spokesman, Vada Manager.

The plan would raise $51 million by witholding some state contributions to the retirement fund. Earlier in the session, the House rejected a Senate plan to partially suspend the retirement payments.

The revenue plan estimates that an additional $26 million would be raised by requiring four districts that contain utilities to impose a minimum property tax of about $1.18 per $100 of assessed valuation. Revenues collected in excess of the districts' needs would be sent to the state treasury for redistribution to less affluent districts.

As part of a $255-million tax plan unveiled in her State of the State address in January, Ms. Mofford proposed that 14 districts, including the four that would be affected by the new legislation, be required to impose a property tax of $4.72 per $100 of assessed valuation to raise a total of $125 million.

Under the lawmakers' plan, other funds would be raised by changing tax rules for consumer-interest deductions, which would bring in an additional $39 million, and increasing licensing fees for vehicles.

In addition, the bill would grant a homeowners' tax rebate to residents of retirement communities and limit their tax bill for schools to $2.36 per $100 of assessed valuation.

Last year, residents of the state's largest retirement community filed a lawsuit challenging a tax bill that would have required them to pay double the new maximum rate by 1997.--ef

Vol. 08, Issue 39

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