Title
Public Hearing and Authorizing Amendment to Chapter 14 of the Phoenix City Code Relating to Taxes (Ordinance G-6808)
Description
Request to hold a public hearing on the request for the following item to authorize an amendment to Chapter 14 of the Phoenix City Code. An ordinance authorizing the City Manager, or his designee, to amend Chapter 14 of the Phoenix City Code, where the model city tax code is maintained, with corresponding statutory model city tax code amendments approved in 2018 and 2019 by the Municipal Tax Code Commission (MTCC), which was established by the State Legislature to review and approve all changes to the local model city tax code. The 2018 and 2019 conforming amendments align the model city tax code with state statutes. Arizona Revised Statute § 42-6052 (H) requires that the governing bodies of all cities and towns adopt the changes to the model city tax code adopted by the commission and therefore, the City of Phoenix must adopt these changes to bring Chapter 14 of the Phoenix City Code into conformance with State statutes accordingly.
Report
Summary
The Model City Tax Code, adopted in 1987, was a coordinated effort on the part of Arizona cities to achieve uniformity in tax administration. Consequently, statutory changes made by the Arizona Legislature during its regular sessions between years 2014 and 2018 required that equivalent changes be incorporated in the local model city tax code (Attachments A and B). These changes were prepared by the League of Arizona Cities and Towns in consultation with representatives from Arizona cities, approved by the business community, and presented before the MTCC. The MTCC held public hearings and approved adoption of the proposed amendments on Dec. 14, 2018; Feb. 22, 2019; and May 31, 2019. The delay in obtaining MTCC adoption was due to the need to await final determination of evolving State Transaction Privilege Tax (TPT) Simplification administrative issues that were clarified through subsequent State legislature session actions, collaborative deliberation and concurrence with the business community on complex construction contracting tax issues that required multiple State legislature session actions to clarify legislative intent, and challenges in securing the required quorum of 10 non-compensated appointive members, each restricted to a 3-year term limit, to serve on the commission.
Financial Impact
Arizona cities and towns must comply with statutory changes recommended for incorporation into the model city tax code when approved for adoption by the MTCC and because the City of Phoenix has been in compliance since then, no fiscal impacts from City Transaction Privilege Tax revenues - neither increases nor decreases - are expected to arise from these recommended changes.
Concurrence/Previous Council Action
Due to the need to maintain uniformity with State statutes and the approval of the business community, City staff recommends that the City Council adopt the proposed 2018 and 2019 amendments already approved by the Municipal Tax Code Commission.
Department
Responsible Department
This item is submitted by City Manager Ed Zuercher and the Finance Department.