Article 9, Arizona Constitution

Arizona Constitution
Preamble
Articles
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Article IX of the Arizona Constitution is entitled Public Debt, Revenue, and Taxation. It has 28 sections.

Section 1

	Text of Section 1: Surrender of Power of Taxation; Uniformity of Taxes “ The power of taxation shall never be surrendered, suspended or contracted away. Except as provided by section 18 of this article, all taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax, and shall be levied and collected for public purposes only. ”

Amendment

Ratified on November 7, 2000 via voter approval of Proposition 104.

Section 2

Text of Section 2: Property Subject to Taxation; Exemptions (a) All property in this state that is not exempt under the laws of the United states or under this section is subject to taxation as provided by law. (b) Property that has been conveyed to evade taxation is not exempt. (c) The following property is exempt from taxation: (1) All federal, state, county and municipal property. (2) Public debts, as evidenced by the bonds of this state and its counties, municipalities and other political subdivisions. (3) Household goods that are owned by the user of the goods and that are used solely for noncommercial purposes. (4) Stocks of raw or finished materials, unassembled parts, works in process or finished products constituting the inventory of a retailer or wholesaler that is located in this state and principally engaged in the resale of the materials, parts, works or products, whether or not for resale to the ultimate consumer. (d) Subsection C of this section is self-executing, and persons who are entitled to the exemption are not required to take any affirmative action to receive the benefit of the exemption. (e) The legislature may exempt the following property by law: (1) The property of an educational, charitable or religious association or institution that is not used or held for profit. (2) Personal property that is used in a trade or business or for agricultural purposes. (3) Cemeteries that are set apart and used to inter deceased human beings. (4) The property of a widow or widower who is a resident of this state. (5) The property of a resident of this state who is at least eighteen years of age and who has a medically certified total and permanent disability. (6) The property of an honorably discharged veteran of the uniformed services of the United States who is a resident of this state and who has a service or nonservice connected disability as determined by the united states department of veterans affairs, or its successor agency. (f) The legislature may determine by law the qualifications for, and the amount of, the exemptions of property described in subsection e of this section. (g) A person is not eligible for exemption under more than one category as a widow, widower, person with a total and permanent disability or veteran with a disability under subsection E, paragraph 4, 5 or 6 of this section.

Amendments

• Ratified in 1996 via voter approval of Proposition 101.
• Ratified on November 7, 2000 via voter approval of Proposition 105.
• Amended with the approval of Proposition 130 on November 8, 2022, to repeal Section 2, Section 2.1, Section 2.2, and Section 2.3, and amending Article 9 to add a new Section 2.

Section 3

Text of Section 3: Annual Tax; Purposes; Amount; Tax Laws; Payment of Taxes into State Treasury “ The legislature shall provide by law for an annual tax sufficient, with other sources of revenue, to defray the necessary ordinary expenses of the state for each fiscal year. And for the purpose of paying the state debt, if there be any, the legislature shall provide for levying an annual tax sufficient to pay the annual interest and the principal of such debt within twenty-five years from the final passage of the law creating the debt. No tax shall be levied except in pursuance of law, and every law imposing a tax shall state distinctly the object of the tax, to which object only it shall be applied. All taxes levied and collected for state purposes shall be paid into the state treasury in money only. ”

Section 4

Text of Section 4: Fiscal Year; Annual Statement of Receipts and Expenditures; Deficit “ The fiscal year shall commence on the first day of July in each year. An accurate statement of the receipts and expenditures of the public money shall be published annually, in such manner as shall be provided by law. Whenever the expenses of any fiscal year shall exceed the income, the legislature may provide for levying a tax for the ensuing fiscal year sufficient, with other sources of income, to pay the deficiency, as well as the estimated expenses of the ensuing fiscal year. ”

Section 5

Text of Section 5: Power of State to Contract Debts; Purposes; Limit; Restrictions “ The state may contract debts to supply the casual deficits or failures in revenues, or to meet expenses not otherwise provided for; but the aggregate amount of such debts, direct and contingent, whether contracted by virtue of one or more laws, or at different periods of time, shall never exceed the sum of three hundred and fifty thousand dollars; and the money arising from the creation of such debts shall be applied to the purpose for which it was obtained or to repay the debts so contracted, and to no other purpose. In addition to the above limited power to contract debts the state may borrow money to repel invasion, suppress insurrection, or defend the state in time of war; but the money thus raised shall be applied exclusively to the object for which the loan shall have been authorized or to the repayment of the debt thereby created. No money shall be paid out of the state treasury, except in the manner provided by law. ”

Section 6

	Text of Section 6: Local Assessments and Taxes “ Except as provided by Section 25 of this Article, incorporated cities, towns, and villages may be vested by law with power to make local improvements by special assessments, or by special taxation of property benefited. For all corporate purposes, all municipal corporations may be vested with authority to assess and collect taxes. ”

Amendments

• Amended via voter approval of Proposition 126 on November 6, 2018.

Section 7

Text of Section 7: Gift or Loan of Credit; Subsidies; Stock Ownership; Joint Ownership “ Neither the state, nor any county, city, town, municipality, or other subdivision of the state shall ever give or loan its credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any individual, association, or corporation, or become a subscriber to, or a shareholder in, any company or corporation, or become a joint owner with any person, company, or corporation, except as to such ownerships as may accrue to the state by operation or provision of law or as authorized by law solely for investment of the monies in the various funds of the state. ”

Amendment

Ratified on November 3, 1998 via voter approval of Proposition 102.

Section 8

Text of Section 8: Local Debt Limits; Assent of Taxpayers “ (1) No county, city, town, school district, or other municipal corporation shall for any purpose become indebted in any manner to an amount exceeding six per centum of the taxable property in such county, city, town, school district, or other municipal corporation, without the assent of a majority of the property taxpayers, who must also in all respects be qualified electors, therein voting at an election provided by law to be held for that purpose, the value of the taxable property therein to be ascertained by the last assessment for state and county purposes, previous to incurring such indebtedness; except, that in incorporated cities and towns assessments shall be taken from the last assessment for city or town purposes; provided, that under no circumstances shall any county or school district become indebted to an amount exceeding fifteen per centum of such taxable property, as shown by the last assessment roll thereof; and provided further, that any incorporated city or town, with such assent, may be allowed to become indebted to a larger amount, but not exceeding twenty per centum additional, for supplying such city or town with water, artificial light, or sewers, when the works for supplying such water, light, or sewers are or shall be owned and controlled by the municipality, and for the acquisition and development by the incorporated city or town of land or interests therein for open space preserves, parks, playgrounds and recreational facilities, public safety, law enforcement, fire and emergency services facilities and streets and transportation facilities. (2) The provisions of section 18, subsections (3), (4), (5) and (6) of this article shall not apply to this section. ”

Amendment

Ratified on November 7, 2006 via voter approval of Proposition 104.

Section 8.1

Text of Section 8.1: Unified School District Debt Limit “ (1) Notwithstanding the provisions of section 8 of this article a unified school district may become indebted to an amount not exceeding thirty per cent of the taxable property of the school district, as shown by the last assessment roll thereof. For purposes of this section, a unified school district is a single school district which provides education to the area within the district for grades kindergarten through twelve and which area is not subject to taxation by any other common or high school district. (2) The provisions of section 18, subsections (3), (4), (5) and (6) of this article shall not apply to this section. ”

Section 9

	Text of Section 9: Statement of Tax and Objects “ Every law which imposes, continues, or revives a tax shall distinctly state the tax and the objects for which it shall be applied; and it shall not be sufficient to refer to any other law to fix such tax or object. ”

Section 10

	Text of Section 10: Aid of Church, Private or Sectarian School, or Public Service Corporation “ No tax shall be laid or appropriation of public money made in aid of any church, or private or sectarian school, or any public service corporation. ”

Section 11

Text of Section 11: Taxing Procedure; License Tax on Registered Vehicles “ From and after December 31, 1973, the manner, method and mode of assessing, equalizing and levying taxes in the state of Arizona shall be such as is prescribed by law. From and after December 31, 1973, a license tax is hereby imposed on vehicles registered for operation upon the highways in Arizona, which license tax shall be in lieu of all ad valorem property taxes on any vehicle subject to such license tax. Such license tax shall be collected as provided by law. To facilitate an even distribution of the registration of vehicles and the collection of the license tax imposed by this section, the legislature may provide for different times or periods of registration between and within the several classes of vehicles. In the event that a vehicle is destroyed after the beginning of a registration year, the license tax paid for such year on such vehicle may be reduced as provided by law. From and after December 31, 1973, mobile homes, as defined by law for tax purposes, shall not be subject to the license tax imposed under the provisions of this section but shall be subject to ad valorem property taxes on any mobile homes in the manner provided by law. Distribution of the proceeds derived from such tax shall be as provided by law. From and after December 31, 1973, the legislature shall provide for the distribution of the proceeds from such license tax to the state, counties, school districts, cities and towns. ”

Section 12

Text of Section 12: Authority to Provide for Levy and Collection of License and Other Taxes “ 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. ”

Section 12.1

Text of Section 12.1: Inventory, Materials and Products of Manufacturers; Production Livestock and Animals; Tax Exemption “ A. A temporary tax is levied for the purpose of raising state revenues for primary and secondary education, health and human services and public safety. B. The temporary tax is levied and shall be collected beginning on June 1, 2010 and shall continue for thirty-six consecutive calendar months, after which the temporary tax is repealed. C. The temporary tax is levied as a separate rate increment in addition to the state transaction privilege tax rates and the use tax rate. The rate of the temporary tax is one per cent of the tax base for each transaction privilege classification that is subject to a rate of five per cent or more and one per cent of the tax base for the use tax. D. The temporary tax is subject to the same exemptions, deductions and exclusions as provided by law for each transaction privilege tax classification and for the use tax. E. The net revenues derived from the temporary tax imposed by this section are not subject to distribution to counties, municipalities or other governmental entities but shall be credited to, and separately accounted in, the state general fund and appropriated as follows: 1. Two-thirds of the revenues shall be appropriated for public primary and secondary education. 2. One‑third of the revenues shall be appropriated for health and human services and public safety purposes. F. The temporary taxes under this section are due and payable at the same time and in the same manner, and are subject to the same provisions for administration and enforcement, as provided by law for other transaction privilege and use taxes. G. The repeal of the temporary tax under this section does not affect the continuing validity of outstanding and unpaid tax obligations that accrue under this section, including any penalties and interest that accrue thereafter by law on the unpaid obligations. H. The temporary tax under this section is repealed from and after May 31, 2013. ”

Amendments

Ratified on May 18, 2010, via voter approval of Proposition 100.

Section 13

Text of Section 13: Inventory, Materials and Products of Manufacturers; Production Livestock and Animals Tax Exemption “ No tax shall be levied on: 1. Raw or unfinished materials, unassembled parts, work in process or finished products, constituting the inventory of a manufacturer or manufacturing establishment located within the state and principally engaged in the fabrication, production and manufacture of products, wares and articles for use, from raw or prepared materials, imparting thereto new forms, qualities, properties and combinations, which materials, parts, work in process or finished products are not consigned or billed to any other party. 2. Livestock, poultry, aquatic animals and honeybees owned by a person who is principally engaged in agricultural production, subject to such conditions as may be prescribed by law. ”

Amendment

Ratified in 1996 via voter approval of Proposition 102.

Section 14

Text of Section 14: Use and Distribution of Vehicle, User, and Gasoline and Diesel Tax Receipts “ No moneys derived from fees, excises, or license taxes relating to registration, operation, or use of vehicles on the public highways or streets or to fuels or any other energy source used for the propulsion of vehicles on the public highways or streets, shall be expended for other than highway and street purposes including the cost of administering the state highway system and the laws creating such fees, excises, or license taxes, statutory refunds and adjustments provided by law, payment of principal and interest on highway and street bonds and obligations, expenses of state enforcement of traffic laws and state administration of traffic safety programs, payment of costs of publication and distribution of Arizona highways magazine, state costs of construction, reconstruction, maintenance or repair of public highways, streets or bridges, costs of rights of way acquisitions and expenses related thereto, roadside development, and for distribution to counties, incorporated cities and towns to be used by them solely for highway and street purposes including costs of rights of way acquisitions and expenses related thereto, construction, reconstruction, maintenance, repair, roadside development, of county, city and town roads, streets, and bridges and payment of principal and interest on highway and street bonds. As long as the total highway user revenues derived equals or exceeds the total derived in the fiscal year ending June 30, 1970, the state and any county shall not receive from such revenues for the use of each and for distribution to cities and towns, fewer dollars than were received and distributed in such fiscal year. This section shall not apply to moneys derived from the automobile license tax imposed under section 11 of article IX of the Constitution of Arizona. All moneys collected in accordance with this section shall be distributed as provided by law. ”

Section 15

Text of Section 15: License Tax on Aircraft “ Commencing January 1, 1965, a license tax is imposed on aircraft registered for operation in Arizona, which license tax shall be in lieu of all ad valorem property taxes on any aircraft subject thereto, but nothing in this section shall be deemed to apply to: 1. Regularly scheduled aircraft operated by an air line company for the primary purpose of carrying persons or property for hire in interstate, intrastate, or international transportation. 2. Aircraft owned and held by an aircraft dealer solely for purposes of sale. 3. Aircraft owned by a nonresident who operates aircraft for a period not in excess of ninety days in any one calendar year, provided that such aircraft are not engaged in any intrastate commercial activity. 4. Aircraft owned and operated exclusively in the public service by the state or by any political subdivision thereof, or by the civil air patrol. The amount, manner, method and mode of assessing, equalizing and levying such license tax and the distribution of the proceeds therefrom shall be prescribed by law. ”

Section 16

Text of Section 16: Exemption of Watercraft from Ad Valorem Property Taxes “ Commencing January 1, 1967, all watercraft registered for operation in Arizona, excluding watercraft owned and operated for any commercial purpose, is exempt from ad valorem property taxes. Watercraft exempt from ad valorem property taxes shall be subject to or exempt from a license tax, as may be prescribed by law. "Watercraft," as used in this section, shall be defined as provided by law. ”

Section 17

Text of Section 17: Economic Estimates Commission; Appropriation Limitation; Powers and Duties of Commission “ (1) The economic estimates commission shall be established by law, with a membership of not to exceed three members, and shall determine and publish prior to February 1 of each year the estimated total personal income for the following fiscal year. By April 1 of each year the commission shall determine and publish a final estimate of the total personal income for the following fiscal year, which estimate shall be used in computing the appropriations limit for the legislature. For the purposes of this section, "total personal income" means the dollar amount that will be reported as total income by persons for the state of Arizona by the U. S. department of commerce or its successor agency. (2) For purposes of this section, "state revenues": (a) Include all monies, revenues, fees, fines, penalties, funds, tuitions, property and receipts of any kind whatsoever received by or for the account of the state or any of its agencies, departments, offices, boards, commissions, authorities, councils and institutions except as provided in this subsection. (b) Do not include: (i) Any amounts or property received from the issuance or incurrence of bonds or other lawful long-term obligations issued or incurred for a specific purpose. For the purpose of this subdivision long-term obligations shall not include warrants issued in the ordinary course of operation or registered for payment by the state. (ii) Any amounts or property received as payment of dividends or interest. (iii) Any amounts or property received by the state in the capacity of trustee, custodian or agent. (iv) Any amounts received from employers for deposit in the unemployment compensation fund or any successor fund. (v) Any amounts collected by the state for distribution to counties, cities and towns without specific restrictions on the use of the funds other than the restrictions included in section 14 of this article. (vi) Any amounts received as grants, aid, contributions or gifts of any type, except voluntary contributions or other contributions received directly or indirectly in lieu of taxes. (vii) Any amounts received as the proceeds from the sale, lease or redemption of property or as consideration for services or the use of property. (viii) Any amounts received pursuant to a transfer during a fiscal year from another agency, department, office, board, commission, authority, council or institution of the state which were included as state revenues for such fiscal year or which are excluded from state revenue under other provisions of this subsection. (ix) Any amounts attributable to an increase in the rates of tax subsequent to July 1, 1979 on vehicle users, gasoline and diesel fuel which were levied on July 1, 1979. (x) Any amounts received during a fiscal year as refunds, reimbursements or other recoveries of amounts appropriated which were applied against the appropriation limitation for such fiscal year or which were excluded from state revenues under other provisions of this subsection. (3) The legislature shall not appropriate for any fiscal year state revenues in excess of seven per cent of the total personal income of the state for that fiscal year as determined by the economic estimates commission. The limitation may be exceeded upon affirmative vote of two-thirds of the membership of each house of the legislature on each measure that appropriates amounts in excess of the limitation. If the legislature authorizes a specific dollar amount of appropriation for more than one fiscal year, for the purpose of measuring such appropriation against the appropriation limitation, the entire amount appropriated shall be applied against the limitation in the first fiscal year during which any expenditures are authorized, and in no other fiscal year. (4) In order to permit the transference of governmental functions or funding responsibilities between the federal and state governments and between the state government and its political subdivisions without abridging the purpose of this section to limit state appropriations to a percentage of total personal income, the legislature shall provide for adjustments of the appropriation percentage limitation consistent with the following principles: (a) If the federal government assumes all or any part of the cost of providing a governmental function which the state previously funded in whole or in part, the appropriation limitation shall be commensurately decreased. (b) If the federal government requires the state to assume all or any part of the cost of providing a governmental function the appropriation limitation shall be commensurately increased. (c) If the state assumes all or any part of the cost of providing a governmental function and the state requires the political subdivision, which previously funded all or any part of the cost of the function to commensurately decrease its tax revenues, the appropriation percentage limitation shall be commensurately increased. (d) If a political subdivision assumes all or any part of the cost of providing a governmental function previously funded in whole or in part by the state, the appropriation percentage limitation shall be commensurately decreased. Any adjustments made pursuant to this subsection shall be made for the first fiscal year of the assumption of the cost. Such adjustment shall remain in effect for each subsequent fiscal year. ”

Section 18

Text of Section 18: Residential Ad Valorem Tax Limits; Limit on Increase in Values; Definitions “ (1) The maximum amount of ad valorem taxes that may be collected from residential property in any tax year shall not exceed one per cent of the property's full cash value as limited by this section. (2) The limitation provided in subsection (1) does not apply to: (a) Ad valorem taxes or special assessments levied to pay the principal of and interest and redemption charges on bonded indebtedness or other lawful long-term obligations issued or incurred for a specific purpose. (b) Ad valorem taxes or assessments levied by or for property improvement assessment districts, improvement districts and other special purpose districts other than counties, cities, towns, school districts and community college districts. (c) Ad valorem taxes levied pursuant to an election to exceed a budget, expenditure or tax limitation. (3) Except as otherwise provided by subsections (5), (6) and (7) of this section: (a) Through tax year 2014, the value of real property and improvements and the value of mobile homes used for all ad valorem taxes except those specified in subsection (2) shall be the lesser of the full cash value of the property or an amount ten per cent greater than the value of property determined pursuant to this subsection for the prior year or an amount equal to the value of property determined pursuant to this subsection for the prior year plus one‑fourth of the difference between such value and the full cash value of the property for current tax year, whichever is greater. (b) For the purposes of taxes levied beginning in tax year 2015, the value of real property and improvements, including mobile homes, used for all ad valorem taxes shall be the lesser of the full cash value of the property or an amount five per cent greater than the value of property determined pursuant to this subsection for the prior year. (4) The legislature shall by law provide a method of determining the value, subject to the provisions of subsection (3), of new property. (5) The limitation on increases in the value of property prescribed in subsection (3) does not apply to equalization orders that the legislature specifically exempts by law from such limitation. (6) Subsection (3) does not apply to: (a) Property used in the business of patented or unpatented producing mines and the mills and the smelters operated in connection with the mines. (b) Producing oil, gas and geothermal interests. (c) Real property, improvements thereto and personal property used thereon used in the operation of telephone, telegraph, gas, water and electric utility companies. (d) Aircraft that is regularly scheduled and operated by an airline company for the primary purpose of carrying persons or property for hire in interstate, intrastate or international transportation. (e) Standing timber. (f) Property used in the operation of pipelines. (g) Personal property regardless of use except mobile homes. (7) A resident of this state who is sixty-five years of age or older may apply to the county assessor for a property valuation protection option on the person's primary residence, including not more than ten acres of undeveloped appurtenant land. To be eligible for the property valuation protection option, the resident shall make application and furnish documentation required by the assessor on or before September 1. If the resident fails to file the application on or before September 1, the assessor shall process the application for the subsequent year. If the resident files an application with the assessor on or before September 1, the assessor shall notify the resident whether the application is accepted or denied on or before December 1. The resident may apply for a property valuation protection option after residing in the primary residence for two years. If one person owns the property, the person's total income from all sources including nontaxable income shall not exceed four hundred per cent of the supplemental security income benefit rate established by section 1611(b)(1) of the social security act. If the property is owned by two or more persons, including a husband and wife, at least one of the owners must be sixty-five years of age or older and the owners' combined total income from all sources including nontaxable income shall not exceed five hundred per cent of the supplemental security income benefit rate established by section 1611(b)(1) of the social security act. The assessor shall review the owner's income qualifications on a triennial basis and shall use the owner's average total income during the previous three years for the review. If the county assessor approves a property valuation protection option, the value of the primary residence shall remain fixed at the full cash value in effect during the year the property valuation protection option is filed and as long as the owner remains eligible. To remain eligible, the county assessor shall require a qualifying resident to reapply for the property valuation protection option every three years and shall send a notice of reapplication to qualifying residents six months before the three year reapplication requirement. If title to the property is conveyed to any person who does not qualify for the property valuation protection option, the property valuation protection option terminates, and the property shall revert to its current full cash value. (8) The legislature shall provide by law a system of property taxation consistent with the provisions of this section. (9) For purposes of this section: (a) "Owner" means the owner of record of the property and includes a person who owns the majority beneficial interest of a living trust. (b) "Primary residence" means all owner occupied real property and improvements to that real property in this state that is a single family home, condominium, townhouse or an owner occupied mobile home and that is used for residential purposes. ”

Amendments

• Ratified on November 7, 2000 via voter approval of Proposition 104.
• Ratified on November 5, 2002 via voter approval of Proposition 102.
• Ratified on November 6, 2012 via voter approval of Proposition 117.

Section 19

Text of Section 19: Limitation on Ad Valorem Tax Levied; Exceptions “ (1) The maximum amount of ad valorem taxes levied by any county, city, town or community college district shall not exceed an amount two per cent greater than the amount levied in the preceding year. (2) The limitation prescribed by subsection (1) does not apply to: (a) Ad valorem taxes or special assessments levied to pay the principal of and the interest and redemption charges on bonded indebtedness or other lawful long-term obligations issued or incurred for a specific purpose. (b) Ad valorem taxes or assessments levied by or for property improvement assessment districts, improvement districts and other special purpose districts other than counties, cities, towns and community college districts. (c) Ad valorem taxes levied by counties for support of school districts. (3) This section applies to all tax years beginning after December 31, 1981. (4) The limitation prescribed by subsection (1) shall be increased each year to the maximum permissible limit, whether or not the political subdivision actually levies ad valorem taxes to such amounts, except that beginning in 2007 the limitation prescribed by subsection (1) shall be computed from the actual tax levy of the county, city, town or community college district in 2005. (5) The voters, in the manner prescribed by law, may elect to allow ad valorem taxation in excess of the limitation prescribed by this section. (6) The limitation prescribed by subsection (1) of this section shall be increased by the amount of ad valorem taxes levied against property not subject to taxation in the prior year and shall be decreased by the amount of ad valorem taxes levied against property subject to taxation in the prior year and not subject to taxation in the current year. Such amounts of ad valorem taxes shall be computed using the rate applied to property not subject to this subsection. (7) The legislature shall provide by law for the implementation of this section. ”

Amendment

Ratified on November 7, 2006 via voter approval of Proposition 101.

Section 20

Text of Section 20: Expenditure Limitation; Adjustments; Reporting “ (1) The economic estimates commission shall determine and publish prior to April 1 of each year the expenditure limitation for the following fiscal year for each county, city and town. The expenditure limitations shall be determined by adjusting the amount of actual payments of local revenues for each such political subdivision for fiscal year 1979-1980 to reflect the changes in the population of each political subdivision and the cost of living. The governing board of any political subdivision shall not authorize expenditures of local revenues in excess of the limitation prescribed in this section, except as provided in subsections (2), (6) and (9) of this section. (2) Expenditures in excess of the limitations determined pursuant to subsection (1) of this section may be authorized as follows: (a) Upon affirmative vote of two-thirds of the members of the governing board for expenditures directly necessitated by a natural or man-made disaster declared by the governor. Any expenditures in excess of the expenditure limitation, as authorized by this paragraph, shall not affect the determination of the expenditure limitation pursuant to subsection (1) of this section in any subsequent years. Any expenditures authorized pursuant to this paragraph shall be made either in the fiscal year in which the disaster is declared or in the succeeding fiscal year. (b) Upon the affirmative vote of seventy per cent of the members of the governing board for expenditures directly necessitated by a natural or man-made disaster not declared by the governor, subject to the following: (i) The governing board reducing expenditures below the expenditure limitation determined pursuant to subsection (1) of this section by the amount of the excess expenditure for the fiscal year following a fiscal year in which excess expenditures were made pursuant to this paragraph; or (ii) Approval of the excess expenditure by a majority of the qualified electors voting either at a special election held by the governing board or at a regularly scheduled election for the nomination or election of the members of the governing board, in the manner provided by law. If the excess expenditure is not approved by a majority of the qualified electors voting, the governing board shall for the fiscal year which immediately follows the fiscal year in which the excess expenditures are made, reduce expenditures below the expenditure limitation determined pursuant to subsection (1) of this section by the amount of the excess expenditures. Any expenditures in excess of the expenditure limitation, as authorized by this paragraph, shall not affect the determination of the expenditure limitation pursuant to subsection (1) of this section in any subsequent years. Any expenditures pursuant to this paragraph shall be made either in the fiscal year in which the disaster occurs or in the succeeding fiscal year. (c) Upon affirmative vote of at least two-thirds of the members of the governing board and approval by a majority of the qualified electors voting either at a special election held by the governing board in a manner prescribed by law, or at a regularly scheduled election for the nomination or election of the members of the governing board. Such approval by a majority of the qualified electors voting shall be for a specific amount in excess of the expenditure limitation, and such approval must occur prior to the fiscal year in which the expenditure limitation is to be exceeded. Any expenditures in excess of the expenditure limitation, as authorized by this subdivision, shall not affect the determination of the expenditure limitation pursuant to subsection (1) of this section, in subsequent years. (3) As used in this section: (a) "Base limit" means the amount of actual payments of local revenues for fiscal year 1979-1980 as used to determine the expenditure limitation pursuant to subsection (1) of this section. (b) "Cost of living" means either: (i) The price of goods and services as measured by the implicit price deflator for the gross national product or its successor as reported by the United States department of commerce or its successor agency. (ii) A different measure or index of the cost of living adopted at the direction of the legislature, by concurrent resolution, upon affirmative vote of two-thirds of the membership of each house of the legislature. Such measure or index shall apply for subsequent fiscal years, except it shall not apply for the fiscal year following the adoption of such measure or index if the measure or index is adopted after March 1 of the preceding fiscal year. (c) "Expenditure" means any authorization for the payment of local revenues. (d) "Local revenues" includes all monies, revenues, funds, fees, fines, penalties, tuitions, property and receipts of any kind whatsoever received by or for the account of a political subdivision or any of its agencies, departments, offices, boards, commissions, authorities, councils and institutions, except: (i) Any amounts or property received from the issuance or incurrence of bonds or other lawful long-term obligations issued or incurred for a specific purpose, or collected or segregated to make payments or deposits required by a contract concerning such bonds or obligations. For the purpose of this subdivision long-term obligations shall not include warrants issued in the ordinary course of operation or registered for payment, by a political subdivision. (ii) Any amounts or property received as payment of dividends or interest, or any gain on the sale or redemption of investment securities, the purchase of which is authorized by law. (iii) Any amounts or property received by a political subdivision in the capacity of trustee, custodian or agent. (iv) Any amounts received as grants and aid of any type received from the federal government or any of its agencies. (v) Any amounts received as grants, aid, contributions or gifts of any type except amounts received directly or indirectly in lieu of taxes received directly or indirectly from any private agency or organization or any individual. (vi) Any amounts received from the state which are included within the appropriation limitation prescribed in section 17 of this article. (vii) Any amounts received pursuant to a transfer during a fiscal year from another agency, department, office, board, commission, authority, council or institution of the same political subdivision which were included as local revenues for such fiscal year or which are excluded from local revenue under other provisions of this section. (viii) Any amounts or property accumulated for the purpose of purchasing land, buildings or improvements or constructing buildings or improvements, if such accumulation and purpose have been approved by the voters of the political subdivision. (ix) Any amounts received pursuant to section 14 of this article which are greater than the amount received in fiscal year 1979-1980. (x) Any amounts received in return for goods or services pursuant to a contract with another political subdivision, school district, community college district or the state, and expended by the other political subdivision, school district, community college district or the state pursuant to the expenditure limitation in effect when the amounts are expended by the other political subdivision, school district, community college district or the state. (xi) Any amounts expended for the construction, reconstruction, operation or maintenance of a hospital financially supported by a city or town prior to January 1, 1980. (xii) Any amounts or property collected to pay the principal of and interest on any warrants issued by a political subdivision and outstanding as of July 1, 1979. (xiii) Any amounts received during a fiscal year as refunds, reimbursements or other recoveries of amounts expended which were applied against the expenditure limitation for such fiscal year or which were excluded from local revenues under other provisions of this subsection. (xiv) Any amounts received collected by the counties for distribution to school districts pursuant to state law. (e) "Political subdivision" means any county, city or town. This definition applies only to this section and does not otherwise modify the commonly accepted definition of political subdivision. (f) "Population" means either: (i) The periodic census conducted by the United States department of commerce or its successor agency, or the annual update of such census by the department of economic security or its successor agency. (ii) A different measure or index of population adopted at the direction of the legislature, by concurrent resolution, upon affirmative vote of two-thirds of the membership of each house of the legislature. Such measure or index shall apply for subsequent fiscal years, except it shall not apply for the fiscal year following the adoption of such measure or index if the measure or index is adopted after March 1 of the preceding fiscal year. (4) The economic estimates commission shall adjust the base limit to reflect subsequent transfers of all or any part of the cost of providing a governmental function, in a manner prescribed by law. The adjustment provided for in this subsection shall be used in determining the expenditure limitation pursuant to subsection (1) of this section beginning with the fiscal year immediately following the transfer. (5) The economic estimates commission shall adjust the base limit to reflect any subsequent annexation, creation of a new political subdivision, consolidation or change in the boundaries of a political subdivision, in a manner prescribed by law. The adjustment provided for in this subsection shall be used in determining the expenditure limitation pursuant to subsection (1) of this section beginning with the fiscal year immediately following the annexation, creation of a new political subdivision, consolidation or change in the boundaries of a political subdivision. (6) Any political subdivision may adjust the base limit by the affirmative vote of two-thirds of the members of the governing board or by initiative, in the manner provided by law, and in either instance by approval of the proposed adjustment by a majority of the qualified electors voting at a regularly scheduled general election or at a nonpartisan election held for the nomination or election of the members of the governing board. The impact of the modification of the expenditure limitation shall appear on the ballot and in publicity pamphlets, as provided by law. Any adjustment, pursuant to this subsection, of the base limit shall be used in determining the expenditure limitation pursuant to subsection (1) of this section beginning with the fiscal year immediately following the approval, as provided by law. (7) The legislature shall provide for expenditure limitations for such special districts as it deems necessary. (8) The legislature shall establish by law a uniform reporting system for all political subdivisions or special districts subject to an expenditure limitation pursuant to this section to insure compliance with this section. The legislature shall establish by law sanctions and penalties for failure to comply with this section. (9) Subsection (1) of this section does not apply to a city or town which at a regularly scheduled election for the nomination or election of members of the governing board of the city or town adopts an expenditure limitation pursuant to this subsection different from the expenditure limitation prescribed by subsection (1) of this section. The governing board of a city or town may by a two-thirds vote provide for referral of an alternative expenditure limitation or the qualified electors may by initiative, in the manner provided by law, propose an alternative expenditure limitation. In a manner provided by law, the impact of the alternative expenditure limitation shall be compared to the impact of the expenditure limitation prescribed by subsection (1) of this section, and the comparison shall appear on the ballot and in publicity pamphlets. If a majority of the qualified electors voting on such issue vote in favor of the alternative expenditure limitation, such limitation shall apply to the city or town. If more than one alternative expenditure limitation is on the ballot and more than one alternative expenditure limitation is approved by the voters, the alternative expenditure limitation receiving the highest number of votes shall apply to such city or town. If an alternative expenditure limitation is adopted, it shall apply for the four succeeding fiscal years. Following the fourth succeeding fiscal year, the expenditure limitation prescribed by subsection (1) of this section shall become the expenditure limitation for the city or town unless an alternative expenditure limitation is approved as provided in this subsection. If a majority of the qualified electors voting on such issue vote against an alternative expenditure limitation, the expenditure limitation prescribed pursuant to subsection (1) of this section shall apply to the city or town, and no new alternative expenditure limitation may be submitted to the voters for a period of at least two years. If an alternative expenditure limitation is adopted pursuant to this subsection, the city or town may not conduct an override election provided for in section 19, subsection (4) of this article, during the time period in which the alternative expenditure limitation is in effect. (10) This section does not apply to any political subdivision until the fiscal year immediately following the first regularly scheduled election after July 1, 1980 for the nomination or election of the members of the governing board of such political subdivision, except that a political subdivision, prior to the fiscal year during which the spending limitation would first become effective, may modify the expenditure limitation prescribed pursuant to subsection (1) of this section, by the provisions prescribed by subsections (2) and (6) of this section, or may adopt an alternative expenditure limitation pursuant to subsection (9) of this section. A county may conduct a special election to exceed the expenditure limitation prescribed pursuant to subsection (1) of this section for the fiscal years 1982-1983 and 1983-1984, on the first Tuesday after the first Monday in November in 1981. (11) "City," as used in this article, means city or charter city. ”

Amendment

Ratified in November 1992 via voter approval of Proposition 104.

Section 21

Text of Section 21: Expenditure Limitations for School Districts and Community College Districts “ (1) The economic estimates commission shall determine and publish prior to April 1 of each year the expenditure limitation for the following fiscal year for each community college district. The expenditure limitations shall be determined by adjusting the amount of expenditures of local revenues for each such district for fiscal year 1979-1980 to reflect the changes in the student population of each district and the cost of living. The governing board of any community college district shall not authorize expenditures of local revenues in excess of the limitation prescribed in this section, except in the manner provided by law. (2) The economic estimates commission shall determine and publish prior to May 1 of each year the aggregate expenditure limitation for all school districts for the following fiscal year. The aggregate expenditure limitation shall be determined by adjusting the total amount of expenditures of local revenues for all school districts for fiscal year 1979-1980 to reflect the changes in student population in the school districts and the cost of living, and multiplying the result by 1.10. The aggregate expenditures of local revenues for all school districts shall not exceed the limitation prescribed in this section, except as provided in subsection (3) of this section. (3) Expenditures in excess of the limitation determined pursuant to subsection (2) of this section may be authorized by the legislature for a single fiscal year, by concurrent resolution, upon affirmative vote of two-thirds of the membership of each house of the legislature. (4) As used in this section: (a) "Cost of living" means either: (i) The price of goods and services as measured by the implicit price deflator for the gross national product or its successor as reported by the United States department of commerce, or its successor agency. (ii) A different measure or index of the cost of living adopted at the direction of the legislature, by concurrent resolution, upon affirmative vote of two-thirds of the membership of each house of the legislature. Such measure or index shall apply for subsequent fiscal years, except it shall not apply for the fiscal year following the adoption of such measure or index if the measure or index is adopted after March 1 of the preceding fiscal year. (b) "Expenditure" means any amounts budgeted to be paid from local revenues as prescribed by law. (c) "Local revenues" includes all monies, revenues, funds, property and receipts of any kind whatsoever received by or for the account of a school district or community college district or any of its agencies, departments, offices, boards, commissions, authorities, councils and institutions, except: (i) Any amounts or property received from the issuance or incurrence of bonds, or other lawful long-term obligations issued or incurred for a specific purpose, or any amounts or property collected or segregated to make payments or deposits required by a contract concerning such bonds or obligations. For the purpose of this subdivision long-term obligations shall not include warrants issued in the ordinary course of operation or registered for payment by a political subdivision. (ii) Any amounts or property received as payment of dividends and interest, or any gain on the sale or redemption of investment securities, the purchase of which is authorized by law. (iii) Any amounts or property received by a school district or community college district in the capacity of trustee, custodian or agent. (iv) Any amounts received as grants and aid of any type received from the federal government or any of its agencies except school assistance in federally affected areas. (v) Any amounts or property received as grants, gifts, aid or contributions of any type except amounts received directly or indirectly in lieu of taxes received directly or indirectly from any private agency or organization, or any individual. (vi) Any amounts received from the state for the purpose of purchasing land, buildings or improvements or constructing buildings or improvements. (vii) Any amounts received pursuant to a transfer during a fiscal year from another agency, department, office, board, commission, authority, council or institution of the same community college district or school district which were included as local revenues for such fiscal year or which are excluded from local revenue under other provisions of this subsection. (viii) Any amounts or property accumulated by a community college district for the purpose of purchasing land, buildings or improvements or constructing buildings or improvements. (ix) Any amounts received in return for goods or services pursuant to a contract with another political subdivision, school district, community college district or the state and expended by the other political subdivision, school district, community college district or the state pursuant to the expenditure limitation in effect when the amounts are expended by the other political subdivision, school district, community college district or the state. (x) Any amounts received as tuition or fees directly or indirectly from any public or private agency or organization or any individual. (xi) Any ad valorem taxes received pursuant to an election to exceed the limitation prescribed by section 19 of this article or for the purposes of funding expenditures in excess of the expenditure limitations prescribed by subsection (7) of this section. (xii) Any amounts received during a fiscal year as refunds, reimbursements or other recoveries of amounts expended which were applied against the expenditure limitation for such fiscal year or which were excluded from local revenues under other provisions of this subsection. (d) For the purpose of subsection (2) of this section, the following items are also excluded from local revenues of school districts: (i) Any amounts received as the proceeds from the sale, lease or rental of school property as authorized by law. (ii) Any amounts received from the capital levy as authorized by law. (iii) Any amounts received from the acquisition, operation, or maintenance of school services of a commercial nature which are entirely or predominantly self-supporting. (iv) Any amounts received for the purpose of funding expenditures authorized in the event of destruction of or damage to the facilities of a school district as authorized by law. (v) Any revenues derived from an additional state transaction privilege tax rate increment for educational purposes that was authorized by the voters before January 1, 2001. (vi) Any amounts received pursuant to article XI, section 8, Constitution of Arizona, that are approved by the majority of qualified voters at a statewide general election held after November 1, 2002, and before January 1, 2003. (e) "Student population" means the number of actual, full-time or the equivalent of actual full-time students enrolled in the school district or community college district determined in a manner prescribed by law. (5) The economic estimates commission shall adjust the amount of expenditures of local revenues in fiscal year 1979-1980, as used to determine the expenditure limitation pursuant to subsection (1) or (2) of this section, to reflect subsequent transfers of all or any part of the cost of providing a governmental function, in a manner prescribed by law. The adjustment provided for in this subsection shall be used in determining the expenditure limitation pursuant to subsection (1) or (2) of this section beginning with the fiscal year immediately following the transfer. (6) The economic estimates commission shall adjust the amount of expenditures of local revenues in fiscal year 1979-1980, as used to determine the expenditure limitation of a community college district pursuant to subsection (1) of this section, to reflect any subsequent annexation, creation of a new district, consolidation or change in the boundaries of a district, in a manner prescribed by law. The adjustment provided for in this subsection shall be used in determining the expenditure limitation pursuant to subsection (1) of this section beginning with the fiscal year immediately following the annexation, creation of a new district, consolidation or change in the boundaries of a district. (7) The legislature shall establish by law expenditure limitations for each school district beginning with the fiscal year beginning July 1, 1980. Expenditures by a school district in excess of such an expenditure limitation must be approved by a majority of the electors voting on the excess expenditures. (8) The legislature shall establish by law a uniform reporting system for school districts and community college districts to ensure compliance with this section. The legislature shall establish by law sanctions and penalties for failure to comply with this section. ”

Amendments

• Ratified in November 1986 via voter approval of Proposition 101.
• Ratified on November 5, 2002 via voter approval of Proposition 104.

Section 22

Text of Section 22: Vote required to increase state revenues; application; exceptions “ (A) An act that provides for a net increase in state revenues, as described in subsection B is effective on 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 effective immediately on the signature of the governor as provided by article IV, part 1, section 1. If the governor vetoes the measure, it shall not become effective unless it is approved by an affirmative vote of three-fourths of the members of each house of the legislature. (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 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 of 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 and 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. ”

Amendment

Ratified in November 1992 via voter approval of Proposition 108.

Section 23

Text of Section 23: Expenditures Required by Initiative or Referendum; Funding Source “ (A) An initiative or referendum measure that proposes a mandatory expenditure of state revenues for any purpose, establishes a fund for any specific purpose or allocates funding for any specific purpose must also provide for an increased source of revenues sufficient to cover the entire immediate and future costs of the proposal. The increased revenues may not be derived from the state general fund or reduce or cause a reduction in general fund revenues. (B) If the identified revenue source provided pursuant to subsection A in any fiscal year fails to fund the entire mandated expenditure for that fiscal year, the legislature may reduce the expenditure of state revenues for that purpose in that fiscal year to the amount of funding supplied by the identified revenue source. ”

Amendment

Ratified on November 2, 2004 via voter approval of Proposition 101.

Section 24

Text of Section 24: Prohibition of new real property sale or transfer taxes “ The state, any county, city, town, municipality or other political subdivision of the state, or any district created by law with authority to impose any tax, fee, stamp requirement or other assessment, shall not impose any new tax, fee, stamp requirement or other assessment, direct or indirect, on the act or privilege of selling, purchasing, granting, assigning, transferring, receiving, or otherwise conveying any interest in real property. This section does not apply to any tax, fee, or other assessment in existence on December 31, 2007. ”

Amendment

• Ratified on November 4, 2008, via voter approval of Proposition 100.

Section 25

Text of Section 25: Prohibition of New or Increased Taxes on Services “ The state, any county, city, town, municipal corporation, or other political subdivision of the state, or any district created by law with authority to impose any tax, fee, stamp requirement, or other assessment, shall not impose or increase any sales tax, transaction privilege tax, luxury tax, excise tax, use tax, or any other transaction-based tax, fee, stamp requirement or assessment on the privilege to engage in, or the gross receipts of sales or gross income derived from, any service performed in this state. This section does not repeal or nullify any tax, fee, stamp requirement, or other assessment in effect on December 31, 2017. ”

Amendment

• Ratified on November 6, 2018, via voter approval of Proposition 126.

See also

• State constitution
• Constitutional article
• Constitutional amendment
• Constitutional revision
• Constitutional convention
• Amendments
  • Initiated constitutional amendment
  • Legislatively-referred constitutional amendment
  • Publication requirements for proposed state constitutional amendments
  • Rules about constitutional conventions in state constitutions
  • State constitutional articles governing state legislatures

External links

Suggest a link

• Arizona State Legislature, "Arizona Constitution" (Links to each section)
• Arizona State Legislature, "Arizona Constitution" (Entire Document in PDF)

Additional reading

• McClory, Toni, (2000). Understanding the Arizona Constitution, Tucson, Arizona: The University of Arizona Press.