Issues outline no. 1

              ISSUES OUTLINE NO. 1
prepared for the
JOINT SELECT COMMITTEE ON
TAX REFORM AND SCHOOL FINANCE
ISSUES OUTLINE NO. 1
prepared for the
JOINT SELECT COMMITTEE
ON
TAX REFORM AND SCHOOL FINANCE
September 14, 1978
INTRODUCTION
Issues Outline 1 i s an i n i t i a l attempt t o organize the possible goals,
pol i c y a1 t e r n a t i ves and requi red research program f o r a Speci a1 Session
on Tax Reform and School Finance.
The report i s divided i n t o two major sections. Section One describes the
acquisition o f data and background research materials and the preparation
o f automated simulation models necessary to evaluate proposed changes t o
the taxation and education finance structures. Section Two o f the report
l i s t s possible goals and p o l i c y alternatives i n taxation and education and
integrates them with the research items described i n Section One. A possible
general time framework of research i s presented i n the Attachment following
Section Two.
It should be noted t h a t no attempt has been made t o provide an overall
time frame f o r when the Committee w i l l l i k e l y consider p a r t i c u l a r issue
areas. However, it i s assumed t h a t thorough evaluation of s p e c i f i c pol i c y
alternatives cannot occur before a l l o f the data has been assembled and
automated i n a fashion t h a t would allow accurate and rapid analysis. Given
present resources, i t appears that data acquisition and automation w i 11
require several months, with the major simulation models becoming available
for use next May or June.
Although an attempt was made to provide a comprehensive o u t l i n e of possible
goals, issues and research, the l i s t s of goals, issues and research developed
i n Issues Outline No. 1 are not intended t o be exhaustive o f a l l possibil i t i e s .
Issues Outline No. 1 i s intended t o serve as an i n i t i a l focal point i n
organizing and i l l u s t r a t i n g the possible issues.
- 1 -
TABLE OF CONTEKTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . '. . . . . . . . . . i
SECTION ONE: DESCRIPTION OF RESEARCH
Overview.. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
I. Development o f Tax Simulation Flodels and Data Abstracts . . 1
11. OtherTaxation Research. . . . . . . . . . . . . . . . . . 4
111. Development o f Education Finance Data Base. . . . . . . . . 5
I V . Other Education Research. . . . . . . . . . . . . . . . . . 6
SECTION TWO: POSSIBLE GOALS IN TAXATION AND EDUCATION FINANCE,
LEGISLATIVE ALTERNATIVES TO ACHIEVE GOALS AND
RESEARCH TO BE UNDERTAKEN
Overview.. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
I. PropertyTaxation. . . . . . . . . . . . . . . . . . . . . 9
11. Other Taxation. . . . . . . . . . . . . . . . . . . . . . . 14
111. Education Finance and Education Program Structure . . . . . 18
I V . Spending Limitations. . . . . . . . . . . . . . . . . . . . 28
ATTACHMENT: ESTIMATED TIME SCHEDULE FOR RESEARCH
I. Taxation Models and Data Abstracts
A. PropertyTaxModels. . . . . . . . . . . . . . . . . . . 30
& I n d i v i d u a l Income Tax Master F i l e . . . . . . . . . . . . 32
C. Corporate Income Tax Model. . . . . . . . . . . . . . . . 33
D. Tax Burden Model. . . . . . . . . . . . . . . . . . . . . 34
E. Sales Tax Abstract and Simulation Model . . . . . . . . . 36
11. Other Taxation Research. . . . . . . . . . . . . . . . . . 38
111. Development o f Education Finance Data Base. . . . . . . . . 41
I V . Development o f Other Education Data . . . . . . . . . . . . 43
SECTION ONE
DESCRIPTION OF RESEARCH
SECTION ONE
DESCRIPTION OF RESEARCH
OVERVIEW
I n order t o answer the questions l i k e l y t o be raised by the Legislature i n
a Special Session on Tax Reform and School Finance, i t w i l l be necessary
t o undertake a comprehensive research program to develop data banks and
analytical tools t o a i d i n evaluating pol i c y options.
I n structuring a program o f research, four main research areas were
i d e n t i f i e d . These include: I ) development o f tax simulation models and
data abstracts, 11) other taxation research, 111) development o f education
finance data bank and IV) other education research. Descriptions o f these
research areas follow. ( A possible research time frame i s presented i n
Attachment. )
DEVELOPMENT OF TAX SIMULATION MODELS AND DATA ABSTRACTS
I n the taxation area, seven basic models have been i d e n t i f i e d as
necessary t o help resolve the majority o f taxation issues l i k e l y t o
arise i n a Special Session. These models are:
1. Legal Class Property Tax Model
2. Use Code Property Tax Model
3. Class 5 Property Tax Model
4. Individual Income Tax Master F i l e
5. Corporate Income Tax Model
6. Tax Burden Model
7. Sales Tax Model
Although the s p e c i f i c time schedules f o r constructing and developing
these models vary according t o the dates a t which data become available,
a1 1 seven models should be operational by June 1979. General work
outlines f o r each o f the models are presented i n the Attachment.
These schedules assume t h a t a f u l l - t i m e computer programmer w i l l be
retained by the Legislature and t h a t a t l e a s t one s t a f f member w i l l
work f u l l - time on developing program specifications and coordinating
model development. It also assumes t h a t the Department o f Revenue
w i l l make available, on a part- time basis, programming technicians i n
the property tax, income tax and sales tax areas as required t o aid i n
data transfer.
DESCRIPTION OF TAXATION DATA MODELS
1. Legal Class Property Tax Model. The legal class property
tax model i s a simulation tool desisned to analyze changes
in the property tax system at the levels of legil class-and
taxing authority. Some of the alternatives which can
be examined within this model include:
a) A Jarvis- Gann- type proposal imposed on Class 5 properties
( in Arizona, similar to the Beaver proposal)
b) Changes i n the assessment ratio of legal classes
c) Tax rate and tax levy 1 imitations
Final data will be available by January 1979 and the model
should be programmed by February or March. The model would
then be tested and debugged during March and April . By May ,
the model would be ready to analyze legislative alternatives.
2. Use Code Property Tax Model. The use code property tax
model increases the flexibility of analysis by a1 lowing
examination of impacts down to the use code level. Examples
of alternatives which can be examined within the constructs
of the use code abstract include:
a) Changes in the assessment ratio of railroads, or any other
i ndus try- defi ned use code
b) Aggregati on of income- producing properties by
industry type into new legal classes
The time schedule for this model is the same as outlined i n
1. above.
3. Class 5 Property Tax Model. This model consists of a property
tax data abstract for Class 5 properties. I t will be used to
analyze such alternatives as a homestead property tax exemption.
Development of this model would follow the same time line as
outlined in 1, above.
4. Individual Income Tax Master File. The individual income
tax master f i l e contains detailed information from
individual tax returns. Programs will be run against the
f i l e to analyze such alternatives as:
a) Changes in the individual income tax rate structure
b) Changes in the levels of deductions and exemptions
such as the standard deduction and the federal income
tax deduction
c) Modifications in income tax indexing for inflation such
as indexing of income tax brackets
The basic data f i l e for 1977 i s currently available through
the Department of Revenue. I t will require approximately
two t o three months to w r i t e program specifications
and the programs t o evaluate changes. Testing o f
a1 ternatives would extend over several months.
5. Corporate Income Tax Model. The corporate income tax
model i s comprised of a data f i l e of c o r ~ o r a t ein come
tax returns and w i 11 be used t o analyze changes i n
the corporate income tax system. Examples o f a l t e r -
na\ tives which can be analyzed by t h i s model include:
a) Changes i n the corporate income tax rate structure
b) Changes i n the levels o f allowable deductions and
exemptions
c) Modifications of tax base to value- added concept
A t the present time, the Department o f Revenue i s
targeting t o have the corporate income tax system
available i n October 1979. However, it i s recommended
that the Legislature request t h a t a testable data
abstract be made available as soon as possible. This
action would i n i t i a t e i m e d i ate keypunching o f data,
thereby providing f o r a data tape i n early 1979
( February or March). By A p r i l the corporate income
tax model should be ready t o analyze alternatives.
6. Tax Burden Model. The tax burden model w i 11 be
developed from a detailed sample o f i n d i v i d u a l income
tax returns. The model w i l l be used t o analyze the
effect o f tax changes as they r e l a t e t o income and
household characteristics. Examples o f questions
which the tax blrrden model w i l l help resolve include:
a) Given a change i n the level of federal income tax
deduction allowed on an Arizona return, what i s
the e f f e c t of tax burden f o r p a r t i c u l a r income
and household groups?
b) If local property taxes are reduced t o 1% o f
f u l l cash value, what happens to the tax burden
of p a r t i cul ar income and household groups?
By May or June, the tax burden model should be ready
f o r p o l i c y evaluation.
7. Sales Tax Model. The sales tax model i s e s s e n t i a l l y a
sales tax data abstract that w i l l enable the t e s t i n g
of changes i n tax rates as well as r e c l a s s i f i c a t i o n o f
taxable industries. Additionally, the model w i l l
f a c i 1 i t a t e t e s t i n g of a1 ternative d i s t r i b u t i o n formulae.
The Department o f Revenue i s currently i n the process
o f developing time and cost estimates f o r providing a
usable data tape. Program development w i l l require two
t o three months, and it i s envisioned t h a t the sales tax
model could be ready f o r pol i c y evaluation by A p r i l or
May.
I I. OTHER TAXATION RESEARCH
In addition to the development and construction of computerized data
simulation models, there are several other data research requirements
that warrant consideration. These research tasks are 1 isted below.
Time estimates for completing the work are also provided and the tasks
should be sequenced so that the research will be available at the time
needed for consideration by the Legislature.
1. Property Taxation
a. Legal. When considering alternative property taxation
schemes, legal questions are likely to arise. These
questions could best be handled on an individual basis
at the time they arise.
b. Data Collection and Analysis. In addition to the
computerized data abstracts, other data will be required
t o analyze particular policy alternatives. These include:
- A l i s t of outstanding debt by d i s t r i c t ( two weeks);
available immediately and needed a t time of consider-ation
of Jarvis- Gann.
- Analysis of California implementation and impact of
Jarvis- Gann; two weeks to prepare report with recom-mendations
for implementation i n Arizona. Needed at
time of consideration of Jarvis- Gann.
- Historical profile of tax levies by d i s t r i c t 1970- 1978
to analyze growth trends; two to three weeks - could be
done immediately and should be done prior to January.
- Compi 1 e comprehensive 1 i s t of property tax relief
alternatives i n use in other states, analyze and report;
two to three weeks; begin investigation now, should be
finalized in November or December.
- Monitor and review DOR Mass Appraisal System process ;
part- time on on- goi ng basis.
- Analyze the institution of greenbelt legislation as it
relates to property taxation; three to five weeks;
should be done i n early 1979.
2. Other Taxation
a. Tax Burden Model. Conduct 1 i terature review, develop tax
estimating equations, coordinate programming and model
construction; three to four months; should begin now.
b. Collect and Analyze Additional Data:
- Prepare h i s t o r i c a l p r o f i l e of state and local revenue
sources. ( 2- 3 months) Should begin now, ready i n
November or December.
- Prepare update o f state- by- state tax re1 i ance study.
( 1- 1% months) Should begin now, ready i n October or
November.
- Assemble data on casual sales. ( 1- 2+ weeks) A t
proper time f o r consideration.
- Assemble data on services. ( 1- 2 weeks) For consider-ation
o f sales tax on services.
- Construct data abstract of other state taxes such as
use tax, l uxury tax, estate tax, etc. ( 2- 3 weeks)
- Survey general tax r e l i e f mechanisms currently i n use
i n other states, especially tax c i r c u i t breaker.
( 2- 3 weeks)
- Survey corporate income tax structures i n other states,
especially Michigan's single business tax. ( 3- 4 weeks)
Should begin now, analysis finished by January.
- H i s t o r i c a l p r o f i l e of user charges i n local d i s t r i c t s ,
analyze and report. ( 2- 4 weeks)
- Assemble and analyze property sales f o r examination o f
real estate transfer fee. ( 4- 8 weeks)
111. DEVELOPMENT OF EDUCATION FINANCE DATA BASE
The development of an education finance data base w i l l serve two
purposes: the f i r s t i s t o have a comprehensive s t a t i s t i c a l base
available i n order t o formulate and t e s t various p o l i c y alternatives
and the second i s t o have actual d i s t r i c t data t o use as a comparison
' base i n order t o analyze the impacts of various alternatives. The Arizona
Department o f Education i s presently compiling a l i s t of data which
it has on f i l e and the form which it i s presently in. This task w i l l
be completed by the end of October.
Presently, it i s envisioned t h a t data w i l l be compiled f o r both the
1977- 78 and 1978- 79 school years i n order to eliminate any irregu-l
a r i t i e s t h a t may occur by using data f o r only one year. The
1977- 78 data w i 11 be used f o r comparison with the 1978- 79 data and
the 1978- 79 data, possibly adjusted t o a r r i v e a t a more " accurate"
level, w i l l be used i n the f i n a l analysis. The following i s a
general time frame of when the various components of the education
finance data base w i l l be assembled
1. L i s t of information available and form information i s i n a t
the Arizona Department o f Education. End o f October.
2. Legislative determination of data needs f o r each school
d i s t r i c t . ( 1 month) Ready mid- October.
3. ADOE, based on Legislature's data needs ( item2. above) f i l l s
data gaps.
4. Each school d i s t r i c t presented with data packages f o r ( a)
v e r i f i c a t i o n of ADOE information and ( b) request f o r remainder
of data. Each county, where applicable, i s also presented
with same information f o r unorganized t e r r i t o r y w i t h i n county.
( 1- 2 months)
5. Prepare data i n format f o r analysis. ( 2- 3 months)
By end o f March, data base collected and stored f o r use
i n analyzing l e g i s l a t i v e alternatives.
6. Each school d i s t r i c t updates data packages t o r e f l e c t more
actual information f o r 1978- 79. ( 2- 3 months)
7. By end o f February, ADOE equalization study completed.
Legislature obtains:
a. Description o f types o f data collected, form used to
gather data, manner i n which data collected was
manipulated
b. Description o f simulation model
c. Test r e s u l t s
8. Analyze ADOE equalization study and update data t o r e f l e c t
1978- 79 information. ( 2- 3 months) Available June 1979.
9. Test, simulate and analyze a l t e r n a t i v e s and impacts.
I V . OTHER EDUCATION RESEARCH
I n addition to the s t a t i s t i c a l data base, t h e f o l l o w i n g research items
and data w i l l need t o be obtained and reviewed. The primary purpose
f o r the research i s to provide background f o r finance a l t e r n a t i v e s
and/ or other education goals. Some o f these data may specify needs,
establish parameters o f a l t e r n a t i v e s or provide a basis of understand-ing
o f a peripheral education area which may be impacted by a change
i n the school finance program and thus need t o be modified.
1. a. Review o f educational refinance programs o f other states.
( 1 - 2 months) Completed by mid- October.
b. Review of evaluations o f o t h e r s t a t e s ' educational finance
programs. If other states are using the same funds and
time frame as the ADOE study, r e s u l t s should be available
i n early 1979. ( 1- 2 months f o r review and report)
2. Evaluate Arizona equal i z a t i o n system. ( 2- 4 months) Completed
early 1979 ( February or March).
3. Review Federal P. L. 94- 142 ( Education of the Handicapped Act)
and Section 504 of the Rehabilitation Act of 1973. ( 2- 4 weeks)
Completed by March.
4. a. L i s t a1 1 Federal special programs including: description,
target population, number o f students served, funding
mechanism and funding provided. ( 2- 4 weeks)
b. L i s t and evaluate a l l state special programs. ( 2- 4 weeks)
5. Study and report on teachers' retirement: program and funding.
( 2- 3 weeks) Completed by January.
6. Study and report on teacher tenure laws. ( 1- 3 weeks)
7. a. Review the present testing programs and objectives used i n
Arizona: t h i r d grade reading test, f i f t h grade math t e s t
and CUES ( Continuous Uniform Education System).
b. Review t e s t i n g programs and objectives i n other states and
on national level. ( 3- 6 months)
8. Review present budget format and Uniform System o f Financial
Records ( USFR) . ( 2- 4 weeks)
9. Review budgetary and valuation process time frames o f school
d i s t r i c t s and a l l other taxing j u r i s d i c t i o n s . ( 2- 4 weeks)
SECTION TWO
POSSIBLE
GOALS I N TAXATION AND EDUCATION FINANCE,
LEGISLATIVE ALTERNATIVES TO ACHIEVE GOALS
AND
RESEARCH TO BE UNDERTAKEN
SECTION TWO
POSSIBLE GOALS IN TAXATION AND EDUCATION FINANCE,
LEGISLATIVE ALTERNATIVES TO ACHIEVE GOALS AND
RESEARCH TO BE UNDERTAKEN
OVERVIEW
This section outlines possible goals and l e g i s l a t i v e alternatives t o be
considered by the Legislature i n a Special Session of Taxation and School
Finance. I n addition, the research elements discussed i n Section One are
integrated with the p o l i c y alternatives t h a t the research i s designed t o
eva 1 uate .
Organizational ly, the goals and a1 ternatives are divided i n t o four areas.
These areas are: ( I) Property Taxation, ( 11) Other Taxation, ( 111) Educa-t
i o n a l Finance and Education Program Structure and ( IV) Spending Limitations.
Their sequence, moreover, represents one 1 ogi cal order f o r consideration by
the Legislature. Another possible ordering might be: ( 1 ) Property Taxation,
( 2) Education Finance and Education Program Structure, ( 3) Other Taxation and
( 4) Spending Limitations. It appears t h a t property taxation w i l l 1 i kely
receive f i r s t consideration since it i s the most urgent area i n need o f
reform. Either " Other Taxationn i n determining replacement revenues or
" Education" could be considered next. Spending Limitations would l i k e l y
( although it need not) be considered a f t e r the revenue and education finance
structures are sol i d i f i e d .
I. RESEARCH AREA: PROPERTY TAXATION
A. GOALS I N REFORMING THE PROPERTY TAX SYSTEM
1. Reduce reliance on property taxes a t state and l o c a l l e v e l s and
s t a b i l i z e the problem o f rapidly r i s i n g property taxes.
2. Reduce the burden of property taxation confronting homeowners.
3. Improve hori zontal and v e r t i c a l equity i n property taxation.
4. Improve and simplify the administration of property taxation.
5. Equalize t o t a l property tax burdens among d i s t r i c t s .
6. Preserve open spaces and other special property types from urban
development.
7. For homeowners, make property taxation more income determinative.
8. Reduce and stabi 1 ize property val uation increases.
B. LEGISLATIVE ALTERNATIVES TO ACHIEVE GOALS AND RESEARCH TO BE
UNDERTAKEN.
GOAL No. 1: Reduce reliance on property taxes a t state and local
levels and stabi 1 ize the problem o f r a p i d l y r i s i n g property
taxes.
ALTERNATIVES RESEARCH
a. Fix the amount o f property . Use Legal Class Model to analyze
taxes that can be raised as a impacts on d i s t r i c t s . Model can be
constant proportion o f valua- used t o evaluate d i f f e r e n t percentage
t i o n ( e. g . Jarvis- Gann). levels.
. Assemble d i s t r i c t debt f o r possible
adjustment i n valuation growth 1 i m i t s .
* Analysis and review o f Cal i f o r n i a
experience; effects and implemen-t
a t i o n .
. Analysis and recommendation f o r
Arizona administration and imple-mentati
on.
b. Limit the amount of annual . Construct h i s t o r i c a l p r o f i l e o f tax
increase i n property taxes. levies by d i s t r i c t 1970- 1978 f o r
comparison.
. Use Legal Class Model to analyze
impacts on d i s t r i c t s o f varying
types and magnitudes of percentage
l i m i t a t i o n s . Model can be used t o
evaluate d i f f e r e n t levels of levy
r e s t r i c t i o n s .
c. Remove or further reduce * Use Legal Class Model and/ or use
the state property tax on a l l Code Model t o evaluate changes i n
or selected property types. property tax l e v e l s .
d. Impose property tax 1i mi- . See - a. above.
tations on local governments.
( e. g. levy o r r a t e l i m i t a t i o n s )
e. Increase state contribution . See EDUCATION, GOAL No. 1,
f o r education. A1 ternative - b.
f. Increase state shared taxes . See OTHER TAXATION, GOAL No. 1,
t o counties, c i t i e s and towns. A1 ternatives.
g. Modify and expand local . See OTHER TAXATION, GOAL No. 1,
user charges as source o f A1 ternatives
revenue.
h. I n s t i t u t e s t r i c t spending . See SPENDING LIMITATIONS, A1 ternatives
1 imitations .
GOAL No. 2: Reduce the burden o f property taxation confronting homeowners.
ALTERNATIVES RESEARCH
. Compile comprehensive 1 i s t o f property
r e l i e f alternatives i n use i n other
states. Analyze. Report.
a. Reduce tax assessment r a t i o * Use Legal Class Model t o evaluate
on owner- occupied dwellings. d i s t r i c t impacts.
b. Increase the assessment . See 5. above.
r a t i o on other classes o f
property.
c. Increase and expand pro- . Use Class 5 Model t o evaluate d i s t r i c t
perty exempti ons f o r home- impacts from a l t e r n a t i v e l e v e l s of
owners : homestead exempti ons .
- homeowners exemption . Obtain HEW data tape. Program to pro-
- widows and veterans j e c t and expand sample f o r widows,
exemption veterans.
d. Increase the current home- - Use Class 5 Model t o evaluate d i s t r i c t
owners rebate program or impacts and the impacts on d i f f e r e n t
modi fy . valued homes from changing the exist-ing
rebate.
e. Limit the growth i n valu- * Use Legal Class Model to evaluate
ation of owner- occupied d i s t r i c t impacts from 1 i m i t i n g growth
dwell i ngs . i n assessed valuation. Also t o
evaluate impacts on other classes of
property.
- Project tax levies by d i s t r i c t f o r
purposes of comparison.
f. L i m i t the amount of taxes . Use Legal Class Model to evaluate
on homes to be raised as a d i s t r i c t impacts.
fixed proportion of market
val ue.
g . Ins ti t u t i on o f additional . See OTHER TAXES, GOAL No. 1,
property tax credits on income Alternatives - h and - i.
tax return.
h. I n s t i t u t i o n o f c i r c u i t - . See OTHER TAXES , GOAL NO. 1,
breaker type c r e d i t on income A1 ternative - i .
tax return.
i . I n s t i t u t e two- tiered tax . Use Legal Class Model to evaluate
rate. impacts.
j. Equalize centrally- assessed
valuations on statewide basis.
GOAL No. 3: Improve horizontal and v e r t i c a l equity i n property taxation.
ALTERNATIVES RESEARCH
a. Improve and modify the MLR . Monitor, review DOR project.
COST models and other mass
appraisal techniques i n use; . Undertake or contract additional sales
mandate additional appraisal r a t i o studies.
improvements t o counties.
b. Consideration o f legis- . Assemble background materials, review
l a t i v e recornendations per and analyze.
IAAO and Price- Waterhouse
reports.
- expand data bases t o
. Review appraisal techniques used i n
other states.
include style, s i t e
and locational
characteristics.
- appraise undeveloped . Analyze the i n s t i t u t i o n o f greenbelt
land by cost o f l e g i s l a t i o n .
development method.
c. Reduce the number o f legal
classes o f property.
GOAL No. 4: Improve and s i m p l i f y the administration o f property taxation.
ALTERNATIVES RESEARCH
a. Improve the e f f i c i e n c y and . Assemble background materials; review
effectiveness o f various and analyze.
aspects of property tax admin-i
s t r a t i o n including: - Review and monitor DOR project.
- state and county report-i
ng . Review administration operations i n
other states.
- preparation o f tax r o l l s
- issuance of tax b i l l s . Consideration o f 1 e g i s l a t i v e recom-mendations
per IAAO and Price- Waterhouse
reports. ( See pages 6 , 7 and 8 of
P r i ce- Waterhouse Report and 91 - 1 01 o f
IAAO Report).
GOAL No. 5: Equalize t o t a l property tax burdens among d i s t r i c t s .
ALTERNATIVES RESEARCH
a. I n s t i t u t e c e i l i n g on . Use Legal Class and Use Code Model to
d i s t r i c t tax rates. evaluate.
. Investigate imp1 ications a f f e c t i n g the
issue o f state v. local control.
. Investigate needs o f state replace-ment
revenues.
b. I n s t i t u t e local spending . See SPENDING LIMITS, A1 ternatives
control s .
c. Explore a l t e r n a t i v e property * Use Legal Class Model and Use Code
tax rebate mechanisms ( e. g. 1978 Model t o evaluate.
Senate property tax reduction
program . Development o f a l t e r n a t i v e rebate
proposals.
d. Increase state a i d f o r * Assemble 1 i s t o f functions f o r possi bl e
local government functions. funding.
* Determine a l l o c a t i o n formulae.
GOAL No. 6 : Preserve open spaces and other special property types from
urban development.
ALTERNATIVES RESEARCH
a. Consideration o f property . Review greenbelt l e g i s l a t i o n of l a s t
preservation provisions. session and as it exists i n other
states.
- Use Use Code Model to analyze
d i f f e r e n t assessment r a t i o s for
special property types.
GOAL No. 7: For homeowners, make property taxation more income
determinative.
ALTERNATIVES RESEARCH
a. Consider property tax . See PROPERTY TAXATION, GOAL No. 2,
exemptions and/ or c r e d i t s t o A1 t e r n a t i ves , and
make the tax more related t o
a b i l i t y t o pay ( e. g. widows - See OTHER TAXATION, GOAL No. 1,
exemption, c i r c u i t breaker A l t e r n a t i v e - i.
income tax credi t ) .
GOAL No. 8: Reduce and s t a b i l i z e property valuation increases.
ALTERNATIVES RESEARCH
a. Develop property val uation . Review e f f e c t s from past A r i zona
indexes . l e g i s l a t i o n ( 1.05, 1 . l o ) .
b. Establish growth 1 i m i ta- - Review programs i n other states.
tions on valuation f o r
taxation. . Use use code model t o evaluate
impacts.
11. RESEARCH AREA: OTHER TAXATION
A. GOALS I N REFORMING THE STATE'S TAXATION STRUCTURE
1. Develop replacement revenues t o compensate f o r the s h i f t away
from property taxes. The p r i n c i p l e s o f taxation ( 1 i s t e d below)
should serve as guidelines.
a. Taxes should bear r e l a t i o n t o a b i l i t y to pay.
b. Taxes should bear r e l a t i o n t o benefits received.
c. Tax structure should provide equity and fairness ( v e r t i c a l
and horizontal equity) .
d. Maximize t o t a l revenue.
e. Simp1 i f y administration.
f. Encourage economic development.
g. Provide social equity.
h. Maximize tax exportation.
2. Improve e f f i c i e n c y and effectiveness of present revenue system.
3. Determine the proper d i v i s i o n o f funding and administrative
control between state and l o c a l government.
LEGISLATIVE ALTERNATIVES TO ACHIEVE GOALS AND RESEARCH TO BE UNDERTAKEN
GOAL No. 1 : Develop replacement revenues to compensate for the s h i f t
away from property taxes. The p r i n c i p l e s o f taxation
should serve as guidelines.
ALTERNATIVES RESEARCH
. Use Tax Burden
Model t o enable analysis o f tax
burden as it relates t o s p e c i f i c
socioeconomic s t r a t a . Work elements
include 1 i terature review, selection
o f sample size and income tax i n f o r -
mation array, s o r t income tax i n f o r -
mation by income l e v e l , household
characteristics and geographical
l o c a t i o n , a d j u s t f o r nontaxable
income and household d e f i n i t i o n ,
develop secondary data f o r use i n
estimating s a l es and property taxes
by income group, program and debug
model , and report. Model ready by
- 14- May or June 1979.
OTHER TAXATION
. Prepare h i s t o r i c a l p r o f i l e o f revenue
source f o r state, counties, c i t i e s and
towns, school d i s t r i c t s 1967, 1970,
1977.
. Select sample c i t i e s and school dis-t
r i c t s ; assemble information from
budgets. Where necessary and appro-p
r i a t e , f i l l i n gaps from the e a r l i e r
Larson Report and Census of Govern-men
t Fi nances .
. Prepare update o f state- by- state tax
reliance comparison found i n tax
study.
a. Devel op additional revenue
from sales taxes. Increase
tax rates on taxable a c t i v i t i e s .
- t o u r i s t - r e l a t e d
a c t i v i t i e s
b. Impose additional sales
and excise taxes
- casual sales and resales
- real property t r a n s f e r
tax
c. Remove sales tax on food
i tems .
d. Return additional shared
sales tax revenues t o l o c a l
governments.
e. Develop luxury use taxes and
enforcement procedures t o capture
revenue l o s t through transport
of goods purchased outside the
s t a t e ' s taxing j u r i s d i c t i o n f o r
use i n the state.
f. Increase rates and improve
c o l l e c t i o n process o f other taxes
such as use tax, motor vehicle
taxes, gasoline taxes, etc.
- 1 5-
. Use Sales Tax Model to evaluate
changes i n tax rates.
. Monitor and review DOR procedures f o r
establ ishing SIC reporting system.
. Assemble data on casual sales and
resale.
. Assemble data on value o f services by
type o f service.
. Use Sales Tax Model t o evaluate impacts.
. Review types o f transactions conducted
i n Arizona f o r possible taxation.
. Assemble information on family budgets.
. Use Sales Tax Model t o evaluate impacts.
. Construct a l l o c a t i o n f a c t o r data bank
for i n t e g r a t i o n with sales tax data
abstract. Should include valuation,
population, c o l l e c t i o n s , e t c . by
d i s t r i c t .
. Develop a l l o c a t i o n formulae.
. Evaluate a1 t e r n a t i v e d i s t r i b u t i o n
schemes.
. Construct use tax data abstract and re-p
o r t on e x i s t i n g revenues and h i s t o r i c a l
p r o f i l e .
. Assemble information on revenues l o s t
through tax avoidance or evasion.
. Review previous l e g i s l a t i o n .
. Review 1 egal .
OTHER TAXATION
g. Modify the i n d i v i d u a l
income tax rate structure t o
produce more revenue
- more progressive
- 1 ess progressive
h. Modify the i n d i v i d u a l
income tax base.
- federal income tax
deduction
- personal exemptions
- standard deduction
- conti nuance o f i n f l a t i o n
indexing
- renters, e l d e r l y credits
i. I n s t i t u t i o n o f c i r c u i t
breaker .
j. Modify corporate income
tax structure by a1 t e r i ng
tax rates t o raise additional
revenue.
. Assess DOR income tax data f i l e .
. Use Individual Income Tax Model
t o evaluate changes i n tax rates.
. Review o f tax c i r c u i t breaker
mechanisms i n use i n other s t a t e s .
. Literature review o f methodology
f o r use i n testing.
. Use Individual Income Tax Model and
Tax Burden Model t o evaluate impact
on state and socioeconomic strata.
. Survey corporate income t a x s t r u c t u r e s
i n other states, especially Michigan's
single business tax concept. Report.
. Monitor and review DOR progress i n
developing corporate income tax
data f i l e . Evaluate data system.
k. Modify corporate income - Use Corporate Income Tax Model t o
tax structure by a1 t e r i n g the evaluate changes i n corporate tax
tax base rates .
- c a p i t a l gains - Use Corporate Income Tax Model to
evaluate changes i n corporate tax
- eliminate federal income base.
tax deduction
- apportionment formula
- 1 6-
OTHER TAXATION
1. Modify corporate income . Literature review o f use i n other states,
t a x s t r u c t u r e by i n s t i t u t i n g e. g. Michigan.
value- added tax.
. Use Corporate Income Tax Model to
evaluate changes i n tax base.
rn. Increase the use o f user . H i s t o r i c a l p r o f i l e o f local d i s t r i c t s '
charges to allow local govern- reliance on user charges. Report.
ments t o more accurately
r e f l e c t marginal costs i n such . Review o f charges l i m i t e d by statute.
charges.
SAnalysi s o f changes, estimation o f impacts.
n. Develop local option sales . Review local option taxes i n use i n
o r income taxes. other states .
. Use Sales Tax Model to evaluate d i s t r i c t
impacts.
. Use Tax Burden Model t o evaluate
individual tax burden impacts.
GOAL No. 2: Improve e f f i c i e n c y and effectiveness o f present revenue system.
ALTERNATIVES RESEARCH
a. Provide for s t r i c t e r * Review o f current laws and enforcement
enforcement o f use tax laws procedures. Report.
- Prepare recommendations.
b. Modify sales tax report- . Monitor DOR work i n t h i s area.
ing system t o r e f l e c t
standard i n d u s t r i a l c l a s s i f i - . Prepare recommendati ons .
c a t i on.
d. Replacement o f corporate
income tax wi t h val ue- added
tax f o r business.
. Prepare s t a f f report on possible areas
f o r l e g i s l a t i v e consideration.
GOAL No. 3: Determine the proper d i v i s i o n o f funding and administrative
control between state and local government.
ALTERNATIVES RESEARCH
- Evaluate the legal imp1 ications.
. Analyze the s h i f t i n l o c a l revenues
from state sources.
RESEARCH AREA: EDUCATION FINANCE AND EDUCATION PROGRAM STRUCTURE
A. GOALS I N REFORMING OF EDUCATION FINANCE AND EDUCATION PROGRAM STRUCTURE
1. Reduce reliance on property taxes at the d i s t r i c t l e v e l .
2. Equalize the burden o f property taxes.
3. Equalize expenditures per student among school d i s t r i c t s .
4. Develop a school financing system which i s f l e x i b l e enough t o
address the unique s i t u a t i o n s o f large and small school d i s t r i c t s ,
r u r a l and urban school d i s t r i c t s , declining enrollment school
d i s t r i c t s and fast- growing school d i s t r i c t s , suburban school
d i s t r i c t s and i n t e r c i t y school d i s t r i c t s and the special needs
o f special students.
5. Design a school financing system which meets the federal
d e f i n i t i o n o f equalization as set f o r t h i n the rules and
regulations promulgated t o implement P. L. 81- 874, Impact Aid.
( This w i l l allow the state to consider 874 funds i n deter-mining
a d i s t r i c t ' s state aid entitlement and thus allow the
state t o reduce i t s contribution i f it so chooses.)
6. Design a school financing system which can be e a s i l y under-stood
by 1 egi slators , school d i s t r i c t boards and personnel
and l a y persons.
7. Insure t h a t a l l property w i t h i n the state i s incorporated i n t o
one o r more school d i s t r i c t s i n order t h a t a l l students w i l l
be w i t h i n a d i s t r i c t ( s ) which provides f o r f u l l K- 12 instruc-t
i o n i n order t o make d i s t r i c t s more uniform i n s t r u c t u r e and
thus s i m p l i f y the funding mechanism and evaluation o f the
funding mechanism.
8. Guarantee q u a l i t y education f o r a l l students i n t h e s t a t e .
9. Determine appropriate and acceptable mix o f state and l o c a l
control o f funding and curriculum.
10. S t a b i l i z e educational costs t o the homeowner and establish
spending and/ or taxing l i m i t a t i o n on local school d i s t r i c t s .
B. LEGISLATIVE ALTERNATIVES TO ACHIEVE GOALS, ISSUES TO BE RESOLVED IN
ACHItVING GOALS AND RESEARCH TO BE UNDERTAKEN.
GOAL No. 1 : Reduce reliance on property taxes a t the d i s t r i c t l e v e l .
EDUCATION FINANCE
ALTERNATIVES RESEARCH
a. See PROPERTY TAXATION
GOALS No. 1, 2 and 5
( increase state funding and
set d i s t r i c t tax l i m i t s ) .
b. State assume f u l l funding
o f education with no d i s t r i c t
power t o tax.
c. Develop " local option" . See OTHER TAXATION for
where d i s t r i c t could opt f o r research and data needs; use Tax
" piggybacking" onto sales tax Burden Model and Sales Tax Model;
or income tax system. data c o l l e c t i o n needed on school
d i s t r i c t basis.
GOAL No. 2: Equalize the burden of property taxes.
ALTERNATIVES RESEARCH
a. Consolidation of property
valuation.
- use county valuation
f o r tax base
- use state valuation
f o r tax base
- use central ly- assessed
a t the county level and
remaining property a t
d i s t r i c t level as tax
bases
- Use Legal Class Property Tax Model
to evaluate impact on property
classes and individual school
d i s t r i c t s .
. Legal research on impact and possible
consequences o f changes, i. e. funding
base and d i s t r i c t boundaries vs.
busing.
- use centrally- assessed
a t the state level and
remaining property a t
county level as tax
bases
- use central ly- assessed
a t the state level and
remaining property a t
d i s t r i c t level as tax
bases
b. Inclusion o f recapture pro-vision
i n conjunction with the
continuation o f the use o f a
qualifying tax rate: d i s t r i c t
" shall" levy the qualifying
tax r a t e t o receive state aid
and when the qualifying rate
produces a greater amount
EDUCATION FINANCE
than the state aid entitlement,
the state receives the amount
i n excess o f the entitlement
level. ( Develop d i s t r i b u t i o n
mechanism t o a1 locate recaptured
do1 1 ars. )
NOTE # 1: Unless local d i s t r i c t s are given some other source o f
revenue production, reduced reliance on property taxes
( GOAL No. 1 ) equates t o increased state funding. How
can the burden o f the remai n i ng property taxes be equal i zed
i n view o f capital construction needs? Funds f o r capital
improvements are more closely t i e d to school d i s t r i c t
wealth ( assessed val uation) than are funds f o r operating
expenses. The c a p a b i l i t y o f a school d i s t r i c t to r a i s e
money by bond issues i s a function o f i t s t o t a l assessed
valuation; the tax burden o f the bonds vary upon the
amount o f bond issue, payment schedule and taxable
valuation.
ALTERNATIVES RESEARCH
. Capital outlay expenditures by
d i s t r i c t : actual 1974- 75 through
1977- 78 and budgeted 1978- 79.
. Bond i n t e r e s t and redemption expend-i
t u r e s by d i s t r i c t : actual 1974- 75
through 1977- 78 and budgeted 1978- 79,
corresponding tax rates and current
amount o f outstanding bonds and
bonds authorized, but not issued.
- Statewide inventory o f physical
plant o f school d i s t r i c t s : age,
condition, usable space, etc.
- Projected needs and expenditures
by d i s t r i c t .
a. State assune f u l l or
p a r t i a l cost o f capital
construction. P a r t i a l cost
determi ned by :
- f l a t percentage o f
d i s t r i c t costs
- apportionment method
based on need and local
e f f o r t
EDUCATION FINANCE
b. Consolidation of property
valuation for bonding purposes.
- See GOAL No. 2, ALTERNATIVE
- a. for various consol idation
a1 ternatives.
c. Guarantee to each d i s t r i c t
the same y i e l d from an equivalent
tax rate: establish a scale which
provides that if a d i s t r i c t needs
a specific levy amount, it must
set a specific tax rate ( guaranteed
y i e l d ) ; any excess levy produced
by the rate would go to the state
and if the rate produces less than
the specific levy, the state would
make up the difference.
NOTE # 2: How can the burden of property taxes be equalized i f
individual school d i s t r i c t s are allowed t o increase
the property tax burden of the local d i s t r i c t level
vis- a- vis an override election?
ALTERNATI VES RESEARCH
- Review d i s t r i c t s which have had over-r
i d e elections, amount, purpose and
resulting tax rate equivalents.
a . Disallow any type o f over-ri
de .
b. Allow overrides , but 1 i m i t
them to:
- f l a t d o l l a r amount per
d i s t r i c t ( levy l i m i t )
- f l a t d o l l a r amount per
student
- percentage of the d i s t r i c t
expendi tures
- percentage of average
state expenditure
- set tax rate l i m i t
c. A1 low overrides, but l i m i t
r a t e o r amount above which the
d i s t r i c t receives only a portion
of the levy amount.
d. Allow overrides, but l i m i t
them to the extent that i f a
d i s t r i c t needs a specific over-ride
amount, it must set a
EDUCATION FINANCE
specific tax rate ( guaranteed
y i e l d ) ; any excess levy pro-duced
by the rate would go t o
the state and if the rate pro-duces
less than the specific
levy, the state would make up
the difference.
GOAL No. 3: Equalize expenditures per student among school d i s t r i c t s .
GOAL No. 4: Develop a school financing system which i s f l e x i b l e enough
to address the unique situations o f large and small school
d i s t r i c t s , r u r a l and urban school d i s t r i c t s , declining
enrol lment school d i s t r i c t s and fast- growi ng school
d i s t r i c t s , suburban school d i s t r i c t s and i n t e r c i t y school
d i s t r i c t s , and the special needs of special students.
GOAL No. 5: Design a school financing system which meets the federal
d e f i n i t i o n o f equalization as set f o r t h i n the rules and
regulations promulgated t o imp1 ement P. L. 81 - 874, Impact
Aid. ( This w i l l allow the state to consider 874 funds i n
detemining a d i s t r i c t ' s state aid entitlement and thus
a1 low the state to reduce i t s contribution i f it so chooses.)
GOAL No. 6: Design a school financing system which can be easily under-stood
by legi slators, school d i s t r i c t boards and personnel
and lay persons.
ALTERNATIVES RESEARCH
. Formulate methodology t o evaluate present
equalization aid system. Prepare report.
. Monitor, review and evaluate Arizona
Department of Education equalization
study.
. Review and summarize school finance
reforms implemented by 24 other states
during the 1970s. Compile evaluations
if any e x i s t ( other states which are
using federal 842 monies t o evaluate
t h e i r systems-- similar to ADOE study).
- Legal research on impact and possible
consequences of changes.
. Assemble f o r 1977- 78 actual d i s t r i c t
ADM, state aid ADM and enrollment,
expenditures by category and revenues
by source. Assemble same information
as budgeted and estimated f o r 1978- 79.
Program t o use as base comparison t o
evaluate a1 ternatives including d i s t r i c t
valuations, tax rates and valuations o f
unorganized t e r r i t o r y .
EDUCATEON FINANCE
. Obtain l a t e s t rules and regulations
regarding equalization a i d and use
o f P. L. 81- 874 funds. ( Impact Aid)
. Teachers1 retirement by d i s t r i c t
1974- 75 through 1978- 79. Review of
teachers' retirement system.
. D i s t r i c t ' s teachers' salary schedules
and number o f teachers s l o t t e d a t
each point i n matrix.
- Review o f teacher tenure laws.
a. Select area( s) o f
equalization.
- Basic educational
program
- Special education:
- Handicapped: continue
d e f i n i t i o n a l categori-cal
i z a t i o n o r change
to system which pro-vides
f o r funding
based upon c l assi f i -
cation o f mild,
moderate and severe
- Special Programs:
vocational ed, career
ed, b i l i n g u a l , etc.
- Capital Outlay
- Bond I n t e r e s t & Redemption
- Transports ti on
- Review o f ADOE study and possible
modification.
. Cost per handicapped category;
enrollment and ADM 1974- 75 through
1978- 79 i n each category.
* Review Federal P . L . 94- 1 42 ( Education
o f the Handicapped Act); Section 504,
Rehabi 1 i ta t i o n Act o f 1973.
- Gifted enrollment, ADM and expendi-tures
1974- 75 through 1978- 79.
. Enrollment, ADM, expenditures f o r
each state- federal program 1974- 75
through 1978- 79.
- Federally- funded special programs:
enrollment, ADM and expenditures
1974- 75 through 1978- 79; descri p-t
i o n o f programs and comparison with
s i m i l a r state- funded programs; fund-ing
amounts and funding mechanisms.
* See GOAL No. 2, NOTE # 1, RESEARCH
- See GOAL No. 2, NOTE # 1, RESEARCH
. Operating and Capital Outlay expendi-tures
1974- 75 through 1978- 79;
detailed information gathered by
ADOE: m i 1 eage, bus type, road
condi tions, etc.
EDUCATION FINANCE
b. Select appropriate funding . Review ADOE study. Update information
bases and weighting system f o r gathered from sample d i s t r i c t s to
funding areas selected i n - a. ref1e ct budgeted 1978- 79 information
above. and actual a f t e r end o f f i s c a l year.
- ADM Information provided by d i s t r i c t s ,
ADOE audit personnel or Auditor
- ADA General.
- Classroom ( pupi l/ teacher
basis)
- High point enrollment
- Credit hours o f students
( fund courses)
- D i s t r i c t size
- Combination o f above
NOTE # 3: How can expenditures be equalized i f individual school d i s t r i c t s
are allowed to increase expenditures over an established l e v e l
vis- a- vis an override election?
ALTERNATIVES RESEARCH
See GOAL No. 2, MOTE # 2 ALTERNATIVES AND RESEARCH.
GOAL No. 7: Insure that a l l property w i t h i n the state i s incorporated
i n t o one or more school d i s t r i c t s i n order t h a t a l l students
w i l l be w i t h i n a d i s t r i c t ( s ) which provides f o r f u l l K- 12
i n s t r u c t i o n i n order t o make d i s t r i c t s more uniform and
thus simp1 i fy the funding mechanism and eval uati on o f the
funding mechanism.
ALTERNATIVES RESEARCH
. L i s t i n g o f school d i s t r i c t s by t o t a l
ADM and enrollment by grade level.
. Location o f unorganized t e r r i t o r y and
number o f students.
NOTE # 4: How can property tax burdens and expenditures per student be
equalized ( GOAL No. 2 and GOAL No. 3) when the state presently
has the following types o f school d i s t r i c t s involved i n teach-ing
a t d i f f e r e n t mixtures o f grade levels and various funding
formulas are used f o r d i f f e r e n t types?
- K- 8 : elementary d i s t r i c t
- K- 9 : elementary d i s t r ic t
- 9- 12 : high school
union high school
county union high school
county high school
EDUCATION FINANCE
K- 12 : unified school d i s t r i c t
elementary teaching high school
elementary d i s t r i c t not in a high school
district which tuitions i t s high school
students
high school districts which are nonoperating
which tuition students
ALTERNATIVES RESEARCH
a. Reorganize and consol idate
school districts so that each
parcel of property is within a
d i s t r i c t ( s ) which offers or
provides for K- 12 grade levels.
b. Incorporate unorganized
territory into existing ele-mentary
school districts and
provide that new high school
districts be formed or existing
high school districts by expand-ed
to include areas not presently
within a high school district.
GOAL No. 8: Guarantee quality education for all students in the state.
ALTERNATIVES RESEARCH
a. Establish standards for . Determine area ( s) of educational
educational quality in Arizona program to be measured for quality,
on various aspects of education. measurement to be used ( testing
method).
- Comparison within Arizona
- Comparison with national test
scores
- Comparison with western states
- Integration of testing procedure .
with other states' testing
procedures
b. Establish methods of testing . Review of other states' testing and
quality. curriculum requirements.
c. Establish statewide . Review of present testing requirements
curri cul um by grade 1 eve1 . and methodology used in Arizona: 3rd
grade reading, 5th grade math, CUES
( Continuous Uniform Evaluation System)
EDUCATION FINANCE
NOTE # 5: How can " quality" be defined? If testing i s t o be used,
should the tests be used f o r grade promotion, teacher
evaluation, program evaluation, comparison among d i s t r i c t s
o r comparison among other states or the nation?
GOAL No. 9: Determine appropriate and acceptable mix o f state and
l o c a l control o f funding and curriculum.
ALTERNATIVES RESEARCH
a. Establish a statewide - Review present curriculum offerings,
c u r r i cul urn by grade, teacher state- mandated courses.
salary schedule, etc. ; local
board would determine specific
content of curriculum and
optional courses.
b. Establish basic courses
and t h e i r content which must
be taught a t various grade
levels; local board would
determine optional courses.
c. Local d i s t r i c t board
determines courses to be
offered.
d. Provide state funding . Review present budget format and
based upon specific courses Uniform System of Financial Records
or grade levels with funds t o ( USFR); modify if necessary.
be spent f o r those courses or
i n those grade levels.
e. Provide state funding
based upon specific courses
or grade 1 eve1 s , but d i s t r i c t
\ expenditures t o be made i n
areas determined by local
board.
GOAL No. 9: Stabilize educational costs to the homeowner and establish
spending and/ or taxing 1 i m i t a t i o n on local school d i s t r i c t s .
ALTERNATIVES RESEARCH
a. See GOAL No. 2, NOTE # 2 and Section I V , RESEARCH AREA: SPENDING
LIMITATIONS
b. More c l o s e l y i n t e g r a t e the
budgetary process with the
valuation process.
EDUCATION FINANCE
- Modify time frame o f . Review budgetary process time frame
budgetary process i n o f school d i s t r i c t s and a l l other
order t h a t valuations taxing j u r i s d i c t i o n s .
are known p r i o r t o f i n a l
budget adoption.
- Modify time frame o f . Review val uati on process time frame
valuation process i n and r e l a t i o n s h i p to taxing j u r i s -
order that valuations d i c t i o n s ' budgetary process.
are known p r i o r t o f i n a l
budget adoption.
I V . RESEARCH AREA: SPENDING LIMITATIONS
A. GOALS
1. L i m i t government spending a t state and l o c a l l e v e l s .
B. LEGISLATIVE ALTERNATIVES TO ACHIEVE GOALS AND RESEARCH TO BE UNDERTAKEN
GOAL No. 1: L i m i t government spending a t state and local levels.
ALTERNATIVES
a. Impose s t r i c t budgeting
controls on l o c a l governments.
- imposition o f growth
1 i m i t a t i ons by expendi -
ture function
- imposi ti on o f general
budgetary r e s t r i c t i o n s
b. Impose l i m i t s on d i s t r i c t
property tax rates.
RESEARCH
- Prepare 1 egal research on e x i s t i n g
l i m i t s i n Arizona. Evaluate
effectiveness. Report.
. Analysis o f state and l o c a l expendi-tures
by function - h i s t o r i c a l pro-f
i l e 1967, 1970, 1977.
. Analysis o f government empl oyment
levels.
. Comparison o f state and local
expendi tures among states.
' Review o f e x i s t i n g spendi ng 1 imi ta-t
i o n s i n other states. Report.
. Analysis o f Arizona 7% l i m i t a t i o n .
Recommendations f o r admini s t r a t i on
and implementation should it pass i n
November election.
. Legal research, esp. vis- a- vis
charter c i t i e s .
. H i s t o r i c a l p r o f i l e o f expenditures
o f local j u r i s d i c t i o n s ; analysis
o f r e s t r i c t i o n impacts.
* H i s t o r i c a l p r o f i l e o f t o t a l d i s t r i c t
budgets.
- Review o f legal, esp. vis- a- vis chart€
c i t i e s .
. D i s t r i c t valuations, tax rates and
tax levies ( could come from legal
class abstract).
SPENDING LIMITATIONS
c. Impose restrictions on
local sales tax rates.
. Historical profile of city sales
tax col lections, rates, base and
exemptions.
. Analyze impacts.
ATTACHMENT
ESTIMATED TIME SCHEDULE
FOR
RESEARCH
The time frames presented i n t h i s Attachment
provide a general guide t o developing major
research elements.
C, L a J P
Q Q , O E 5 u L L O C ,
3 nu
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August 1978
September .
October
November
December
January 1979,
February
March
April
May
June
July
August
September
October
November
December
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I. C. CORPORATE INCOFlE TAX MODEL NOTES
CORPORATE INCOME
TAX MODEL
1. Key information
from returns ( DOR)
2. Draft simulation
specifications
3. Obtain data tapes,
if possible
4. Program simula-tions
( DOR and
consultant)
5. Simulate, t e s t and
analyze
6. Update
I. D. TAX BURDEN MODEL NOTES
Tax burden model should
be ready to analyze
a1 ternatives i n May
or June 1979.
1. Selection o f sample
coul d begi n a f t e r
i n i t i a l 1 i terature
review ( est. mid-
October). Approxi-mate
2 weeks to
design sample.
2. Sampl e transferred
to data tape by
DOR f o r Legisla-ture.
Allow 4
weeks f o r process-ing.
3. S t a f f c o l l e c t s and
assembles secondary
data f o r use i n
estimating property
and sales taxes.
Allow 4 weeks f o r
work. Work could
begin following
i n i t i a l l i t e r a t u r e
review.
4. Allow 4 weeks to
estimate tax
equations.
5. Approximately 3- 4
weeks t o d r a f t
programming specs.
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XI am- c w -
s - hV,
0 P O I
1 1 0 w
c3 V, 5
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s - 3
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August 1978
September
October
November
December
January 197!
February
March
Apri 1
May
June
July
August
September
October
November
December
L Z,
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I I . OTHER TAXATION RESEARCH ( Continued)
OTHER TAXATION
Tax burden model I
Other data col 1 ec-t
i o n and analysis I
- prepare his t o r i ca
p r o f i l e o f state
and local revenue
sources
- prepare update o f
state- by- state
tax reliance
compari son
- assemble data on
casual sales
- assemble data on
servi ces I
- construct data
abstract o f other
state taxes
- survey general
tax re1 i e f mech-anisms
i n other
states
NOTES
I aJ
Qln - 0
- Q r
3ncC Q
E Q O l n
OC, CnaJ
' tluC>
U s f - - u + C,
C't ln Q
Q O a J C
. w L
. c aJ
UOLC,
111. DEVELOPMFNT OF EDUCATION FINANCE DATA BASE ( continued)
NOTES
Information placed
i n format devel ope(
i n 5. f o r testing
a1 ternatives and
impacts using 1978-
79 base; data f o r
both years comparec
to determine if
any large variance:
appear.
Study completed by
end o f February:
Legislature obtains
description of dati
col lected f o r
sampl e d i s t r i c t s ,
description o f
simulation model
and t e s t results.
Sample d i s t r i c t s
used 1977- 78 data.
If ADOE study pro-vides
meaningfiul
a1 ternatives , the
data may be updater
By the end of June
data available to
t e s t a1 ternatives
and data base
ready to t e s t
a1 ternatives
against.
I V . DEVELOPMENT OF OTHER EDUC
0)
h m
L C
aJ L L > r
L5 Paw aJ na J r ) mL r F
DEVELOPMENT OF OTHER c C,, > o u ES ZP uL L. ~
EDUCATION DATA : aJ : U OOZ aa7 ( LJ E 2~ s
Leqal
b. L i s t i n g o f State
Speci a1 programs.
DATA
L
NOTES
aJ L L n L aJ aJ
C, a~ n n
> r
F 3 : ! % 8 E 3 Q, C0 O, UW
3 W O Z O
la. Review o f other states
educational finance
sys tems .
lb. Review o f evaluations
o f other states.
2. Evaluation o f Arizona I I
sys tem .
3. Review of Federal
Special Education Law.
4a. L i s t i n g of Federal
programs.
laddressed.
lb. Other states are
also using the
same federal fund-ing
as AWE t o
eval uate t h e i r
systems o f finance.
2. Evaluation w i l l be
done by l e g i s l a t i v e
s t a f f i f AWE study
does not i ncorporate
a study of present
sys tem .
4a. Description; tar-
& get population,
b. students served,
fundi ng rnechani sm
and funds provided.
I V . DEVELOPMENT OF . OTHER EDUCATION DATA ( Continued)
NOTES
DEVELOPMENT OF OTHER
EDUCATION DATA
5. Study o f teachers'
retirement.
6. Study and report on
teacher tenure laws.
7. Review o f testing pro-gram
i n Arizona and
other states.
8. Review present budget
format and USFR.
9. Review budgeting and
valuation process.
Program
evaluated and fund-ing
mechani sm
evaluated.
Budget formal and
Uniform System o f
Financial Records
review and modifi-cations
made f o r
f i n a l solution.
Reviewed f o r schools
and a l l other tax-ing
a u t h o r i t i e s .