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ACMA HIGHWAY USER REVENUE FUND BRIEFING. July 27, 2006. HIGHWAY USER REVENUE FUND (HURF). 1. HIGHWAY USER REVENUE FUND Background. HURF established in 1974 Monies (except VLT) are dedicated to highway purposes under the provisions of Article IX, Section 14, of the Arizona Constitution

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ACMA HIGHWAY USER REVENUE FUND BRIEFING

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ACMA

HIGHWAY USER REVENUE FUND

BRIEFING

July 27, 2006


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HIGHWAY USER REVENUE FUND(HURF)

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HIGHWAY USER REVENUE FUND

Background

  • HURF established in 1974

  • Monies (except VLT) are dedicated to highway purposes under the provisions of Article IX, Section 14, of the Arizona Constitution

  • Nationally, dedicated user revenues provide the bulk of income for highways

  • Distribution formulas set by statute

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HIGHWAY USER REVENUE FUND

Sources and Distribution of Funds

FY 2006

TOTAL: $1,331.6 Million

SOURCES

DISTRIBUTION

Economic

Strength Fund

$1 - 0.1%

DPS

$66.7

5.0%

Other

$55.9

4.2%

MVD

$0.6

0.0%

Registration

$158.8

11.9%

Fuel

$702.5

52.8%

Counties

$240.5

18.1%

ADOT

$539.8

40.5%

VLT

$373.9

28.1%

Cities

$386.2

29.0%

Motor Carrier

$40.5

3.0%

ADOT 15.2%

$96.8

7.3%

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NOTE: ADOT 15.2% represents ADOT’s allocation of HURF for MAG and PAG regional projects.


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VEHICLE LICENSE TAX DISTRIBUTIONFY 2006

Vehicle License Tax

$832.0 Million /1

Counties

(Highway Purposes)

5.83%

$48.7 Million

HURF

44.99%

$373.9 Million /2

State General Fund

(School Aid)

0.0%

$0.6 Million

State Highway Fund

0.0%

$0.3 Million /3

State Highway Fund

0.0%

$0.1 Million

County Gen. Fund

24.59%

$204.2 Million

Cities/Towns Fund

24.59%

$204.2 Million

NOTES:

1. The distribution percentage for each recipient based on statutory distribution. The State General Fund and State Highway Fund receive a share of the VLT only from alternative fuel vehicles, rental vehicles and privately owned vehicles used as a school bus, ambulance or fire fighting service. The other VLT recipients also receive a small amount of VLT from these vehicles.

2. Laws 2005, Chapter 306 (SB 1119) distributed 1.51% share of State Highway Fund’s share of HURF VLT to DPS Parity Compensation Fund totaling $2.7 million in FY 2006.

3. $13.6 million from the State Highway Fund and the $0.3 million from the State Highway Fund share of VLT was paid to the MVD Third Parties per HB 2026 and HB 2055 from the 1998 and 2001 legislative sessions, respectively in FY 2006. The reimbursements were previously paid solely from the State Highway Fund share of VLT until it was severely reduced from the VLT rate reductions.

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HIGHWAY USER REVENUE FUND

Revenue Performance

Annual Rates of Growth

Forecast

Variance 3.5% 1.7% 1.0% 0.0% -0.3% -1.7% -2.6% 1.4% 1.0% 3.5% 5.0% 3.3% -4.1% 4.6% -0.3% -1.1% 1.0% 0.3% 2.6% 1.4% 1.9%

NOTE: Includes tax rate changes.

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HIGHWAY USER REVENUE FUNDAverage Annual Growth Rates

FY 1986-2006

HURF

4. 9%

6

220 071406


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HIGHWAY USER REVENUE FUND

November 2005 Official Forecast

Dollars in Millions)

NOTE: FY 2006 estimate based on August 2005 interim Forecast

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Revenues from:

Distribution breakdown:

Distribution formulas:

$.18 Gas Tax

50.5% to State Highway Fund

7.67% to Maricopa and Pima Counties for Controlled Access with a

$.26 Use Fuel Tax (7/00)

75% and 25% split respectively. (Statutory 12.6% & Special 2.6% money)

Vehicle Registration

4 2.83% to ADOT Discretionary.

Motor Carrier Fee

44.99% of VLT (12/00)

27.5% to Cities & Towns

One half distributed on basis of incorporated population and one half on

Other

the basis of county origin of gasoline sales and city or town

population within each county.

3% to Cities over 300,000

Distributed to Phoenix, Tucson and Mesa based on population.

19% to Counties

Distributed based on a portion of gasoline distribution and diesel fuel

consumption and on a portion of unincorporated population. The split

is as follows: 85/15 in FY 1997, 80/20 in FY 1998, 76/24 in FY 1999, and

72/28 in FY 2000 and thereafter)

HIGHWAY USER REVENUE FUNDRevenues and Distributions

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HIGHWAY USER REVENUE FUNDFY 2006 Revenues and Distributions

(Dollars in Millions)

NOTES:

/1. Appropriation to MVD for vehicle registration enforcement program ($383,300) and 5 FTE positions for 3rd Party program ($250,000).

/2. The 12.6% (statutory) and 2.6% (non-statutory) allocations from the State Highway Fund share of HURF distributions.

/3. With the elimination of the VLT distribution to the state highway fund, a distribution is made from the state highway fund to MVD Third Parties for the collection of VLT.

/4. Per Laws 2005, Chapter 306 (SB 1119), 1.51 percent of the state highway fund share of HURF VLT is distributed to the DPS Parity Compensation Fund.

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Disclaimer

  • I am not an attorney. (Nor do I play one on TV)

  • The following is only presented for your information.

  • It is not meant to “take a position” on any specific issue or set of circumstances.

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State Uses of Highway User Revenue FundsArizona State Constitution

Article IX, Section 14

14. Use and distribution of vehicle, user, and gasoline and diesel tax receipts

Section 14. 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,

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City and County Uses of Highway User Revenue FundsArizona State Constitution

Article IX, Section 14

14. Use and distribution of vehicle, user, and gasoline and diesel tax receipts (continued)

…………….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.

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Other ProvisionsArizona State Constitution

Article IX, Section 14

14. Use and distribution of vehicle, user, and gasoline and diesel tax receipts (continued)

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.

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Vehicle License TaxArizona State Constitution

Article IX, Section 11

11. Taxing procedure; license tax on registered vehicles

Section 11. 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.

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Vehicle License TaxArizona State Constitution

Article IX, Section 11

11. Taxing procedure; license tax on registered vehicles (continued)

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.

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Vehicle License TaxCollections and Rates

First Year Registrations

  • 28-5801. Vehicle license tax rate

  • B. Except as provided in subsections C and D of this section:

  • During the first twelve months of the life of a vehicle as determined by its initial registration, the vehicle license tax is based on each one hundred dollars in value, the value of the vehicle is sixty per cent of the manufacturer's base retail price of the vehicle and the vehicle license tax rate for each of the recipients is as follows:

  • The rate for the Arizona highway user revenue fund is one dollar twenty-six cents.

  • (b) The rate for the county general fund is sixty-nine cents.

  • (c) The rate for counties for the same use as highway user revenue fund monies is sixteen cents.

  • (d) The rate for incorporated cities and towns is sixty-nine cents.

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Vehicle License TaxCollections and Rates

Subsequent Year Registrations

  • 28-5801. Vehicle license tax rate (continued)

  • 2. During each succeeding twelve month period, the vehicle license tax is based on each one hundred dollars in value, the value of the vehicle is 16.25 per cent less than the value for the preceding twelve month period and the vehicle license tax rate for each of the recipients is as follows:

  • The rate for the Arizona highway user revenue fund is one dollar thirty cents.

  • (b) The rate for the county general fund is seventy-one cents.

  • (c) The rate for counties for the same use as highway user revenue fund monies is seventeen cents.

  • (d) The rate for incorporated cities and towns is seventy-one cents.

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Vehicle License TaxDistributions

First Distribution of the Month

28-5808. Vehicle license tax distribution

A. The director shall distribute monies collected by the director pursuant to section 28-5801, except monies deposited in the state general fund, on the first and fifteenth calendar day of each month as follows:

1. On the first calendar day, the director shall deposit, pursuant to sections 35-146 and 35-147, all of the Arizona highway user revenue fund monies received from the first through the fifteenth calendar day of the preceding month in the Arizona highway user revenue fund, except that on the first calendar day the director shall deposit, pursuant to sections 35-146 and 35-147, in the parity compensation fund established by section 41-1720, 1.51 per cent of the portion of vehicle license tax revenues that otherwise would be deposited in the state highway fund from the first through the fifteenth calendar day of the preceding month.

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Vehicle License TaxDistributions

Second Distribution of the Month

28-5808. Vehicle license tax distribution (continued)

2. On the fifteenth calendar day, the director shall deposit, pursuant to sections 35-146 and 35-147, all of the Arizona highway user revenue fund monies received from the sixteenth through the last day of the preceding month in the Arizona highway user revenue fund, except that on the fifteenth calendar day, the director shall deposit, pursuant to sections 35-146 and 35-147, in the parity compensation fund established by section 41-1720, 1.51 per cent of the portion of vehicle license tax revenues that otherwise would be deposited in the state highway fund from the sixteenth through the last day of the preceding month.

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Vehicle License TaxDistributions

Second Distribution of the Month

28-5808. Vehicle license tax distribution (continued)

On the fifteenth calendar day, the director shall distribute or deposit all other monies received during the entire preceding month as follows:

(a) The county general fund monies to the county general fund.

(b) The county highway monies to the state treasurer to be apportioned among the counties for the same use as highway user revenue fund monies on the basis that the population of the unincorporated area of each county bears to the population of the unincorporated areas of all counties in this state.

(c) The incorporated cities and towns monies to the incorporated cities and towns of the county in proportion to the population of each.

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Definition of Highway User Revenues

28-6501. Definition of highway user revenues

In this article, unless the context otherwise requires or except as otherwise provided by statute, "highway user revenues" means all monies received in this state from licenses, taxes, penalties, interest and fees authorized by the following:

1. Chapters 2, 7, 8 and 15 of this title, except for:

(a) The special plate administration fees prescribed in sections 28-2404, 28-2412 through 28-2424 and 28-2514.

(b) The donations prescribed in sections 28-2404, 28-2412 through 28-2415, 28-2417 through 28-2424, 28-2453, 28-2454 and 28-2455.

2. Chapters 10 and 11 of this title.

3. Chapter 16, articles 1, 2 and 4 of this title, except as provided in sections 28-5926 and 28-5927.

Vehicle License Taxes are described under Chapter 16, Article 3. Therefore, Vehicle License Taxes are NOT defined as Highway User Revenues

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Arizona Highway User Revenue FundPermitted Uses

(Title 28, Chapter 18, Article 2)

28-6533. Arizona highway user revenue fund

A. The officer collecting all highway user revenues, as defined in section 28-6501 and in article IX, section 14, Constitution of Arizona, and all fees, penalties and fines collected under sections 28-1101, 28-1103, 28-1105 and 28-1521 shall transfer the revenues to the department. After the deduction of all exemptions and refunds and after taking actions required under subsection C of this section, the department shall immediately deposit, pursuant to sections 35-146 and 35-147, the revenues in a fund designated as the Arizona highway user revenue fund.

B. The revenues in the Arizona highway user revenue fund shall only be spent for the purposes prescribed in article IX, section 14, Constitution of Arizona. Counties and incorporated cities and towns shall not spend highway user revenue fund monies distributed to them pursuant to this article for enforcement of traffic laws or administration of traffic safety programs.

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Arizona Highway User Revenue FundPermitted Uses (continued)

(Title 28, Chapter 18, Article 2)

28-6533. Arizona highway user revenue fund (continued)

If the auditor general reports to the state treasurer after conducting a performance audit pursuant to section 41-1279.03, subsection A, paragraph 7 that a jurisdiction has not used revenues as required by this subsection, the state treasurer shall withhold the noncomplying jurisdiction's revenues until the noncomplying jurisdiction presents evidence that is satisfactory to the auditor general and that shows that the jurisdiction has spent monies for purposes prescribed in this subsection from another general revenue source equal to the amount of the revenues diverted from the uses prescribed in this subsection.

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Arizona Highway User Revenue FundDistributions

(Title 28, Chapter 18, Article 2)

28-6538. Arizona highway user revenue fund distribution; remaining monies; highway fund distribution; contract authorization; regional transportation plan requirements

A. Each fiscal year the department shall allocate and the state treasurer shall distribute revenues of the Arizona highway user revenue fund remaining after the distribution provided in sections 28-6534 and 28-6537 as follows:

1. To the state highway fund, fifty and one-half per cent.

2. To the counties, nineteen per cent.

3. To the incorporated cities and towns, twenty-seven and one-half per cent.

4. To incorporated cities with a population of three hundred thousand or more persons, three per cent.

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Auditor General

41-1279.03. Powers and duties

A. The auditor general shall:

7. If requested by the committee, conduct performance audits of counties and incorporated cities and towns receiving highway user revenue fund monies pursuant to title 28, chapter 18, article 2 to determine if the monies are being spent as provided in section 28-6533, subsection B.

41-1279.21. Powers and duties of auditor general relating to counties, school districts and community colleges

A. In addition to other powers and duties prescribed by law, the auditor general shall:

1. Conduct or cause to be conducted annual financial and compliance audits of financial transactions and accounts kept by or for all counties. Each county shall provide financial information for inclusion in the annual audit that verifies that highway user revenue fund monies received by the county pursuant to title 28, chapter 18, article 2 and any other dedicated state transportation revenues received by the county are being used solely for the authorized transportation purposes.

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Attorney General Opinion

I84-087

Question: Can Highway User Revenues which are subject to the restrictions of Art. IX, Section 14 of the Constitution of Arizona be used to construct county highway offices, storage buildings, garages, appurtenances, fencing, and other related facilities to house county highway officials and employees?

Answer: Yes, “…so long as the duties of those officials and employees are directly related to the 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”.

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Attorney General Opinion

I05-003

Question: Can counties expend Highway User Revenue Fund (HURF) monies to pay expenses such as: Legislative monitoring services; public outreach and community relations; regional and environmental planning; traffic and safety studies; development services including permitting; zoning and inspection; geographic information system programming and analysis; administrative costs, such as – transportation department management and administrative support; overhead for county central services such as accounting, engineering, payroll, human resources and procurement; information technology support; county self-insurance premiums; audit costs.

Answer: A county may spend HURF monies for the expenses in question “… only if the expenditure is directly related to a highway or street purpose under Article IX, Section 14 of the Arizona Constitution. If an expenditure only partially relates to a highway or street purpose, counties may use HURF monies only for the portion that directly relates to that purpose.”

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Local Option Fuel Taxes

Question: Can a local jurisdiction (city or county) level its own gas tax?

Answer: No. In the case of City of Phoenix vs. Popkin (Arizona, 1963), the Arizona Supreme Court “…held that by constitutional provision governing use and distribution of vehicle and gasoline tax receipts, (the) state pre-empted (the) field of motor vehicle taxes, and (the) proposed city ordinance would be unconstitutional…”

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