Committee advances bill to stop GPLET abatements for K–12 school taxes

The Senate Government Committee returned SB 12-93 with a do-pass recommendation after extended testimony from tax researchers, legal advocates, and city officials about the Government Property Lease Excise Tax (GPLET). The bill would bar abatement of taxes designated for K–12 school districts during the first eight years of a GPLET agreement.

Kevin McCarthy, president of the Arizona Tax Research Association, supported the bill on fiscal grounds, arguing that GPLET shifts the costs of economic-development subsidies to the state and other taxing jurisdictions and that the proposal would constrain a statewide subsidy that benefits primarily large urban jurisdictions. ‘‘State aid implications of this are significant to you,’’ McCarthy told the committee.

John Riches (vice president for litigation at the institute represented in testimony) urged the measure on constitutional grounds, saying excluding school districts from abatements reduces the ‘‘give’’ side of GPLET subsidies and lowers the risk of gift-clause violations.

City officials and redevelopment staff from Phoenix, Mesa, and regional economic organizations said the change would substantially reduce the tool’s effectiveness for vertical urban redevelopment. Eric Johnson, assistant director for Phoenix’s Community and Economic Development Department, said the proposal would remove about 73% of eligible abated tax and likely diminish the city’s ability to attract redevelopment projects.

Witnesses described the mechanics of state school aid and equalization bases: a property taken off the tax rolls under GPLET can lead to state backfill through equalization formulas, shifting costs to the state general fund. Sponsor and supporters argued the bill holds school districts harmless while limiting the state’s subsidy exposure.

After discussion on revenue flows and local impacts, the committee adopted a sponsor amendment and returned SB 12-93 with a do-pass recommendation; committee wording recorded the outcome as passed as amended (reported vote of 4–3).