Summary#

HB 4165, “Revenue; 2026-2027,” amends Arizona tax and revenue laws, including Arizona Revised Statutes sections 42-5029.02 and 42-5041, and a 2022 law. It extends funding and fee arrangements for the Department of Revenue’s integrated tax system modernization project; the stated goal is to pay for that project’s costs. The bill was signed into law, but the supplied text does not give an effective date.

• The Department of Revenue may continue assessing fees on counties, cities, towns, councils of governments and certain regional transportation authorities through June 30, 2030, instead of June 30, 2028.
• The department may continue receiving transfers from specified tax revenues for the project through June 30, 2030. The law limits those transfers to the department’s actual, reasonable project costs.
• The law extends the date for repealing Arizona Revised Statutes section 42-1009 from December 31, 2029, to December 31, 2031. The supplied material does not explain what that section does.
• For fiscal year 2026–2027, the legislature states that total fees for the named local entities should not exceed $1,273,800. It also states that transfers from the two specified revenue sources should not exceed $154,500 and $34,400.
• The extended transfers come before the remaining specified revenue is sent to the classroom site fund. The bill does not change the other education distributions listed in the law.

What it means for you#

• Counties, cities, towns, councils of governments and certain regional transportation authorities: The Department of Revenue may assess them fees for the project through June 30, 2030. Fees are due when assessed; if unpaid by December 31, the state treasurer must withhold the amount owed from certain revenue distributions until paid.
• Taxpayers: The bill does not directly change personal tax rates in the supplied text.
• Schools and public colleges: The bill keeps the listed education funding distributions in place, while extending a transfer for tax-system modernization that is made before remaining revenue goes to the classroom site fund.
• Arizona residents generally: This bill extends funding arrangements and fee authority; it does not create a new public service or a new independent agency.

Money#

The bill sets fiscal year 2026–2027 limits for fees and transfers, but no estimate of the project’s total cost is available.

• The legislature states that fees charged to all covered local entities should total no more than $1,273,800 in that fiscal year. Their shares are allocated using past revenue distributions.
• Transfers from the specified revenues are to cover actual, reasonable project costs. The legislature states that the fiscal year 2026–2027 transfers should not exceed $154,500 and $34,400, respectively.
• The modernization fund is administered by the Department of Revenue, and spending from it is subject to legislative appropriation.
• The bill does not give fee or transfer caps for later fiscal years.

What is unclear#

• The supplied materials do not include the current versions of the amended laws. I could not verify how these provisions interact with current law beyond the changes shown in the bill.
• The text does not explain what section 42-1009 does, so the practical effect of extending its repeal date is unclear.
• The bill does not give the project’s total cost, how much will be charged to each local entity after fiscal year 2026–2027, or what the system upgrades will include.
• No publicly available information on the bill’s effective date is included in the supplied material.

Case for#

• The bill extends a funding source for the Department of Revenue’s tax-system project rather than ending it in 2028.
• Fees and transfers are tied to actual, reasonable project costs, and the fund can be used only for costs of implementing the project.
• The fiscal year 2026–2027 fee limit and transfer limits give specific bounds for that year.

Case against#

• Local governments and regional bodies may face fees through 2030, and unpaid fees can be withheld from their revenue distributions.
• Transfers for the project come before the remaining specified revenue goes to the classroom site fund. A possible trade-off is less revenue available for that fund than if no project transfer were made.
• After fiscal year 2026–2027, the supplied text gives no dollar caps for fees or transfers, leaving their amounts uncertain.
• The Department of Revenue director determines the fees and administers the fund; the supplied text does not describe a separate review or appeal process for those decisions.