Summary#

SB 1862 would amend Arizona Revised Statutes § 28-339, replace § 28-6534 with a new annual transfer requirement, and repeal § 28-7282 after June 30, 2035. Its apparent goal is to help eligible entities pursue federal surface-transportation grants. The bill is not law; whether it will pass is uncertain.

• The Arizona Department of Transportation (ADOT) would administer the State Match Advantage for Rural Transportation Fund. The bill would require $2.5 million to be transferred into it each fiscal year from the Arizona highway user revenue fund.
• The fund could pay up to 50% of costs to develop and submit a federal grant application, provide or reimburse a grant match, and pay for eligible project design and engineering.
• Fund money would be divided among five categories, each assigned 20%: projects in counties with populations of at least 100,000; counties below 100,000; municipalities with populations of at least 10,000; municipalities below 10,000; and ADOT.
• Some projects in counties with more than one million people, or in urbanized areas of those counties, would be barred from specified categories and from ADOT’s category.
• Applicants would need approval from the relevant metropolitan planning organization or council of governments before applying to ADOT. A board would decide whether to approve, deny, modify, or seek more information on applications.
• If an engineering-services award recipient does not apply for a federal grant within two years, the award lapses and the recipient must repay money already spent. Other repayment rules would apply if an award is rescinded because the project receives enough funding from another source.

What it means for you#

• Local governments and other grant-eligible entities: You could apply for help with eligible federal transportation-grant costs, but would first need approval from the applicable metropolitan planning organization or council of governments. The bill does not guarantee an award.
• Applicants receiving engineering money: You would have to submit a federal grant application within two years or repay the money spent. An applicant whose award is rescinded because another source funds the same project and purpose in an equal or greater amount would have up to one year to repay money spent.
• ADOT and the board: ADOT would administer the fund and review applications. A departmental committee would recommend on complete, eligible applications before the board acts. The board could set preferences, including for applicants offering more matching money or partnering with others.
• Individuals: The bill does not provide grants directly to individuals or change individual taxes, fees, or driving rules in the text provided. It would redirect highway user revenue to the fund.
• Current law: The materials do not include the existing versions of §§ 28-6534 or 28-7282, so their current effects and the full change from current law cannot be verified.

Money#

The bill requires an annual $2.5 million transfer from the Arizona highway user revenue fund, but no total cost estimate is available.

• The fund would also receive legislative appropriations and nonfederal gifts, grants, donations, or other amounts.
• Fund money would be continuously appropriated, meaning it could be spent for the listed purposes without a later appropriation.
• ADOT could use up to 5% of the fund’s investment earnings from the previous fiscal year to administer it.
• No publicly available information on administrative costs, expected awards, or the effect of the transfer on other highway-user-revenue spending is included in the supplied material.

What is unclear#

• The supplied text does not explain what § 28-7282 currently does or what its repeal after June 30, 2035 would change.
• Without the current version of § 28-6534, it is unclear how the new section changes existing law or programs.
• The bill leaves ADOT able to set application deadlines and request documents, but does not set detailed application rules, decision timelines beyond placing an application on a board agenda within 45 days after notification, or an appeal process.
• The bill does not say how the five categories would work when a project could fit more than one category, or how unmet demand in a category would be handled beyond allowing redistribution of unawarded money.
• The text does not state an effective date or explain how this fund would interact with other state transportation funding programs.

Case for#

• A possible argument for the bill is that it would help eligible entities cover early costs and matching funds needed to seek federal transportation grants.
• Dividing fund money among population-based categories could make some funding available for projects in smaller counties and municipalities, as well as larger ones.
• The two-year application requirement for engineering awards and repayment rules could help return money when stated conditions are not met or other funding replaces an award.
• Board preferences for matching money and partnerships could favor applications that bring in other resources or involve multiple entities.

Case against#

• One concern is that the annual $2.5 million transfer would reduce the highway user revenue available for other uses, but the bill does not describe what those uses are or estimate the effect.
• Fixed 20% shares could leave money unused in one category while applicants in another category lack funding; the board could redistribute unawarded money only at specified times.
• The bill gives ADOT and the board important choices over application requirements, preferences, and awards, but does not set a full decision process or an appeal route.
• Applicants could face repayment risk, especially if they receive engineering funding but do not apply for a federal grant within two years.