1. State Shared Revenues – Final FY 2024 Budget Estimates
2. Population Figures for Shared Revenue Estimates
3. Shared Revenue Estimates by Tax Type
4. STATE SHARED REVENUE

Click here for past State Shared Revenue reports.

State Shared Revenues – Final FY 2024 Budget Estimates

The estimated shared revenues for each city and town for FY 2024 is set forth in this report. We obtained the total dollar amounts subject to distribution for each tax type from the Arizona Department of Transportation (ADOT provides the numbers for VLT and HURF) and the Arizona Department of Revenue (ADOR provides the numbers for TPT and URS). Please recognize that most total distribution amounts are estimates, so they are subject to change.

Population Figures for Shared Revenue Estimates

As directed by statute, the city and town population figures used for the distribution of state shared revenues are the official U.S. Census Bureau population estimates for each municipality as of July 1 of the prior year. The amounts allocated to each city and town in this Shared Revenue Report were produced using the Census Bureau’s population estimates as of July 2022.

Shared Revenue Estimates by Tax Type

The tables found in this report list the anticipated distribution of revenue to each city and town during FY 2024 from the Vehicle License Tax (VLT), Highway User Revenue Fund (HURF), State Transaction Privilege Tax (TPT), and State Income Tax, formally designated as Urban Revenue Sharing (URS).

Vehicle License Tax (VLT) – Approximately 20% of the revenues collected by ADOT for the registration of motor vehicles are distributed to cities and towns. These monies are distributed semi-monthly based on collections since the last distribution and may be expended for any municipal public purpose. A city or town receives its share of VLT based on a formula that considers the “county of origin” where vehicles are registered, coupled with its population in relation to the total incorporated population of their county. The ADOT estimate of the total VLT distribution to cities and towns for FY 2024 is $326,047,000, approximately (0.13%) lower than last year’s estimate of $326,457,000.

Highway User Revenue Fund (HURF) – This is sometimes referred to simply as the “gas tax” but there are a number of other sources that also contribute to the Highway User Revenue Fund. These include designated portions of Use Fuel taxes, VLT revenues, motor carrier taxes, and operator’s license fees, along with a portion of the excise taxes collected on recreational marijuana sales. HURF monies are distributed monthly based on collections since the previous distribution. HURF is restricted by statute – HURF distributions can only be used for street and highway expenditures. Cities and towns receive 27.5% of the total collections from all sources. One-half of the monies that a city or town receives is allocated based on the municipality’s population in relation to the population of all incorporated cities and towns in the state. The remaining half is allocated based on the “county of origin” of gasoline sales and the relation of a municipality’s population to the population of all incorporated cities and towns in their county. The ADOT estimate of the total HURF distribution to cities and towns for FY 2024 is $499,094,000, approximately (0.39%) lower than last year’s estimated figure of $501,038,000.

Note: The total figures above and the individual city amounts shown on the attached table do not include the additional distribution of 3% of HURF collections (estimated at $54,447,000) that is allocated per statute to cities with populations over 300,000 (Phoenix: ~$33,037,895; Tucson: ~$10,361,264; and Mesa: ~$11,047,841).

State Transaction Privilege Tax (TPT) – Cities and towns share in a portion of the total collections of TPT imposed at the State level. Each tax classification has a designated sharing percentage that goes into the distribution base, and cities receive 25% of the base. Shared TPT is distributed semi-monthly based on collections since the previous distribution and may be expended for any municipal public purpose. A municipality receives its share of the state shared sales tax based solely on the relation of its population to the total population of all incorporated cities and towns. The FY 2024 ADOR estimate for state shared TPT is $877,470,000, approximately 7.01% higher than last year’s estimated figure of $820,000,000.

State Income Tax (URS) – Originally enacted by the voters in 1972 in exchange for cities and towns giving up the authority to assess local income taxes and local luxury taxes (liquor and tobacco), URS provides that 15% of the net income tax collected during a given fiscal year is distributed to cities and towns. Beginning in FY 2024, cities and towns will receive 18% of the total state income tax collected. Note that the increased sharing percentage itself does not equate to ongoing increased URS distributions. The State’s adoption of the 2.5% flat income tax rate will result in reduced income tax collections. The new sharing rate is the result of negotiations intended to minimize the negative impact on cities and towns due to this income tax collection reduction. The amount distributed is based on the total net income tax collections during the fiscal year two years prior to the distribution year. These funds are distributed monthly based on 1/12 of the total available and may be expended for any municipal public purpose. This money is allocated to an individual city or town based solely on its population (or the 1,500 minimum for the nine smallest towns) in relation to the total population of all incorporated cities and towns. The FY 2024 ADOR estimate for URS is $1,564,819,794, approximately 41.36% higher than last year’s estimate of $1,106,958,676. (Note: This is the only revenue type that is likely to remain unchanged because it is based on collections from two years ago, subject to slight changes due to various adjustments such as late refunds, court decisions, etc.)

In summary, the total estimated shared revenues for distribution to cities and towns in the upcoming fiscal year from each source based on the current state laws are as follows:

Please recognize there is always the possibility of an unforeseen circumstance that could significantly alter these shared revenue forecasts, including changes enacted by the legislature in its current session. If there are any noteworthy changes to any of these numbers, we will deliver revised estimates to you as quickly as possible. If you have any questions, please give us a call.

STATE SHARED REVENUE