2010 Census The Impact on Revenue Sharing By Elaine Smith Arizona Department of Revenue Office of Economic Research and Analysis February 4, 2011

Topics to be Covered The process The timing A hypothetical look at the impacts

2010 Census and Revenue Sharing Process The populations currently in use by DOR are the mid-decade population counts chosen by each jurisdiction during Spring At the time, the choices were: 2000 Decennial Census; 2005 DES Estimate; Special Census; 2005 Census Sample Survey.

2010 Census and Revenue Sharing Process The 2010 Census counts and the shares that they produce will be used from July 1, 2011 through (at least) June 30, Changes to the share during that time can occur only with annexations or new incorporations.

2010 Census and Revenue Sharing Process The Census Bureau will send DOR the 2010 Census Certified counts for each county and incorporated city. DOR will work with the League of Cities and Towns to verify the counts used for each jurisdiction.

2010 Census and Revenue Sharing Process Once the counts have been received, DOR will release a preliminary estimate of FY12 revenue sharing for Urban Revenue Sharing (URS) and Transaction Privilege Tax (TPT) based on those counts. The official estimate will be released at the end of June 2011.

2010 Census and Revenue Sharing Timing We expect that the counts at the jurisdictional level will be available in February or March. The new figures will be used for all distributions occurring on or after July 1, 2011.

2010 Census and Revenue Sharing Timing For distributions performed by DOR, this means that the July 2011 (FY12) URS distribution will be the first use of the 2010 Census figures.

2010 Census and Revenue Sharing Timing For TPT revenue sharing, the 2010 Census figures will be used for the final FY11 monthly distribution of June 2011, which will occur in mid to late July 2011.

2010 Census and Revenue Sharing Hypothetical impacts The state count is expected to be just under 6.4 million, nearly 25% higher than the 2000 Decennial Census count. However, the 2010 statewide count is only 4.8% higher than the mid-decade statewide count we have been using for the past five years.

2010 Census and Revenue Sharing Hypothetical impacts In general, jurisdictions that have grown by more than the average since 2005 will experience an increase in their share of revenue sharing Those that have grown less than the average since 2005 will experience a decrease in their share.

2010 Census and Revenue Sharing Hypothetical impacts Beware, however, an increase in share doesn’t automatically generate an increase in $$$’s in distribution. Due to factors unrelated to the population counts, the pool of revenue sharing $$ in FY12 is expected to be smaller than the pool in FY11.

2010 Census and Revenue Sharing Hypothetical impacts FY12 URS is expected to drop $50 million in total, from $474 million in FY11 to $424 million in FY12. FY12 TPT city revenue sharing is expected to increase from an expected $365 million in FY11 to $380 million in FY12.

2010 Census and Revenue Sharing Hypothetical impacts Because we do not have the new counts to produce a set of real FY12 revenue sharing estimates, I have produced a set of hypothetical impacts, based on shares calculated from the most recent set of population estimates from the Department of Commerce.

Questions?

Contact Information Elaine Smith – Senior Economist Arizona Department of Revenue Office of Economic Research & Analysis Phone:

Additional Contact Information Department of Revenue website: Municipal privilege tax: Kathleen Jackson County excise taxes: Elaine Smith County and city revenue sharing: Elaine Smith TPT Licenses: DOR License and Registration

Additional Contact Information Tax base estimates: Elaine Smith Levy Limits: Darlene Teller Expenditure Limits: Diane Sosinski

Additional Contact Information Bonded Indebtedness Cities Darleen Teller Counties Elaine Smith

Additional Contact Information License Compliance Services: Peggy Creamer Property tax services:Property Tax Division