AZ HB2294

Amends the school tuition organization (STO) tax credit cap mechanism, which was previously set to increase by 20 percent annually through fiscal year 2017-2018.

Beginning in fiscal year 2018-2019, the annual increase to the tax credit cap becomes conditional: if both transaction privilege tax growth and nonfarm employment growth are each less than 2 percent, the cap does not increase from the previous year; otherwise, it increases by 20 percent.

Requires the director of the office of strategic planning and budgeting and the director of the joint legislative budget committee to jointly notify the department of revenue by February 1 when growth conditions fall below the 2 percent threshold for both metrics.

Defines "total nonfarm employment growth rate" as the percentage change in seasonally adjusted nonfarm employment from the final month of the most recent calendar year to the final month of the immediately preceding calendar year.

Defines "transaction privilege tax growth rate" as the percentage change in state transaction privilege tax revenues distributed to the general fund from the most recent calendar year to the immediately preceding calendar year, with retroactive application from June 30, 2018.