HB 2735 Summary

• Imposes a 1% transaction privilege tax on services, with revenues split equally (25% each) to classroom site fund, financial aid trust fund, public safety personnel retirement fund, and a new Arizona higher education financial aid program fund.

• Creates the Arizona higher education financial aid program to provide tuition and fees coverage for Arizona resident students enrolled in universities under the Arizona Board of Regents or community colleges, with funds distributed on a first-come, first-served basis if insufficient monies available.

• Assesses a $300 annual surcharge on tuition paid by out-of-state university students, with revenues deposited into the Arizona higher education financial aid program fund.

• Adds a new services classification to the transaction privilege tax that includes 55 specific service categories (legal, medical, accounting, engineering, real estate, etc.) previously unclassified.

• Requires a two-thirds vote in both legislative chambers for enactment and provides $500,000 initial appropriation in fiscal year 2023-2024 to fund the program.