A bill repealing tax-increment financing passed 57-1 in the State House of Representatives Wednesday, putting to rest an argument between some town officials and the Payson School District.
HB 2026 went to Gov. Jane Dee Hull Thursday for her approval.
According to information from Hull's office, the governor is going to take a long, hard look at the legislation and has not taken a position on the bill.
The repeal of tax-increment financing in both the House and the Senate, a bill initiated by the Payson Unified School District, is a setback for town officials who wanted to form a special property tax district for the redevelopment of Main Street.
But Town Manager Rich Underkofler said the idea of tax-increment financing was "dead on arrival" when it went before the Town Council earlier this month.
"A majority of the council members were not going to go for it anyway," Underkofler said Thursday.
If the governor signs the bill into legislation, the move will repeal the law which allows municipalities to raise money for development projects with the creation of special districts using additional sales or property taxes.
In the Senate version of the bill, which passed by a narrow 16-14 margin, three Valley projects were exempted: the Phoenix Coyotes hockey arena; the Galleria canal redevelopment project in Scottsdale; and the Cardinals' football stadium and convention center in Mesa.
The Associated Press reported that Senate President Brenda Burns (R-Glendale) was in favor of the exemption of the Valley projects because they will each require public votes and are undergoing heavy public scrutiny.
Proponents of tax-increment funding in Payson can put aside their argument with school officials, but Payson's Main Street project was not the only project in the works looking at using tax-increment funding.
Projects in Casa Grande and Tucson that would have benefited from such funding will also be affected.
Payson School officials objected to what they said would be a loss of some of their property tax revenue within the Main Street redevelopment district. It was a move, they said, to raise school district property taxes.
Those in favor of the proposal said increment-financing would only raise property taxes by a few dollars a year. They said it would not affect the school district, which would recover any losses through the property tax increase.