SB 1850

Senate Engrossed
commerce; 2026-2027.
State of Arizona
Senate
Fifty-seventh Legislature
Second Regular Session
2026
SENATE BILL 1850
AN
ACT
Amending section 5-572, Arizona
Revised Statutes, as amended by laws 2024, CHAPTER 210, section 2; repealing
section 5-572, Arizona revised statutes, as amended by laws 2024, chapter
210, section 3; amending sections 20-156, 28-8604, 32-1134,
41-1545.05, 41-1561, 41-2257, 41-2306 and 44-2039,
Arizona Revised Statutes; relating to commerce.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it
enacted by the Legislature of the State of Arizona:
Section 1. Section 5-572, Arizona Revised
Statutes, as amended by Laws 2024, chapter 210, section 2, is amended to read:
START_STATUTE5-572. Use of monies in state lottery fund; report
A. If there are any bonds or bond related
obligations payable from the state lottery revenue bond debt service fund, the
state lottery revenue bond debt service fund shall be secured by a first lien
on the monies in the state lottery fund after the payment of operating costs of
the lottery, as prescribed in section 5-555, subsection A, paragraph 1,
until the state lottery bond debt service fund contains sufficient monies to
meet all the requirements for the current period as required by the bond
documents. Debt service for revenue bonds issued pursuant to this
chapter shall be paid first from monies that would have otherwise been
deposited pursuant to this section in the state general fund. After
the requirements for the current period have been satisfied as required by the
bond documents, the monies in the state lottery fund shall be expended for the
expenses of the commission incurred in carrying out its powers and duties and
in the operation of the lottery.
B. Of the monies remaining in the state lottery fund
each fiscal year after appropriations and deposits authorized in subsection A
of this section, $10,000,000 shall be deposited in the Arizona game and fish
commission heritage fund established by section 17-297.
C. Of the monies remaining in the state lottery fund
each fiscal year after appropriations and deposits authorized in subsections A
and B of this section, $5,000,000 shall be allocated to the department of child
safety for the healthy families program established by section 8-481,
$4,000,000 shall be allocated to the Arizona board of regents for the Arizona
area health education system established by section 15-1643, $3,000,000
shall be allocated to the department of health services to fund the teenage
pregnancy prevention programs established in Laws 1995, chapter 190, sections 2
and 3, $2,000,000 shall be allocated to the department of health services for
the health start program established by section 36-697, $2,000,000 shall
be deposited in the disease control research fund established by section 36-274
and $1,000,000 shall be allocated to the department of health services for the
federal women, infants and children food program. The allocations in
this subsection shall be adjusted annually according to changes in the GDP
price deflator as defined in section 41-563, and the allocations are
exempt from the provisions of section 35-190 relating to lapsing of
appropriations. If there are not sufficient monies available
pursuant to this subsection, the allocation of monies for each program shall be
reduced on a pro rata basis.
D. If the state
lottery director determines that monies available to the state general fund may
not equal $84,150,000 in a fiscal year, the director shall not authorize
deposits to the Arizona game and fish commission heritage fund pursuant to
subsection B of this section until the deposits to the state general fund equal
$84,150,000 in a fiscal year.
E. Of the monies remaining in the state lottery fund
each fiscal year after appropriations and deposits authorized in subsections A
through D of this section, $1,000,000 or the remaining balance in the fund,
whichever is less, is appropriated to the department of economic security for
grants to nonprofit organizations, including faith-based organizations, for
homeless emergency and transitional shelters and related support
services. The department of economic security shall submit a report
on the amounts, recipients, purposes and results of each grant to the governor,
the speaker of the house of representatives and the president of the senate on
or before December 31 of each year for the prior fiscal year and shall provide
a copy of this report to the secretary of state.
F. Of the monies remaining in the state lottery fund
each fiscal year after appropriations and deposits authorized in subsections A
through E of this section, and after a total of at least $99,640,000 has
been deposited in the state general fund, $1,750,000 shall be deposited in the
Arizona competes fund established by section 41-1545.01 through
fiscal year 2028-2029 and $3,500,000 thereafter. The
balance in the state lottery fund remaining after deposits into the Arizona
competes fund shall be deposited in the university capital improvement lease-to-own
and bond fund established by section 15-1682.03, up to a maximum of
eighty percent of the total annual payments of lease-to-own and bond agreements
entered into by the Arizona board of regents.
G. All monies remaining in the state lottery fund
after the appropriations and deposits authorized in this section shall be
deposited in the state general fund.
H. Except for monies expended for debt service of
revenue bonds as provided in subsection A of this section, monies expended
under subsection A of this section are subject to legislative appropriation.
I. The commission shall transfer monies prescribed
in this section on a quarterly basis. END_STATUTE
Sec. 2. Repeal
Section 5-572, Arizona Revised
Statutes, as amended by Laws 2024, chapter 210, section 3, is repealed.
Sec. 3. Section 20-156, Arizona Revised
Statutes, is amended to read:
START_STATUTE20-156. Examination of insurers; financial surveillance fund; definition
A. The director shall examine the affairs,
transactions, accounts, records and assets of each authorized insurer as often
as the director deems advisable. The director shall so examine each
domestic insurer at least once every five years. Examination of an
alien insurer shall be limited to its insurance transactions in the United
States.� The director may examine the business transactions and affairs of each
domestic life and disability reinsurer as defined in section 20-1082,
service company as defined in section 20-1095 and mechanical
reimbursement reinsurer as defined in section 20-1096.
B. The director shall in like manner examine each
insurer applying for an initial certificate of authority to do business in this
state.
C. In lieu of making an examination, the director
may accept a full report of the last recent examination of a foreign or alien
insurer, certified to by the insurance supervisory official of another state,
territory, commonwealth or district of the United States.
D. The expenses of the examinations conducted under
this section shall be paid by the insurance examiners' revolving fund as
provided in section 20-159. Such expenses shall be limited to
preexamination selection and preparation costs, examination costs,
postexamination costs and other such costs of evaluations of compliance
required by law.
E. The financial surveillance fund is established
consisting of monies collected pursuant to subsection F of this section.� The
fund is a special state fund pursuant to section 35-142, subsection A,
paragraph 8.� The department shall administer the fund. Monies in
the fund are continuously appropriated and are exempt from the
provisions of section 35-190 relating to lapsing of appropriations
subject to legislative appropriation.
F. The director shall annually assess and collect
from each foreign, alien and domestic insurer, other than
a domestic life and disability reinsurer as defined in section 20-1082, a
service company as defined in section 20-1095, and a mechanical
reimbursement reinsurer as defined in section 20-1096, that
hold an active certificate of authority an amount within the ranges
provided in this subsection and on a uniform percentage basis among all fee
categories, to pay the costs of employing financial analysts who
shall assist the department in conducting financial surveillance of domestic
insurers administering the insurance operational
functions of the department. The director shall deposit all
collected monies in the financial surveillance fund.� The director shall base
the amount of each insurer's assessment on the total admitted assets of the
insurer as shown in its annual statement for the calendar year preceding the
year in which the assessment is made, according to the following schedule:
����������������������������������� Minimum���������� Maximum
����������� Assessment Amount �
Assessment Amount
Insurers with total admitted
  assets of greater than
  $1,000,000,000���������������������������� $15,000������ $22,500
Insurers with total admitted
  assets of at least $200,000,000
  but not more than $1,000,000,000���������� $
5,000������ $ 7,500
Insurers with total admitted
  assets of at least $100,000,000
  but not more than $199,999,999������������ $
3,000������ $ 4,500
Insurers with total admitted assets
  of at least $50,000,000 but not
  more than $99,999,999��������������������� $
1,500������ $ 2,250
Insurers with total admitted assets
  of at least $25,000,000 but not
  more than $49,999,999��������������������� $��
500������ $�� 750
Insurers with total admitted
  assets of not more than
  $24,999,999������������������������������� $��
250������ $�� 375
G. For the purposes of this section,
"insurer" includes health care services organizations, prepaid dental
plan organizations, hospital service corporations, medical service
corporations, dental service corporations and hospital, medical, dental and
optometric service corporations incorporated in this state. END_STATUTE
Sec. 4. Section 28-8604, Arizona Revised
Statutes, is amended to read:
START_STATUTE28-8604. Advanced air mobility fund
A. The advanced air mobility fund is
established. The state treasurer Arizona commerce authority shall administer the
fund. Monies in the fund are subject to legislative appropriation
and are exempt from the provisions of section 35-190 relating to lapsing
of appropriations. The state treasurer Arizona commerce authority shall invest and divest monies in
the fund as provided by section 35-313, and monies earned from investment
shall be credited to the fund. The fund consists of the following:
1. Monies appropriated by the legislature.
2. Any nonfederal gifts, grants, donations or other
monies received by the state treasurer Arizona commerce authority from
any public or private source for transportation projects.
B. The monies in the fund shall be used to:
1. Purchase advanced air mobility vehicles that are
capable of carrying passengers or cargo for testing and demonstration purposes
of the ability to use the advanced air mobility vehicles.
2. Construct vertiports.
C. Before any expenditure is made from
the fund, the state treasurer and the department shall submit an expenditure
plan for review to the joint committee on capital review.
C. The purpose of the fund is to
allow for the office of defense innovation within the arizona commerce
authority to enter into a contract with any entity that advances the state's
defense, aerospace, dual use technology and national security innovation
ecosystem. END_STATUTE
Sec. 5. Section 32-1134, Arizona Revised
Statutes, is amended to read:
START_STATUTE32-1134. Powers and duties of registrar
A. The registrar shall:
1. Establish assessments and maintain the fund
balance at a level sufficient to pay operating costs and anticipated claims
using the cash basis of accounting.
2. Cause an examination of the fund to be made every
three years by an independent certified public accountant.
3. File with the department of insurance and
financial institutions an annual statement of the condition of the fund.
4. Employ accountants and attorneys from monies in
the fund, but not to exceed $10,000 in any fiscal year, that are necessary for
the performance of the duties prescribed in this section.
5. Employ or contract with individuals and procure
equipment and operational support, to be paid from or purchased with monies in
the fund, but not to exceed in any fiscal year fourteen twenty percent of the total amount deposited in the fund in the
prior fiscal year as may be necessary to monitor, process or oppose claims
filed by claimants, which may result in collection from the recovery fund.
B. Notwithstanding section 32-1135, the
registrar may expend spend interest
monies from the fund to increase public awareness of the fund. This expenditure
may not exceed $50,000 in any fiscal year.END_STATUTE
Sec. 6. Section 41-1545.05, Arizona Revised
Statutes, is amended to read:
START_STATUTE41-1545.05. Program termination
The program established by this article ends on July 1, 2026 2028.END_STATUTE
Sec. 7. Section 41-1561, Arizona Revised
Statutes, is amended to read:
START_STATUTE41-1561. Office of defense innovation; powers and duties; annual report;
definitions
A. The office of defense innovation is established
within the authority.
B. The office shall enter into a
contract with a qualified public or private entity to advance this state's
defense, aerospace, dual use TECHNOLOGY and national security innovation
ecosystem.� The office shall engage with and coordinate with private industry,
defense contractors, small businesses, institutions of higher education,
research institutions, military installations and private stakeholders to
implement the duties of the office.
B. C. The
office may:
1. Act as a liaison between this state, the United
States department of defense and national security organizations, including
federal and state agencies and law enforcement and
industries that support the purposes prescribed in this subsection section.
2. Identify and pursue, as appropriate,
opportunities to increase the amount of federal funding to foster the
development of products, services and technologies that support the United
States department of defense in this state.
3. Support, enhance or expand
any ongoing United States department of defense industry
development mission that is directed at this state missions
within the state.
4. Support Arizona-based companies that seek
federal defense contracts.
5. Advance Advocate
to any relevant constituencies for Arizona's economic interests that are
related to the United States department of defense's aerospace
mission missions and aerospace and defense
sectors and industries.
6. Develop and implement a reoccurring strategic
plan to enhance Arizona's competitiveness in defense-related and national security industries.
7. Identify and support emerging technology and dual use technology, including commercialization support
services to accelerate technology development.
8. Collaborate with the Arizona board of regents and
universities and research institutions that seek to increase the amount of
defense research and development funding for applied research, and advance prototyping of critical defense-related
products and technologies;  and support
rapid technology transfer and transition capabilities.
9. Collaborate to enhance workforce development that
prepares innovators, and intrapreneurs
entrepreneurs and workers to support defense
and national security industries of the future.
10. Develop, in coordination with
public and private partners and consistent with applicable state and federal
law, a proving ground in this state for autonomous systems and advanced air
mobility to enable testing, validation and commercialization activities.
11. Enter into agreements, including
intergovernmental agreements and memoranda of UNDERSTANDING, as necessary to
implement this section.
12. Apply for, accept and spend
grants, donations, aid or other monies received from the federal government or
any agency of the federal government for any advanced air mobility purpose.
13. On behalf of this state or in
coordination with any appropriate state agency, apply for and hold federal
aviation administration certificates, waivers or authorizations necessary to
implement this section.
10. 14. Coordinate
with the governor and the legislature on the office's activities, achievements
and recommendations.
D. This section does not allow the
office to exercise regulatory authority over any public or private entity.
C. E. On
or before December 31, 2026 and each year thereafter, the office shall submit a
report regarding the office's activities and
recommendations to the governor, the president of the senate and the speaker of
the house of representatives and shall provide a copy of the report to the
secretary of state.
F. On or before september 1, 2029,
the office shall submit to the governor, the president of the senate and the
speaker of the house of representatives a comprehensive report that includes
all of the following:
1. A summary of the office's
activities and accomplishments.
2. An assessment of the economic and
national security impact of the office.
3. Recommendations regarding the
continuation, modification or termination of the office.
G. For the purposes of this section:
1. "Advanced air mobility"
has the same meaning prescribed in section 28-8601.
2. "Dual use technology"
means technology that has both civilian and defense or national security
applications.
3. "Qualified public or private
entity" means an entity that demonstrates experience, capacity and
credibility in defense and national security innovation and that has the
ability to do all of the following:
(a) Support
federal defense and national security missions, including engaging with the
united states department of defense and related agencies.
(b) Manage
complex programs that involve coordination among public and private
stakeholders, including industry, academia and government.
(c) Facilitate
technology development, testing, validation or transition activities in support
of defense or dual use technology
applications.
(d) Operate in
ENVIRONMENTS that may require specialized compliance, credentialing or security
conditions and support defense-related contracting or federal program
requirements.END_STATUTE
Sec. 8. Section 41-2257, Arizona Revised
Statutes, is amended to read:
START_STATUTE41-2257. Financial assistance
A. The authority may provide financial assistance to
political subdivisions, special districts and Indian tribes in developing,
acquiring, constructing, improving, equipping or refinancing infrastructure.�
The financial assistance shall include:
1. Loans as provided in this section.
2. Credit enhancements purchased for a political
subdivision's, special district's or Indian tribe's bonds or other forms of
indebtedness.
B. A loan shall be evidenced by a loan repayment
agreement, lease purchase agreement or bonds of a political subdivision,
special district or Indian tribe that are delivered to and held by the
authority.
C. The authority shall prescribe a principal
repayment schedule for each loan made. Loan principal payments may
be rescheduled at the discretion of the authority but may not be forgiven.
D. A loan under this section:
1. Shall be repaid not more than thirty years after
the date it is incurred.
2. Shall require that interest payments begin not
later than the next date that either principal or interest must be paid by the
authority to holders of any of the authority's bonds that provided funding for
the loan. The authority may provide that loan interest accruing
during construction of the borrower's infrastructure project and up to one year
after completion of the construction be capitalized in the loan.
3. Shall be repayable in at least annual principal
installments and at least semiannual interest installments.
4. Shall be conditioned on the identification of
pledged revenues for repaying the loan. If the infrastructure
financed by the loan is part of a municipal utility and the city or town
pledges revenues of the utility to repay the loan, the loan shall be treated
under section 9-530, subsection B as a lawful long-term obligation
incurred for a specific capital purpose.
5. To the extent permitted by law, shall be secured
by a debt service reserve account that is held in trust and that is in such
amount, if any, as determined by the authority.
6. Shall be either:
(a) For a political subdivision, additionally
secured by an irrevocable pledge of the shared state revenues due the political
subdivision for the life of the loan as provided by a resolution of the board.
(b) For an Indian tribe, conditioned on the
establishment of a dedicated revenue source under the control of a tribally
chartered corporation or other tribal entity that is subject to suit by the
attorney general to enforce the loan contract or be secured by assets that, in
the event of default of the loan contract, are subject to execution by the
attorney general.
E. The authority shall prescribe the rate or rates
of interest on loans made under this section, but the rate or rates shall not
exceed the prevailing market rate for similar types of loans. A
political subdivision or special district may negotiate the sale of its bonds
to or a loan repayment agreement with the authority without complying with any
public or accelerated bidding requirements imposed by any other law for the
sale of its bonds.
F. The approval of a loan is conditioned on a
written commitment by the political subdivision or special district to complete
all applicable reviews and approvals and to secure all required permits in a
timely manner.
G. The approval of financial assistance to a city or
town having a population of more than one hundred fifty
thousand persons shall be conditioned on approval of its voters. An
election is not required if voter approval has previously been received for
substantially the same project.
H. The approval of financial assistance to a county
having a population of more than two five hundred
thousand persons shall be conditioned on approval of its voters.� An election
is not required if voter approval has previously been received for
substantially the same project.
I. By resolution of the board, the authority may
impose any additional requirements it considers necessary to ensure that the
loan principal and interest are timely paid.
J. All monies received from political subdivisions,
special districts and Indian tribes as loan repayments, interest and penalties
shall be deposited, pursuant to sections 35-146 and 35-147, in the
fund.
K. The attorney general may take whatever actions
are necessary to enforce the loan contract and achieve repayment of loans
provided by the authority pursuant to this article.
L. If a political subdivision fails to make any
payment due to the authority under its loan repayment agreement or bonds, the
authority shall certify to the state treasurer and notify the governing body of
the defaulting political subdivision that the political subdivision has failed
to make the required payment and direct a withholding of state shared revenues
as provided in subsection M of this section.� The certificate of default shall
be in the form determined by the authority, provided the certificate specifies
the amount required to satisfy the unpaid payment obligation of the political
subdivision.
M. On receipt of a certificate of default from the
authority, the state treasurer, to the extent not otherwise expressly
prohibited by law, shall withhold the monies from the next succeeding
distribution of monies pursuant to section 42-5029 due to the defaulting
political subdivision. In the case of a city or town, the state
treasurer shall also withhold from the next succeeding distribution of monies
pursuant to section 43-206 due to the defaulting city or town the amount
specified in the certificate of default and immediately deposit the amount
withheld in the fund.� The state treasurer shall continue to withhold and
deposit the monies until the authority certifies to the state treasurer that
the default has been cured.� In no event shall the state treasurer withhold any
amount that is necessary, as certified by the defaulting political subdivision
to the state treasurer and the authority, to make any required deposits then
due for the payment of principal and interest on bonds of the political subdivision
that were issued prior to the date of the loan repayment agreement or bonds and
that have been secured by a pledge of distributions made pursuant to sections
42-5029 and 43-206. END_STATUTE
Sec. 9. Section 41-2306, Arizona Revised
Statutes, is amended to read:
START_STATUTE41-2306. Tourism fund
A. The tourism fund is established consisting of
separate accounts derived from:
1. State general fund monies appropriated to the
fund by the legislature.� All monies in this account are continuously
appropriated to the office of tourism for the purposes of operations and
statewide tourism promotion.
2. Revenues deposited pursuant to section 5-835,
subsection B or C.� All monies in this account are continuously appropriated to
the office of tourism, which, in consultation with a consortium of destination
marketing organizations in the county in which the tourism and sports authority
is established, shall be spent to promote tourism within that county.� For fiscal years 2010-2011 and 2011-2012, fifty per cent of
the revenues deposited in the tourism fund pursuant to this paragraph may be
expended by the office of tourism for operational and administrative purposes.
3. Revenues deposited pursuant to section 42-6108.01. The
legislature shall appropriate all monies in this account to the office of
tourism, which, in conjunction with the destination marketing organization in
the county in which the tax revenues are collected, shall be spent only to promote
tourism within that county and shall not be spent for administrative or
overhead expenses.
4. Revenues deposited pursuant to section 5-601.02(H)(3)(b)(iv).�
The office of tourism shall administer the account.� The account is not subject
to appropriation, and expenditures from the fund are not subject to outside
approval notwithstanding any statutory provision to the contrary.� Monies received
pursuant to section 5-601.02 shall be deposited directly with this
account.� On notice from the office of tourism, the state treasurer may invest
and divest monies in the account as provided by section 35-313, and
monies earned from investment shall be credited to the account.� No monies in
the account shall revert to or be deposited in any other fund, including the
state general fund. Monies in this account shall supplement, not
supplant, current funds in other accounts of the tourism fund.� Monies in this
account shall be spent only to promote tourism within the state and shall not
be used for administrative or overhead expenses.
5. Monies received in the form of a
gift, grant or donation.� The office of tourism may accept and spend monies
that are received as gifts, grants or donations.
B. Monies in the fund are exempt from the provisions
of section 35-190 relating to lapsing of appropriations.END_STATUTE
Sec. 10. Section 44-2039, Arizona Revised
Statutes, is amended to read:
START_STATUTE44-2039. Securities regulatory and enforcement fund; purpose
A. The securities
regulatory and enforcement fund is established and shall be administered by the
commission under the conditions and for the purposes provided by this section.�
Monies in the fund are exempt from the provisions of section 35-190
relating to lapsing of appropriations.
B. Fees collected pursuant
to section 44-1861, subsections A, D and P and section 44-3324
shall be deposited, pursuant to sections 35-146 and 35-147, in the
securities regulatory and enforcement fund, except as provided in subsection D
of this section and except that all other revenues collected in each fiscal
year in excess of the amount appropriated from the fund by the legislature
shall be deposited in the state general fund.
C. Monies in the fund are
subject to legislative appropriation.� The commission shall use the monies in
the fund for education and regulatory, investigative and enforcement operations
in the securities division, railroad safety and a part of
general administrative and hearing expenses of the commission.
D. On February 1 and June
30 of each year, monies deposited in the securities regulatory and enforcement
fund pursuant to section 44-3324 are transferred to the state general
fund. END_STATUTE
Sec. 11. Retroactivity
Section 41-1545.05, Arizona
Revised Statutes, as amended by this act, applies retroactively to from and
after June 29, 2026.