AZ Legislature OK $1.9B Income Tax Cut 06/25 06:03
The Arizona House on Thursday approved a $1.9 billion income tax cut that
mainly benefits the wealthy as majority Republicans pushed through key pieces
of a state budget plan opposed by Democrats and packed with a conservative wish
list of unrelated policy changes.
PHOENIX (AP) -- The Arizona House on Thursday approved a $1.9 billion income
tax cut that mainly benefits the wealthy as majority Republicans pushed through
key pieces of a state budget plan opposed by Democrats and packed with a
conservative wish list of unrelated policy changes.
The House joined the Senate in approving the tax cuts and another bill
shielding high-earning taxpayers from the effects of a new 3.5% tax surcharge
voters approved in November to boost education funding.
In all, nine of the 11 bills that make up the $12.8 billion budget were
ready to send to Republican Gov. Doug Ducey, who negotiated the spending plan
and will sign it. The 31-29 party-line votes came after majority Republicans,
angered that House Democrats failed to show up to work earlier in the week,
limited debate on the budget plan.
House Speaker Rusty Bowers announced that the GOP would change the rules and
allow only 30 minutes of debate on each bill. Such debate typically takes up
hours on each measure.
"It is clear, was clear then, by the absence of an entire caucus ... that
procedural obstruction and delay have been instituted in lieu of civility,"
Republicans say the state is flush with cash, and the tax cut is needed to
keep Arizona competitive and prevent the tax increase contained in Proposition
208, which added the new tax on high-earning Arizonans. They argued the tax cut
will help businesses create jobs and that will help the middle class.
"I think what we do have here is a historic tax cut that will result in
significant positive impact for everyone, everyone in the state," said Peoria
Rep. Ben Toma, the majority leader and a key architect of the tax cuts. "It's a
tax cut that helps small businesses, and it helps us be more competitive as a
state relative to our neighbors."
Democrats vehemently oppose the tax cuts, saying without them the state
could finally fully fund schools and social programs that were never completely
restored after the Great Recession.
"This is the time to make meaningful investments in our state's future
instead of this massive giveaway to folks who are really not struggling,"
Democratic Rep. Kelli Butler of Paradise Valley said. "And there are plenty in
Arizona who are really struggling."
The $1.9 billion in tax cuts will be phased in when revenue targets are met,
starting at $1.3 billion this year. When fully phased in, the plan would lower
tax rates for most taxpayers to 2.5%, down from a range of 2.59% to 4.5%.
Wealthy taxpayers would, in effect, be spared from the tax hike approved by
voters last year to pay for schools.
The average Arizonan earning between $75,000 and $100,000 will save $231 a
year in state income taxes, while the average taxpayer earning between $500,000
and $1 million a year will save more than $12,000, according to the
Legislature's budget analysts.
Ducey hailed the passage of the tax cut bill and the provision shielding
individuals earning over $250,000 or couples making more than $500,000 from the
new Proposition 208 tax. The estimated $827 million a year in new money will
still go to schools, but it will come out of the general fund, preventing the
state from funding other programs.
"Every Arizonan -- no matter how much they make -- wins with this
legislation. They will get to keep more of the money they earn under this tax
plan," Ducey said. "It will protect small businesses from a devastating 77% tax
increase, it ensures working families and all Arizona taxpayers get to spend
their money how they choose, and it will help our state stay competitive so we
can continue to attract good-paying jobs."
Changes negotiated by a pair of GOP holdouts protect city revenues by
boosting the percentage of income tax shared with municipalities, and boost
state debt payoffs to $1.9 billion.
The new rules eliminated most of the usual debate, questions and forced roll
call votes on amendments that can eat up hours of time. Holding 29 of 60 seats,
Democrats' only power is to slow the movement of bills by extensive debate.
Democrats were enraged, saying they did not show up Tuesday because
Republicans had introduced a slew of last-minute budget amendments, and noted
that it was absent Republicans who prevented a quorum.
Rep. Charlene Fernandez of Yuma called the limits "absolutely ridiculous"
and said Republicans wasted 26 days of the session getting their own members on
board with the budget deal.
The Senate packed the budget with conservative policy priorities, including
a big expansion of the state's private school voucher program, a ban on
teaching so-called critical race theory in K-12 schools, and a host of items
targeting the enforcement of coronavirus restrictions. They include bans on
cities requiring vaccines or ordering mask mandates if the pandemic again
surges and similar restrictions for schools and state colleges and universities.
Republican Rep. Bret Roberts of Maricopa said he would not have voted for
the health budget bill without those items and told members that he was glad
they were included.
Democratic Rep. Lorenzo Sierra of Cashion, who survived a severe case of
COVID-19 that left him on a ventilator for days, was flabbergasted. "Arrogance
is not an effective vaccine against COVID-19," Sierra said.
It also embraces the unfounded theory that former President Donald Trump
lost in Arizona because of voter fraud, creating a $12 million election
integrity fund to pay for election security updates and other priorities.
While Republicans appear to have the votes to pass the overall budget, some
of the items added by the Senate could end up being dropped by the House. The
lower chamber adjourned at about 10:30 Thursday night after skipping debate on
the voucher expansion, which some House Republicans oppose.
The Senate, meanwhile, re-introduced and passed 22 bills that Ducey vetoed
last month, when he said he wouldn't sign any new measures before lawmakers
approved a budget. The unexpected action infuriated many lawmakers.
Senators also took the extremely unusual step Thursday of voting to override
one of Ducey's vetoes, which requires a two-thirds vote. Republican Sen. Tyler
Pace said they chose a bill making technical changes to state laws that had
previously passed unanimously to send Ducey the message that lawmakers won't
The last time the Legislature overrode a governor's veto was in 1981.