Arizona Republicans tout family tax rebates amid projected $400 million budget shortfall

PHOENIX – Republican legislators defended family tax rebates Monday as beneficial to Arizonans on the heels of new projections that Arizona is expecting a $400 million state budget shortfall.

The Finance Advisory Committee report released last week indicated the projected shortfall is due in part to a drop in individual income tax collections. In a news release, Arizona House Democrats pointed to “an irresponsible permanent $2 billion income tax cut primarily benefitting wealthier Arizonans.” Arizona’s 2.5% flat tax was approved by Republican lawmakers in 2021, and the following September, former Gov. Doug Ducey directed the Arizona Department of Revenue to enact the flat tax in the 2023 tax year, a year ahead of schedule.

Republican legislators, including the Arizona Freedom Caucus, hosted a news conference Monday to tout the rebates as “inflation relief” that will be headed to Arizona families. Beginning Oct. 30, tax rebates will start heading out to about 750,000 Arizona families. The money could take weeks to a month to reach them.

“Out-of-control inflation has impacted Arizona families. Families are suffering from high gas prices, surging housing costs, increasing energy costs and everything in between,” said Senate President Warren Petersen (R-Gilbert).

How has inflation impacted Phoenix?

In late 2022, Phoenix led the nation in inflation – with consumer prices up 13% in Phoenix, according to data from the Bureau of Labor Statistics.

“Many of our citizens have picked up second jobs to offset rising prices,” Petersen said. “Many of them have skipped family vacations this year. Many of them have had to take in family members because it is hard times. Many people have for the very first time had to turn to food banks to provide food for their families.”

Tatiana Peña, who is a mother of five daughters, spoke at the news conference with her family because she heard that Arizona legislators had instituted tax relief for Arizona families.

“When you are raising five daughters, they’re really hungry. That is a lot we have to pay for, and the fact that we have had so much inflation hasn’t helped out. Then we have to buy their clothing, school supplies, even health care – everything’s been going up so much, including gas,” Peña said.

How will Arizona families receive tax rebates?

Families that have gotten rebates electronically in the past will receive the payment electronically, and those who have received rebates through the mail in the past, will get a check.

Qualifying families will receive $250 per dependent under the age of 17 and $100 for dependents over the age of 17. Families with multiple dependents can receive up to $750.

“The whole point is people know what to do with their money better than we ever will in government,” said Senate Majority Leader Sonny Borrelli (R-Lake Havasu City). “This is something that is going to help every single family make sure they put food on the table at a time where inflation is through the roof.”

Officials with the Arizona Senate Democratic Caucus did not immediately respond to a request for comment Monday.

Inflation slows, but many Arizona families still struggling

The latest data from the Bureau of Labor Statistics showed that in February the consumer price index in the Phoenix metro area reached 8.5% above the prior year. In August that year-over-year number went down to 3.7%.

However, even as inflation has gone down, many Arizona families are struggling to make ends meet.

“Regardless of political leanings, the food bank has seen a lot of folks coming,” said Jerry Brown, director of media relations at Phoenix-based St. Mary’s Food Bank. “Especially now with inflation, it is actually more people than we saw during the pandemic two or three years ago – a lot of first-time folks.”

Brown said the food bank currently feeds up to 1,500 families a day.