Tax-slashing $12.8B Arizona budget introduced in House

May 24, 2021, 5:04 PM | Updated: May 25, 2021, 12:32 pm
(AP Photo/Ross D. Franklin, File)...
(AP Photo/Ross D. Franklin, File)
(AP Photo/Ross D. Franklin, File)

PHOENIX (AP) — A $12.8 billion spending plan for the coming budget year that slashes income taxes by 25% over three years and shields the wealthy from having to directly pay a new surcharge to boost education spending was introduced in the Arizona House on Monday.

The fate of the deal hammered out between Republican leaders of the House and Senate and GOP Gov. Doug Ducey was murky as some Republicans expressed concerns about various components of the budget and all Democrats were solidly opposed to the $1.5 billion per year income tax cut.

With just a one-vote margin in each chamber, one Republican member can sideline a deal. And several members have said they have concerns, some because of spending that goes against their conservative principles and others because of the tax cuts, which are permanent and come as the state still carries large amounts of debt from the Great Recession.

“It’s almost overwhelming, the amount of spending,” Republican Sen. Michelle Ugenti-Rita of Scottsdale said in an interview late last week. “And its not sustainable.”

While she has major concerns, Ugenti-Rita would not say she would oppose the budget if it were up for a vote.

Republican Rep. David Cook of Globe said he also had major concerns, starting with a deal on an increase in weekly unemployment that bypassed his work this session on the issue. He’s also concerned with the size of the tax cuts and a separate provision that will keep the wealthy from paying a new voter-approved 3.5% surcharge on wages above $250,000 for an individual and $500,000 for a couple.

The estimated $827 million cost of Proposition 208 would be put on lower-earning Arizonans, something that rubs Cook the wrong way.

“We’re taking general fund revenue … and paying tax debt for higher income earners,” Cook said Monday. “And I don’t think that’s fair.”

Also of concern to Cook is the amount of debt the state is carrying. An Associated Press analysis shows the state is on the hook for $6.6 billion in pension debt and $7.6 billion in bonds, lease-purchases and payment deferrals. That includes $930 million owed to schools from a budget gimmick used following the Great Recession that delayed nearly $1 billion in payments. The current balance is $930 million, and the proposed budget would pay that down to $900 million.

“If we go down that road of ignoring our debt and our obligations, that’s the wrong road to go down,” Cook said.

Cook said the income tax cut — the largest in state history — is a problem. The proposal eliminates the state’s graduated income tax structure in favor of a one-level tax rate of 2.5% that’s lower than the current bottom tier rate of 2.59%. The current maximum rate is 4.5%, which would reach 8% with the Proposition 208 surcharge.

The new maximum rate of 4.5% would not affect the new revenues created by the 3.5% Invest in Education initiative because the budget deal taps general fund revenue to make up the difference.

“I’m all for cutting taxes,” Cook said. “But in a responsible manner.”

The 11 budget bills that were introduced Monday will have their first hearing in the House Appropriations Committee on Tuesday. A similar hearing will be held in the Senate, likely the only time the public will have a chance to weigh in on the proposal.

For Republican Legislative leaders who hammered out the deal with Ducey, the strong questions from other GOP lawmakers are a problem. Changes to the agreed-upon budget will need the governor’s backing and still maintain support from other GOP members who support the policy proposals in the spending plan for the fiscal year that begins July 1.

And as always when the actual budget bills are introduced, there were surprises.

One is a clear attack by Republicans on Democratic Secretary of State Katie Hobbs, by barring her hiring private attorneys to defend the state in any election-related lawsuits. Hobbs spent more than $250,000 on outside lawyers last year after Attorney General Mark Brnovich refused to defend her office in lawsuits. She asked the Legislature for a supplemental appropriation to pay that bill, but it was not included in the budget.

The budget requires Brnovich, a Republican, to make all policy decisions regarding election lawsuits. And it specifically blocks Brnovich from providing legal advice to Hobbs.

Lifetime Windows & Doors

We want to hear from you.

Have a story idea or tip? Pass it along to the KTAR News team here.

Arizona News

(Facebook File Photo/Phoenix Police Department)...

Police investigate Phoenix hit-and-run that left pedestrian dead

Police are investigating a Phoenix hit-and-run after a pedestrian crossing the street was killed on Sunday evening.
1 day ago
Katie Hobbs, the Democratic governor-elect and current secretary of state, signs the official certi...

Arizona Sec. of State Hobbs requests recount of 3 election races

Arizona Secretary of State Katie Hobbs requested on Monday evening a recount of three general election races.
1 day ago
(File Photo by Mark Kolbe/Getty Images)...
Associated Press

Fugitive since 2013 arrested in Mexico, extradited to Arizona

The FBI says a fugitive wanted for his involvement in a criminal drug enterprise has been extradited from Mexico and returned to Tucson.
1 day ago
(Facebook Photo/Morgan Wallen)...

Country artist Morgan Wallen to perform next year at Chase Field in downtown Phoenix

Country artist Morgan Wallen announced last week an upcoming stop in the Valley for his 2023 world tour.
1 day ago
(Photo by Norm Hall/Getty Images)...
Danny Shapiro

Ron Wolfley expects Patriots to corner Kyler Murray, run the ball against Cardinals

Cardinals radio personality and Arizona Sports host Ron Wolfley has ideas on how the Patriots will play the Cardinals next Monday.
1 day ago
Arizona Supreme Court Chief Justice Robert Brutinel, left, signs the official Arizona general elect...
Kevin Stone

Arizona certifies 2022 election, setting stage for lawsuits, recounts

Arizona Secretary of State Katie Hobbs certified the state's 2022 general election Monday, but it doesn’t close the books on the midterms.
1 day ago

Sponsored Articles

Quantum Fiber

How high-speed fiber internet can improve everyday life

Quantum Fiber supplies unlimited data with speeds up to 940 mbps, enough to share 4K videos with coworkers 20 times faster than a cable.
Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.
Day & Night Air Conditioning, Heating and Plumbing

Here are 4 signs the HVAC unit needs to be replaced

Pool renovations and kitchen upgrades may seem enticing, but at the forefront of these investments arguably should be what residents use the most. In a state where summertime is sweltering, access to a functioning HVAC unit can be critical.
Tax-slashing $12.8B Arizona budget introduced in House