Positive reactions continue to come in from business groups in response to the Arizona Legislature’s passage this week of a Fiscal Year 2022 budget package which includes more than $1.3 billion in tax cuts, $1 billion in payments toward state debt, and a transition of the state’s multi-tied income tax system to a flat rate.
The nonprofit, nonpartisan Arizona Tax Research Association called passage of the FY2022 budget “a watershed moment” for Arizona, while Scot Mussi, president of the Arizona Free Enterprise Club, commended the Legislature for passing what he called “historic” tax cuts.
“Every single taxpayer in Arizona will now get a tax cut,” Mussi said. “This is great news for the future of our great state!”
The National Federation of Independent Business, which advocates for small and independent businesses across the country, gave a shout out to the Legislature via Twitter for adopting “landmark property & income tax reforms” which support small businesses. “Your work will allow small businesses to grow our state economy and create more jobs #ForArizonans,” the message said.
On Friday, Gov. Doug Ducey issued a video statement celebrating passage of the 11 bills which make up what he calls the state’s “fiscally conservative, forward-looking budget” that starts July 1.
“Here in Arizona our economy is booming,” said Ducey, thanking House Speaker Rusty Bowers, Senate President Karen Fann, and all the legislators. “New people and businesses are moving here every day. And at the state level that’s resulted in record revenue. With this budget we’re investing those dollars in the things that matter: schools, universities, community colleges, and new roads and bridges, just to name a few.”
Ducey added that “most importantly we’re giving a bulk of the surplus dollars back to the people who earned them.”
A budget signing ceremony must wait until at least Monday when the Senate returns from recess to formally transmit the budget bills to the governor.
Meanwhile, supporters of the voter initiative known as Proposition 208 are promising a court fight over a bill Ducey is also expected to sign next week.
Prop 208 passed last November by a slim margin of 51.75 to 48.25 percent. The purpose of the initiative was to provide additional funding for public and charter school by way of a new 3.5 percent income tax surcharge for many Arizonans.
Among those subject to the new tax surcharge would be thousands of small business owners who currently report business profits on their state personal income tax return. SB1783, however, provides a small business alternate income tax as an option for those who operate as sole proprietors, LLCs, professional partnerships, and S Corporations.
Under the alternate tax, income derived from small business can be reported on a special small business income tax form. This will ensure the income is not added into personal income for purposes of calculating the amount of Prop 208 surcharge a taxpayer owes.
Critics contend SB1783 is a way to unlawfully circumvent the taxation provision of Prop 208. Proponents of the bill point to the many statements made prior to the 2020 General Election which assured business owners that “business income” would not be subject to the surcharge.
The Arizona Legislature just approved the Goldwater Institute’s plan to dramatically reduce income taxes and simplify the state’s tax code, making Arizona one of the lowest-tax states in the country. This historic reform will restore Arizona’s competitive advantage as a low-tax state and provide a boost for small business owners still struggling to recover from the COVID pandemic.
This plan collapses Arizona’s pre-Prop. 208 tax rates into a single, low 2.5% rate, and it caps the maximum tax rate at 4.5%. This means that no one’s taxes will increase because of Prop. 208. In fact, everyone’s income taxes will go down as a result of this victory.
Additionally, the Goldwater Institute has challenged the constitutionality of Prop. 208, and we’re now awaiting a decision from the Arizona Supreme Court. Fortunately, this new tax reform measure will mitigate the negative effects of Prop. 208—which otherwise would have decimated our economy—and help ensure the state’s future economic success.
President Ronald Reagan once said, “You can’t be for big government, big taxes, and big bureaucracy and still be for the little guy.”
Well, in Arizona, we are fighting for the little guy. We’re reducing the size of government, slashing regulations and cutting taxes.
The pandemic left no one in America untouched, but today, Arizona is open for business and our economy is thriving.
During the pandemic, many Americans from ultra-liberal states that embraced lockdowns relocated to Arizona so their kids could still go to school in person and their small businesses could survive. Hundreds of companies are moving or expanding here. And when these companies relocate to Arizona, they’re bringing high-paying jobs.
There’s a reason that Arizona has become a beacon of economic prosperity. People and companies are tired of burdensome overregulation and high taxes, and they’re moving their operations to a place that embraces free enterprise.
The 60-member House stayed on the floor until nearly 11 p.m. Thursday to pass 10 of the 11 bills in the Fiscal Year 2022 budget package, and will return at 9 a.m. Friday to debate and vote on HB2898, which covers K-12 legislation.
The bills which already passed and are being transmitted to the Senate include Gov. Doug Ducey’s long-championed flat rate income tax, a $1.3 billion tax cut, and liability payments to state pension funds. In addition, the bills include key legislation related to COVID-19 vaccine passports and a governor’s use of state of emergency powers.
But getting 90 percent of the bills passed in a single day when there are 60 members was not without controversy. It took the Senate from Tuesday morning to nearly 2:30 a.m. Wednesday to complete its passage of the 11-bill budget package, and that was with only 30 members.
As with the Senate, the House Republican caucus has a two member cushion over Democrats, meaning the Republicans can pass a bill without any “aye” votes from across the aisle. After doing some quick math, House Speaker Rusty Bowers made a last minute motion to change the rules, severely limiting the amount of time each lawmaker had to debate or comment on bills and votes.
One thing the rules could not do, however, was limit the number of amendments Democrats could offer to the bills. And each amendment came with its own process of debate and comment, something the Democrat caucus utilized to the full extent. But in the end, the 10 bills were passed on a 31 to 29 margin. The K-12 bill, however, has some Republican opposition which had not been resolved as of Thursday night.
The Senate was also back at work Thursday to address a few dozen bills members still want to see passed.
Among those are 22 bills which Ducey vetoed on May 28 when he became frustrated with the lack of legislative attention to the budget bills. Instead of propelling legislators into action, the governor’s veto action temporarily polarized some Republican Senators who objected to elements of the budget package, at least until all 16 came on board this week to pass the bills.
The Senate has reintroduced Ducey’s 22 vetoed bills -several of which initially passed with bipartisan support. But in an unexpected move Thursday, 25 senators also successfully voted for a bipartisan override of one of the vetoed bills.
Senators admitted the override vote -only the third in Arizona history and the first since the 1981- was a symbolic message to Ducey and future governors that the state has three equal branches of government. The bill itself however will not be enacted unless the House also overrides the veto by a two-thirds margin.
Sen. Tyler Pace, a Republican like the governor, was one of the supporters of the veto override.
“I stand with the belief that the Legislature has an authority to override, and that authority can be used in times when the Legislature feels that a policy or bill that was otherwise vetoed should become law,” he said in explaining his motivation.
Even Senate President Karen Fann voted for the bipartisan override despite her wish it had been handled differently by her members. “I know where you guys are coming from, I understand your feelings,” Fann said. “This is a very big thing that we are doing right now.”
Speaker Bowers is expected to have his members tackle the issue of the 22 vetoed bills and the possible override once the final budget bill passes. In addition, they need to take up SB1783 to address changes to small business tax legislation in light of the new flat income tax Arizona will have.
The Arizona Supreme Court explained Thursday why it ruled last year that the name of rapper turned presidential candidate Kanye West would not be printed on 2020 General Election ballots in the state.
West announced back on July 4, 2020 that he was running as an Independent candidate for president. His multi-million dollar effort resulted in less than 66,500 votes in the 12 states where his name was on the ballot, along with another 4,000 as write-in votes in a handful of other states.
Questions were later raised as to whether West’s candidacy was simply a publicity endeavor or if he was seeking to draw votes away from Joe Biden in favor of then-President Donald Trump, as the two men had been friends for several years. But in early September, West’s Arizona campaign team submitted 57,892 signatures on nominating petitions to secure a spot on ballots across the state.
A registered voter challenged West’s candidacy in Maricopa County Superior Court where a judge declared the signatures invalid because West’s electors -those voters who would have cast Arizona’s 11 Electoral College votes if West won- never filed required paperwork before the signatures were collected.
The judge also ruled West did not personally qualify to be on ballots in Arizona as an Independent candidate because he was a registered Republican in Wyoming.
West lost his emergency direct appeal to the Arizona Supreme Court, which issued an order at the time enjoining Arizona Secretary of State Katie Hobbs along with the 15 county recorders from listing West and his electors on 2020 General Election ballots. But the public did not learn the legal reasoning behind that decision until Thursday.
“West was required to provide the Secretary (of State) with a letter designating the names of his vice-presidential running mate and his eleven presidential electors, a statement signed by each consenting to their designation, and a nomination paper on behalf of each elector,” Justice Bill Montgomery wrote in the opinion. “Additionally, the electors were required to submit nomination petitions containing the requisite number of signatures to qualify for the ballot.”
The justices, however, determined the Maricopa County judge who heard the case last September erred in ruling that West’s Republican Party affiliation was a factor for keeping his name off the ballot. The statute about party affiliation cited by the judge only applied to the 11 Arizonans who wished to be listed as West’s electors on the ballot, Montgomery wrote.
But that error did not change the fact West was ineligible in Arizona to be on the ballot for president due to failing to secure enough valid nominating petition signatures.
“Given the dispositive effect of West’s electors’ failure to qualify for the ballot, we do not address his other arguments regarding the process for challenging nomination petitions, naming indispensable parties, and the application of laches to plaintiffs,” Montgomery wrote. “We affirm the trial court’s order.”
