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 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.”
In what could be a major rebalancing of powers between the executive and legislative branches, the State Senate passed legislation earlier this week to rein in a governor’s state of emergency powers.
Lawmakers have tried since January to pass legislation to ensure a governor confers with the legislature in certain instances once a public health emergency has been declared. The intent was to ensure a governor cannot issue unending emergency executive orders which impact business offerings, public health decisions, school functions, and whether families can see loved ones in nursing homes.
Many Arizonans do not realize the state remains under a declared emergency even though Gov. Doug Ducey has lifted many of his COVID-19 executive orders. Sen. Michelle Ugenti-Rita introduced a bill, SB1084, in an attempt to reassert the legislature’s power. Her bill was heard in the House and Senate but stalled in April due to concerns by some within the Republican caucus which holds a majority in both chambers.
Fast forward to the Senate’s marathon consideration of the 11-bill budget package on Tuesday and Wednesday. Ugenti-Rita proposed the text of her bill as a floor amendment to a budget reconciliation bill, SB1819. Her amendment passed on a 16 to 14 party line vote, as did SB1819 itself.
It is now up to House Speaker Rusty Bowers to secure 31 votes in his chamber to get the legislation to Ducey’s desk.
Current state law allows lawmakers to void a public health state of emergency based on a general majority vote in both chambers. However, if the legislature is not in session then two-thirds of lawmakers would have to authorize a special session, or the governor would have to call a special session.
According to the amendment language, a governor’s initial state of emergency
proclamation with respect to a public health emergency will be capped at 30 days beginning Jan. 2, 2023. It allows a governor to extend the public health state of emergency up to 120 days, but any single extension could not be for more than 30 days.
Once the 120 day period is up, the state of emergency will terminate unless extended in whole or in part by a concurrent resolution of the legislature. Lawmakers could vote to extend the state of emergency as many times as necessary in periods of not more than 30 days at a time.
Another key provision of the legislation prohibits a governor from proclaiming a new state of emergency upon termination of a state of emergency based on the same conditions unless there is passage of a concurrent resolution of the legislature consenting to the new state of emergency.
Another amendment which passed with SB1819 makes it clear what emergency powers cities, towns, and counties will have -and won’t have- in the future. It includes a ban on curfews, business closures, and other public health declarations such as mask mandates which run counter to a governor’s orders.
The State Senate worked into the early hours Wednesday to pass an 11-bill budget packet, and now all eyes turn to the 60 members of the House which is slated to take up the bills Thursday.
But questions remain as to whether House Speaker Rusty Bowers can ensure 31 votes on the budget bill involving K-12 Education funding.
The Senate pushed its bills through a marathon of 16 to 14 party line votes which started Tuesday and did not end until 2:30 a.m. Wednesday. Many of those bills included amendments, including SB1826, the Senate’s K-12 budget bill, which as passed includes a major expansion of eligibility for Arizona’s Empowerment Scholarship Accounts (ESAs).
An ESA allows an eligible child to receive credit for most of the government education funding that would have been paid to the student’s public or charter school. Those funds can then be used toward private school expenses, including tuition, counseling, tuition, and other necessary costs.
The Senate’s K-12 bill jumps the number of students eligible for an ESA from 256,000 to nearly 726,000. However, the House K-12 budget bill, HB2898, does not currently expand ESA eligibility. And two Republicans whose votes are needed to pass any budget bill have been staunchly opposed an ESA expansion.
Those Republicans are Rep. Joel John (R-LD4) and Rep. Michelle Udall (R-LD25). Both have worked as educators, and it was their opposition earlier in the session that killed an ESA expansion bill introduced by Sen. Paul Boyer.
How strong the opposition of John and Udall is to expanding ESA criteria will be tested Thursday due to the fact Senate President Karen Fann included one of Udall’s own education-related bills in the same Senate’s K-12 budget amendment. There are also items in the amendment that John is known to support.
Less than 10,000 of the students in K-12 who are currently eligible for an ESA utilize the program. Assuming the same percent of eligible students enroll under the new criteria as under the current criteria, then nearly 2,000 new students would benefit in Fiscal Year 2022. That number of new students could grow to nearly 6,000 in Fiscal year 2024, according to the Joint Legislative Budget Committee.
Boyer, an educator for a charter school, introduced his bill back in February and was able to get it through the Senate on a 16 to 14 party line vote. It then stalled in the House when it became clear Bowers did not have the necessary 31 votes for passage due to John and Udall’s opposition.
For the last few weeks Boyer had withheld support for the Senate’s 11-bill budget package, which he believed needed to provide more funding for education and paying down Arizona’s debt. With ESA and other expenditures added as amendments his vote turned to a yes. Whether Bowers can find a way to bring John and Udall on board for Thursday’s vote remains to be seen.
Those who support the ESA expansion include the Center for Arizona Policy, the Barry Goldwater Institute for Public Policy Research, and the Republican Liberty Caucus- Arizona.
