With one week to go before the end of the fiscal year, the Arizona legislature managed to reconcile enough differences to pass a finalized version of the budget. However, Republican legislators opposed to the historic $18 billion budget have reported that the controlling party made the budget more palatable for members across the aisle rather than those of their own party.
Although Democratic legislators initially expressed great frustration about the budget, it appears that they may have feigned their opposition — the overwhelming majority of Democrats voted for the budget.
State Representative Jacqueline Parker (R-Mesa) was one of the legislators that voted against the budget. In a Thursday interview with “Conservative Circus,” Parker talked openly about the backdoor proceedings that went on over the last week, claiming that GOP leadership and Governor Doug Ducey gave Democrats what they wanted at the cost of Arizonans’ best interests.
All throughout Thursday’s voting, Parker offered updates on floor proceedings. She noted the shared levity between the Republicans and Democrats as the total expenditures added up with each bill passed.
Parker also noted that the budget received near-unanimous support from Democrats — unique, since Democrats normally have opposed past Republican-majority budgets.
Contrary to assurances from House Appropriations Committee Chairwoman Regina Cobb (R-Kingman) that the budget would enable the state to “weather the storm” of a future recession, Parker said that the budget provisions would bankrupt the state in a recession.
“Spending is colossal, there are no massive tax cuts, and it’s exceeding our actual fiscal revenues. We’re looking at, probably, future bankruptcy as a recession comes forward,” said Parker.
Parker said that several others brought these concerns to Republican leadership prior to floor votes, but that they were ignored. The representative reported that the leaders were more interested in pleasing Democrats than with working out a conservative budget.
“Leadership essentially just said, ‘It’s easier to just go buy Democrats,’” recounted Parker. “They bought them to the tune of six billion more dollars.”
Although school choice advocates touted the universal expansion of the state’s Empowerment Account Scholarship (ESA) Program, Parker reported that Governor Doug Ducey subverted those efforts. Parker said that she and other unnamed legislators received a 2 am call warning that the ESA expansion came with a “poison pill” from the Ninth Floor.
“Ducey has made an agreement with the Democrats that if they don’t refer the ESA bill to the ballot or challenge it in court within the 90 day period, they’re going to extend the aggregate expenditure limit forever, indefinitely,” said Parker.
Parker warned that this secret deal would lead to education expenditures that would break past the 50 percent limit and possibly take over the entire budget.
One of the contentious aspects of the budget was the expansion of homeless shelters throughout Arizona suburbs. State Representative Joseph Chaplik (R-Scottsdale), another one of the lone Republicans who opposed the budget alongside Parker, lamented that the budget policies would turn the state into another California.
Another was the tax credits to entice the film industry to come to the state. The last similar tax credit program bled the state of millions of dollars leading up to the 2008 recession.
In a major victory for millions of Arizonans, the Arizona Free Enterprise Club has prevailed at the Arizona Supreme Court in its attempt to protect a forecasted $1.9 billion tax cut through changes signed into law last year to change Arizona from a four rate income tax structure to a single rate.
On Thursday, the justices ruled in favor of a lawsuit filed the AFEC and several of its members who sought to ensure two provisions of Senate Bill 1828 related to the new 2.5 percent flat rate income structure goes into effect in January 2025. SB1828 was the omnibus appropriations bill signed into law by Gov. Doug Ducey in June 2021.
The AFEC lawsuit was in response to an effort by the Arizona Education Association sponsored Invest In Arizona to have voters overturn those two provisions in November.
But key to the AFEC’s legal arguments is the Arizona Constitution, which prohibits voter referendums of legislative actions undertaken for “the support and maintenance of the departments of state government and state institutions.” Oral arguments were held at the Arizona Supreme Court on Tuesday, during which attorneys Kory Langhofer and Thomas Basile presented AFEC’s position.
On Thursday morning, Mussi took part in an interview with KFYI’s James T. Harris about the efforts to protect the forthcoming tax cuts due to changing to a 2.5 percent flat rate. Mussi told Harris that Tuesday’s arguments at the Arizona Supreme Court “went well” and that he was optimistic “the justices generally understood what our argument was.”
Mussi did not realize how prescient his observation was, as just a few hours later the justices released their decision siding with AFEC and rejecting the referendum attempt.
The decision under the signature of Chief Justice Robert Brutinel enjoined the Invest In Arizona referendum effort from appearing on the 2022 General Election Ballot. In addition, the decision denied Invest In Arizona’s request for attorneys’ fees.
After the Court’s decision was announced, Mussi called it “a big win for taxpayers” across the state.
“The legislature passed historic tax cuts last year that benefit all Arizona taxpayers,” he added. “It’s time for Invest in Arizona and out-of-state special interest groups to accept this reality and stop making a farce of the referendum process.”
A detailed opinion explaining the legal conclusions made by the justices to form Thursday’s decision will be released in the next few weeks.
A controversial bill to offer up to $150 million in tax credits to filmmakers, SB1708, passed the House Appropriations Committee on a divided vote: 8-5.
The bill reads like a promotional deal for a store: if a company spends up to $10 million, then they get 15 percent in tax credits. If they spend between $10 and $35 million, then they get $17.5 percent. And if they spend over $35 million, then they get 20 percent. Companies could get more: an additional 2.5 percent for total production labor costs associated with Arizonan employees, an additional 2.5 percent of total qualified production costs associated with filming at a qualified production facility in Arizona or primarily on location, and an additional 2.5 percent of total qualified production costs if they filmed in association with a long-term tenant of a qualified production facility.
Arizona Free Enterprise Club Vice President Aimee Yentes told the committee that the $150 million refundable tax credit was not only unwise but likely unconstitutional, directing the committee members to review the Goldwater Institute’s analysis of the bill’s potential gift clause violations. She added that this type of legislation only causes a bidding war between states that ultimately cause its residents to lose out, citing similar legislation adopted in other states and their current struggles. As for the argument that the tax credit would result in more jobs for locals, Yentes asserted that theory fails to prove itself in practice.
“It’s a loser that produces few, shallow, low-payment, temporary jobs,” said Yentes.
Michael Scott, CEO of self-described “faith-based” film company Pure Flix responsible for movies like “Case for Christ” and the “God’s Not Dead” series, said that they spend tens of millions outside of Arizona. Scott promised they would employ many locals if they could bring filmmaking to Arizona.
Rob Gerstner, a longtime cameraman, said that this bill wouldn’t stop film companies from “sub-renting” equipment: local companies lack all the equipment necessary to film a movie, meaning that they would then need to rely on renting equipment from other states to fulfill the film company’s contract. Gerstner said that money would bleed out of Arizona because of logistical problems like that.
State Representative Jake Hoffman (R-Queen Creek) noted that pornography movies don’t qualify for the credit, but asked why works like the controversial Netflix film “Cuties” wouldn’t be scrutinized — something that would oppose certain Arizonan’s values. The bill sponsor, State Senator David Gowan (R-Sierra Vista), said that the bill would inspire the “mass good” and that the bad and good works could compete.
“I don’t know how you control all that aspect, but it certainly allows them to be here and allow them to counter that with our religious movies,” said Gowan. “You can’t control everything that’s out there, but you can certainly control the most evil.”
Hoffman said that political candidates and their campaigns could reap the tax credit reward. Gowan said that those kinds of works would fall under campaign laws, which would. Hoffman said that attorneys informed him of the opposite legal take and advised Gowan to look into that.
State Representative Gail Griffin (R-Hereford) explained that she’s never voted for a refundable tax credit. Hoffman said that he wasn’t confident political campaigns wouldn’t benefit from the bill, and cited concerns that the bill would cause a slippery slope “race to the bottom” for tax credits. State Representative Joanne Osborne (R-Goodyear) cited similar concerns.
“At the end of the day I’m just a small mom and pop business owner; I don’t get a $150 million tax credit,” said Osborne. “This bill does set a precedent, and it’s not one I’m going to support.”
State Representative Lorenzo Sierra (D-Avondale) expressed excitement at the thought of all the film-related programs that may arise from this bill.
Butler argued that this bill was “really scary” from the sheer amount of money being committed from the state legislature, at the potential expense of other investments. She said she wasn’t convinced that the returns would outweigh the funds given, citing that there needed to be more checks and balances like a sunset clause to keep the legislation in check. Yet, Butler voted for the bill.
Chairman Regina Cobb (R-Kingman) said that she felt there were significant advantages and disadvantages presented by the bill, agreeing with Butler that there should be a sunset clause, and voted for the bill.
The House Transportation Committee approved SB1356, legislation to give Maricopa County residents a vote for or against a transportation tax and excise tax plan. The committee passed with bipartisan support, with the exception of three: State Representatives Neal Carter (R-Queen Creek), Kevin Payne (R-Peoria), and Leo Biasucci (R-Lake Havasu City).Two didn’t vote either way: State Representatives Brenda Barton (R-Payson) and David Cook (R-Globe).
Arizona Free Enterprise Club Vice President Aimee Yentes expressed opposition to the bill, noting that 40 percent of the money was allocated for public transit. Yentes explained that the 1985 transportation tax plan was successful because it built freeways, but that over the decades the plan shifted from essential infrastructure like roads and freeways to “transit,” despite a steep, increasing decline in its use. That number sits at half a percent currently.
“As we’ve seen post-COVID, that ridership number has fallen off a cliff. There are actually more people who don’t own a vehicle that take a car to work than actually use public transit. That’s kind of astonishing,” said Yentes.
Yentes also noted that the bill sets aside funding for something already covered by statute: “regional programs.” She said the definition of that term was problematic because it doesn’t distinguish street intersection improvements but, rather, “arterial roads and regional programs.”
“It really is a catch-all that can be used to siphon off local city slush funds for whatever: complete streets, air quality,” said Yentes.
The bill sponsor, State Senator Tyler Pace (R-Mesa) said that the bill’s rejection, either by the legislature or by Maricopa County voters, would necessitate the Arizona legislature to find the funds for transportation projects themselves. Pace insisted that the committee members shouldn’t nitpick at the provisions of the bill because the greater good concerned Arizona’s legacy of quiet, fast roads superior to those of other states.
State Representative Richard Andrade (D-Glendale) compared SB1356 to previous efforts to expand and extend the state’s two major highways: Loop 101 and the I-17. Andrade argued that creating more public transit like light rails would increase their use.
Those in opposition explained that they weren’t confident this bill would actually meet transportation needs. Carter said that he supported infrastructure, but said that the legislation had room for improvement. Carter said his reservations included provisions for expenditures related to air quality, and the expansion beyond a 20-year authorization.
Payne expressed displeasure that legislators impacted by the bill weren’t included in stakeholder meetings. He explained that his constituents were requesting another bus route down Bell Road, for example, and that he couldn’t vote for the bill in good conscience because of that.
Echoing Carter and Payne’s statements in his “no” vote was Biasucci. Biasucci argued that the legislature should utilize its $4 billion in surplus instead of passing the costs on to taxpayers.
“I think this is, really, how it needs to be done: the money should come from the general fund to be spent on major projects, I’m talking billions of dollars’ worth, in my opinion. For me, when we’re sitting on this huge surplus, it’s hard for me to say, ‘Yes, I agree with a tax increase or an extension,’” said Biasucci.
State Representative Jake Hoffman’s (R-Queen Creek) controversial proof of citizenship for voting bill passed the Senate on Wednesday along party lines. HB2492 now heads to the governor for final approval. The legislation requires that individuals provide proof of citizenship when registering to vote in the state, and further requires election officials to confirm with all available government databases that the applicant is an American citizen.
The bill advanced steadily through both the House and the Senate, moving out of Senate committee less than two weeks ago, shortly after it was passed by the entire House a few weeks before that. The legislation didn’t advance without pushback, however. Community activists attempted to stall the bill during its consideration by the Senate Judiciary Committee, forcing a recess with their antics such as shouting down the legislators and shouting, “Shame!” repeatedly after the bill passed.
In a statement to AZ Free News, Arizona Free Enterprise Club President Scot Mussi was hopeful that Governor Doug Ducey would sign the bill. Mussi applauded the legislature for passing a bill that aligned with the state and federal constitution, forecasting that the bill would prevent bad actors from interfering with elections.
Senate Democrats had a different perspective of the bill: they claimed that the legislation would force numerous Arizonans to register to vote again. They also claimed that the bill violated federal election law.
In regard to the constitutionality claim, Arizona Free Enterprise Club Deputy Director Greg Blackie explained during the Senate Judiciary Committee hearing that the 2013 Supreme Court ruling determined that the National Voter Registration Act didn’t stop states from denying an applicant’s registration based on information that proved the applicant’s ineligibility. Under this bill, that would mean proof that an applicant isn’t a citizen.