Sen. Mesnard Working To Reduce State Income Tax By 50% Of Surplus

Sen. Mesnard Working To Reduce State Income Tax By 50% Of Surplus

By Matthew Holloway |

Arizona State Senator JD Mesnard (R-LD13) is looking to reduce the size of government and the state income tax burden on Arizonans with dual bills: SB1318 and SCR1014. Both bills, which are moving through the House after passing the Senate in February, would require the Arizona Department of Revenue (ADOR) to reduce the individual income tax rate by 50% of the structural surplus for each Taxable Year (TY). If SB1318 passes the legisalture and is vetoed by Democrat Governor Katie Hobbs, SCR104 would put the issue on the Arizona ballot.

Both bills would require the Joint Legislative Budget Committee (JLBC) to determine the surplus for each Fiscal Year (FY), which would then be used to pro-actively reduce the income tax rate by 50% of the surplus amount, passing the tax savings onto the taxpayer more immediately than the issuance of a tax dividend.

Mesnard has a history of pursuing tax cuts. He was one of the lawmakers responsible for the historic 2021 tax reform that brought a flat income tax rate of 2.5% to individual taxpayers in Arizona. He also authored SB1783 the same year which lowered taxes on small businesses.

As reported by the AZ Capitol Times, Democrat Gov. Katie Hobbs expressed her opposition to SB1318, however should she veto it, the legislature would send SCR1014 to the Secretary of State, who would submit this proposition to the voters at the next election. Comparing the bill to the 1992 ‘TABOR’ or the Taxpayers Bill of Rights instituted by Colorado, Hobbs said, “I’m not interested in tying our hands like that. No. Not like TABOR. No. That’s not tax relief. That is tying the hands of future administrations.”

During hearings in February, Mesnard explained, “This is a proposal to essentially strike a balance. When you have a surplus, let’s split it between giving money to taxpayers and the other half allocating towards whatever you want.”

Democrat Sen. Brian Fernandez described the bill as an effort to “handcuff us so we can’t make decisions during a budget (negotiation).”

Mesnard responded, “So, ‘handcuff’; is an interesting choice of words. We can put parameters on ourselves. The voters put parameters on increasing taxes back in the 90s and also, more recently, when they’re on the ballot.”

Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.

Joint Legislative Budget Committee Addresses Hobbs’ Budget Mismanagement

Joint Legislative Budget Committee Addresses Hobbs’ Budget Mismanagement

By Jonathan Eberle |

The Joint Legislative Budget Committee (JLBC), led by Representative David Livingston (R-28), convened on Thursday to address what it described as a financial mismanagement crisis within Governor Katie Hobbs’ administration. The focus of the meeting was the Department of Child Safety’s (DCS) Congregate Care program, which is reportedly facing imminent financial collapse.

The JLBC directed DCS to use existing funds within its budget to maintain services for vulnerable children without seeking additional taxpayer dollars. According to Chairman Livingston, Governor Hobbs’ approach to budgeting has resulted in repeated financial emergencies.

“Governor Hobbs’s repeated failures to manage the budget responsibly have pushed agencies into crisis after crisis. Her administration’s approach is to overspend, ignore reality, and then demand a last-minute bailout. That’s not leadership—that’s recklessness,” Livingston stated.

Republican legislators accused the Governor’s team of failing to disclose available federal funds that could have been used to stabilize the Congregate Care program. Instead, they said that those funds were redirected to a separate Kinship Support Services initiative that had not previously received state funding.

“That decision by the Governor is stunning,” Livingston said. “Instead of prioritizing the program on the brink of insolvency, she chose to send federal dollars elsewhere. This raises serious questions about her administration’s priorities and decision-making.”

Beyond the immediate concerns with DCS, lawmakers also raised alarms about the Developmental Disabilities (DDD) program, which they claim is on track to run out of funds by April. Speaker of the House Steve Montenegro announced the formation of a House Ad Hoc Committee on Executive Budget Mismanagement to investigate what Republicans see as a pattern of fiscal irresponsibility under Governor Hobbs’ administration.

“We care deeply about the children in DCS’ care. That’s why we acted quickly today,” Livingston stated. “The Legislature will not reward fiscal irresponsibility by throwing more taxpayer dollars at a crisis of the Governor’s making. Moving forward, the Governor must be more transparent and accountable about her agency budgets.”

The coming weeks will likely see further debate as lawmakers seek answers regarding the state’s financial outlook and agency funding priorities.

Jonathan Eberle is a reporter for AZ Free News. You can send him news tips using this link.

Are Republican Proposed Tax Cuts Too Much?

Are Republican Proposed Tax Cuts Too Much?

By the Free Enterprise Club |

Republicans in the Arizona legislature are on the cusp of passing significant tax relief for hardworking families and small business. With historic levels of surplus cash sitting in the state coffers (over $4 billion for FY 2022 alone), returning this money to taxpayers makes sense. In fact, it would have already happened if not for two lone holdouts within the Republican caucus, claiming the $1.9B tax cut is just “too big.”

Are they right? Should the size of the tax package be reduced to avoid a funding cliff in the future?

For an answer to this criticism, it makes sense to examine current revenue projections being provided by the Joint Legislative Budget Committee (JLBC). For years JLBC has been relied upon as an independent source for revenue and budget projections by the state legislature. JLBC has never been accused of partisanship or of “cooking the books” to produce rosy budget scenarios. If anything, they have historically been too conservative in their figures, often because they don’t use dynamic modeling for their growth projections.

With this in mind, JLBC is projecting that by FY2024, baseline revenue for the state will be over $14.5 billion, a figure that has been growing with each month. For perspective, legislators were budgeting just shy of $11.1 billion in ongoing revenue prior to the pandemic—meaning that Arizona is expected to see a 31% increase in state revenue in four years.

Where is all this new revenue coming from? While a portion of this surplus is expected from economic growth, that is not the only source. Much of this new revenue is from a series of tax increases that continued to be ignored by opponents of the budget.

Remember the “monumental” new gaming compact Ducey signed in April—the one allowing for sports and fantasy sports betting? That is projected to rake in $300 million of new revenue annually by FY2024.

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