Invest in Arizona wants you to believe that they ran a grassroots campaign. But that notion is absurd. And you don’t need to look very far to find out.
Recently, the political committee filed its campaign finance report. And lo and behold, what does it show? That the National Education Association (NEA) and Stand for Children, two out-of-state special interest groups, purchased the referendum against historic tax cuts that Republicans delivered earlier this year.
Just look at the numbers. In Quarter 3, Invest in Arizona received just over $16,000 from individual donors. Now, compare that to the nearly $2.4 million it received from the NEA and the more than $2.3 million it received in cash, goods, and services from Stand for Children.
That’s more than $4.5 million—basically their entire budget—with the overwhelming majority spent on gathering signatures.
So much for “grassroots,” eh?
Of course, Stand for Children is trying to claim that its money came from its Phoenix office. But these groups can’t be trusted…
At the end of June, the state legislature passed a $1.8 billion tax cut, the single largest tax cut in Arizona history. And Governor Ducey didn’t waste any time before signing the budget, which shouldn’t come as a big surprise. As Senator Mesnard explained while voting in favor of the budget:
At the end of the day, when this passes, every single taxpayer in Arizona will get a cut. Every single one.
It was certainly a day worth celebrating. But not everyone joined the party.
Apparently, Invest in Arizona, a political committee sponsored by Arizona Education Association and Stand for Children, isn’t happy with the idea of every Arizona taxpayer receiving a cut. In an effort to block the historic tax cuts, the group filed three referendums that include components from three bills passed this legislative session:
After raking in cash from taxpayers amounting to a staggering $4 billion surplus, Governor Ducey and Republican legislators have delivered big with a historic tax cut this year. At full implementation, the cuts enshrined in SB1827, SB1828, and SB1783 will total $1.8 billion, and this couldn’t have come at a better time.
While Arizona families and small businesses were struggling during covid shutdowns and trying to make ends meet, the tax collector was still busy collecting. And as all Arizonans were already being overtaxed, on the narrowest margin, Proposition 208 was passed threatening a 77% tax hike on many Arizonans and small businesses. The tax cuts in this year’s budget completely neutralize that threat.
The tax cut package will result in a tax cut for all Arizona taxpayers. At full implementation, the current four rates of 2.59%, 3.34%, 4.17%, and 4.5% (with a fifth Prop 208 rate of 8%) will be collapsed into one single rate of 2.5%.
But since Proposition 208 is voter protected, income above $250,000 ($500,000 for married filing jointly) would still be hit with the 3.5% “surcharge,” resulting in a top rate of 6%, leaving Arizona still uncompetitive. The tax cut package takes care of this, too, by capping the top rate any taxpayer will shoulder at 4.5%, or the current top marginal rate.
Finally, holding the Red4Ed Prop 208 proponents to the promise that their tax hike “legally” could not affect small businesses, SB1783 will create an optional alternative small business tax which will have a rate beginning at 3.5% this year, ratcheting down to match the new single individual income rate of 2.5%. This means that small businesses can bifurcate their business income from their personal income, filing it under the alternative small business tax and paying a rate of 2.5% instead of the capped 4.5% rate. To reiterate, this is small business income that by Prop 208 advocates own words was never supposed to be subject to the surcharge. SB1783 codifies that intent…
As one of the longest legislative sessions in Arizona history comes to a close, we come to the customary conclusion that no one is totally happy with the results. That is to be expected. No individual or group of individuals should expect to get all they want.
However, this session fell considerably short of conservative goals in several areas. Most prominent among these were election integrity and balance of power. Balloting irregularities and dictatorial executives are anathema to good governance.
Still, we did not do so badly considering the current composition of our legislature. Hopefully, that composition may be improved during the next election cycle.
Two areas in which we did better than many had expected were the budget and tax reform. But these are precisely the two areas in which we are getting tremendous pushback from organizations that support unionism, socialism, and radicalism (please excuse the redundancy).
One major radical group is Save Our Schools Arizona. They are already calling for a citizen’s initiative to undermine the hard-earned progress we made in the areas of budgeting and taxation.
In fact, Save Our Schools AZ, in their June 28 Legislative Report made the following outrageous, irresponsible, and patently false statements:
“The Bad: House lawmakers passed a K-12 budget bill packed with myriad attacks on schools and teachers.” And…
“The Brutally Awful: Both the House and Senate passed identical bills pushing Arizona’s largest tax cut in history into law”.
Let us evaluate the second claim first. It should be pointed out that whenever these radical organizations bitch and moan about “tax cuts” they are bitching and moaning about “tax cuts for the rich”. They don’t bitch and moan about the portion of the tax relief that helps low- and middle-class taxpayers. With that in mind let us look at the overall taxation of the rich, to determine whether this is a giveaway to the wealthiest among us, or simply a much-needed tax relief to prevent job providers from fleeing Arizona.
Marginal income tax rate paid by the wealthiest Arizonans:
Before Prop 208
After Prop 208
8.0% (4.5% + 3.5%)
After Tax Relief
6.0% (2.5% + 3.5%)
Can someone, with a straight face, explain how going from a 4.5% tax rate to a 6.0% tax rate constitute a “tax cut”? Tax relief would be a much better name for it.
It should also be noted that there is nothing in the omnibus tax relief tax relief bill (SB1828), or in any of the budget reconciliation bills to remotely suggest that the Education industry will not get their 3.5%. This brings us to addressing the other claim made by the Save Our Schools cabal.
The only way that a thinking person can agree with the SOS’s claim that the legislature gave us a “K-12 budget bill packed with myriad attacks on schools and teachers” is to conclude that a whopping 24% increase in funding constitutes “myriad attacks”. Let us look at some numbers taken from the JLBC’s and the Governor’s websites:
$6.7 BILLION ($5.0 B K-12 + $1.7 B HIGHER ED)
$8.2 BILLION ($6.2 b K-12 + $2.0 B HIGHER ED)
While the overall budget went up by a relatively modest 11%, the education budget increased by 22%, and the K-12 portion increased by 24%.
Under this new budget, the portion allocated to education is 64%, leaving only 36% for healthcare, law enforcement, border security, street repairs, infrastructure, etc.
The SOS and other groups that claim to support students should be praising our legislature and thanking them for their generosity, instead of plotting to undermine their work via mob rule.
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.