GOP-led Arizona Legislature approves $1.8B income tax cut

Arizona lawmakers pass budget as deadline looms

A major issue with the budget is tax cuts and school funding, which sparked a heated debate. FOX 10's Matt Galka reports.

PHOENIX - The Arizona House on Thursday approved a $1.9 billion income tax cut package that mainly benefits the wealthy as majority Republicans began pushing through a state budget plan opposed by Democrats and packed with a conservative wish list of policy changes.

The House joined the Senate in approving the tax cuts and another bill shielding high-earning taxpayers from the effects of a new 3.5% tax surcharge voters approved in November to boost education funding.

In all, they had approved four of the 11 bills that make up the $12.8 billion budget plan by late afternoon. The 31-29 party-line votes came after majority Republicans, angered that House Democrats failed to show up to work earlier in the week, limited debate on the budget plan.

Move by House Democrats denied quorum for some time

The move by House Democrats, meanwhile, kept the lower chamber short of the number of lawmakers required to conduct business, forcing Republican House leaders to delay budget work until Thursday, when all GOP lawmakers are expected to be at the Capitol.

House Democratic Leader Reginald Bolding said Democrats and the public need more time to review proposed changes Republicans released shortly before the budget debate was scheduled to begin.

"You can’t simultaneously ignore the wishes of half the state and then take us for granted to pass a partisan budget," Bolding said in a statement.

Denying a quorum is a tactic increasingly being weaponized by the minority parties of state legislatures in an era of intense partisanship. Republicans in the Democratic-controlled Oregon Senate have blocked legislation for years by refusing to show up, denying the two-thirds quorum required there. Democrats in the Republican-controlled Texas House blocked an elections bill this year by walking out.

That hasn’t previously been an issue in Arizona, where a quorum requires the presence of only a simple majority of lawmakers. But on Tuesday, several Republicans planned to vote remotely under rules created during the pandemic, allowing Democrats to exploit the absences.

The move left Republicans fuming.

"I would ask us all, it may really be tough, but could we contemplate growing up and shouldering the responsibility together and think of together more than individual and pass a budget?" Bowers said before the House adjourned. "We’re gonna try again on Thursday."

Education supporters show up to voice frustration

At the State House, red shirts were seen in the gallery watching the heated budget debate.

"The legislature had years to come up with a plan, and they didn't," said teacher Angela Philpot.

Democrats vehemently oppose a $1.9 billion-per-year tax cut in the budget negotiated by Ducey and top leaders of the House and Senate, all Republicans.

The plan would lower tax rates for most taxpayers to 2.5%, down from a range of 2.59% to 4.5%. Wealthy taxpayers would, in effect, be spared from a 3.5% tax hike approved by voters last year to pay for schools.

Changes to get Republican votes slightly slow the phase-in of the tax cuts to ensure revenue projections are met.

Some teachers believe the budget plan guts Proposition 208, a voter-approved ballot measure meant to fund schools through a surcharge, or tax hike, on wealthy Arizonans.

"The average beginning teacher salary is $37,000. This tax cut will give them $17, But if you make over $5 million, this tax cut will give them $350,000. This tax cut is specifically to benefit the wealthy in Arizona which is specifically who was supposed to fund 208. So I don’t see how you can fund 208 yet give a permanent tax cut to the wealthy," said Philpot.

"For many of us we see this for what it is – its just a tax cut for the wealthy," said Sen. Rebecca Rios, the minority leader. "The top 1% of Arizona wage earners are going to reap 50% of the tax cut benefits. The bottom 80% of working families will get on 7 % of the benefits. This is welfare for the wealthy."

Supporters, however, say the cut protects small businesses.

Senate Republicans mainly stayed silent during debate, knowing they had the votes to pass the budget. They rejected a series of Democratic amendments on 16-14 party-line votes.

Budget plan had been stalled for weeks

The budget plan stalled for weeks amid concerns among a handful of Republicans that it would cripple city governments, which get a big share of their revenue from the state income tax. Ducey and legislative leaders ameliorated the GOP concerns by agreeing to delay the implementation of the tax cut and give local governments a bigger share of income tax collections.

Democrats also oppose many other budget provisions, including plans to strip Democratic Secretary of State Katie Hobbs of her power to defend election lawsuits and limits on vaccine and masking requirements for universities and local governments.

Lawmakers also passed private school voucher expansion, Critical Race Theory ban

Lawmakers also unveiled and approved a raft of new policy changes that include a massive expansion of the state’s private school voucher program.

Democrats vehemently opposed the proposal, which had stalled in the House for months. That measure would qualify another 600,000 of Arizona’s 1.1 million K-12 students for the program, allowing students who qualify for free or reduced-price lunch to get vouchers.

Republicans have called the measure a lifeline for low-income students, while Democrats argue it would siphon money from already underfunded public schools and go against the will of voters who rejected a larger expansion in 2018.

"I have always been against ... vouchers for education because they really, really hurt district schools," Democratic Sen. Sally Ann Gonzales said. "They take money away from district schools."

The proposal was championed by Republican Sen. Paul Boyer, one of two Republicans who held up the budget for weeks, in part over concerns cities would be hurt by the tax cuts.

The Senate amendments to the budget also ban so-called "critical race theory," ban K-12 schools and universities from requiring COVID-19 vaccines, prevent both from requiring face masks if the coronavirus pandemic surges again and bar any employer or business from requiring vaccine passports.

All were priorities of majority Republicans but had not passed as standalone bills or were new issues. That was the case with facemasks at universities, where Gov. Doug Ducey last week issued an order barring Arizona State University from implementing a new policy that said unvaccinated students must be regularly tested and wear face masks.

Both chambers are controlled by Republicans, and Democrats could not block Senate action.

The Associated Press (AP) contributed to this report.

Arizona budget battle: House to reconvene on June 24

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