Legislation protecting small businesses from new tax among 23 bills signed by Ducey

Gov. Ducey signs bill banning critical race theory training

Arizona Gov. Doug Ducey has signed a bill into law prohibiting the teaching of critical race theory in schools and in state and local governments.

PHOENIX (AP) - Arizona Gov. Doug Ducey signed nearly two dozen bills Friday and vetoed one as he works to clear his desk of the measures lawmakers sent him toward the end of the legislative session that wrapped up last week.

He signed legislation that would create a new small business income tax category to allow small business owners to avoid paying any of the 3.5% income tax surcharge voters approved in November.

The Republican governor acted on 24 bills from the legislative session that ended last week and faces a Monday deadline to sign or veto 11 remaining measures. He issued one veto, of a bill expanding the State Emergency Council.

Ducey also signed legislation that bans city or county governments from requiring employees to take orientation, training or therapy that suggest an employee is inherently racist, sexist or oppressive, whether consciously or unconsciously. The state budget he signed last week contains similar language banning schools from teaching critical race theory.

Critical race theory is an academic framework that examines history through the lens of racism. It centers on the idea that racism is systemic in the nation’s institutions and that they function to maintain the dominance of white people in society.

The one bill he vetoed would have required the governor to convene an emergency council at least once every 14 days after proclaiming a statewide state of emergency, such as the one still in effect for the COVID-19 pandemic. The measure "would add unneeded bureaucracy to the management of emergencies, especially wildfires," Ducey wrote in a letter explaining his veto.

The Republican governor faces a Monday deadline to sign or veto the 11 bills remaining. In addition to the critical race theory and taxation legislation, Ducey enacted:

— New penalties for drivers caught street racing, which law-enforcement officials say is a growing problem. Drivers will face stiffer misdemeanor charges and an additional $1,000 fine that will help pay for anti-racing efforts. Officers will be able to immediately impound vehicles used in street races for seven days. The latter provision has drawn opposition from critics who say the government shouldn’t be able to take someone’s vehicle before they’ve been convicted in court.

— Power for people to ask a judge to seal court records of old arrests and convictions. Supporters say the new procedures will make it easier for people to get housing and a job without past legal troubles standing in their way. Old records will be eligible for sealing anywhere from two to 10 years after all fines are paid and other sentencing conditions are met, depending on the severity of the crime. Prosecutors and victims will get a chance to object.

— Limits on the factors that hospitals can consider when rationing care during a future pandemic or other emergency that overwhelms health care providers. Policies for "crisis standards of care," which specify how to allocate supplies or staff when there aren’t enough to go around, will be limited to considering a patient’s short-term survival prospects. Doctors won’t be able to consider the person’s quality of life or life expectancy — a priority for advocates of people with disabilities.

Prop. 208 workaround bill faces criticism

The governor's signature on the Proposition 208 workaround bill by Chandler GOP Sen. J.D. Mesnard means small businesses are no longer subject to the 3.5% surcharge on income above $250,000 for individuals or $500,000 for couples in the initiative.

"This tax cut will keep Arizona competitive for small businesses already operating here and new businesses flocking here every day," Ducey said in a statement. "After a year as tough as the last, we should not be raising taxes on our small businesses — we should be cutting their taxes."

Ducey did not mention that the new tax category cuts a large part of the money voters wanted schools to get by imposing Proposition 208, called the Invest in Education Act. It was an outgrowth of a 2018 statewide teachers strike that won 20% pay raises but still left teachers among the lowest paid in the nation.

Backers of the measure say the governor and the Republican-controlled Legislature are thumbing their nose at voters who wanted the wealthy to pay more to fund education.

"What people need to understand is that’s $150 million that was meant for teacher salaries, that’s what the governor just erased," said Joe Thomas, president of the state teachers union, the Arizona Education Association.

"It is entirely disappointing. I don’t know another way to say it," Thomas said. "Teachers worked hard, educators worked hard to get Invest in Ed on the ballot, during a pandemic, voters came out to sign those petitions, during a pandemic, to get it on the ballot, and we passed it."

Half of the new tax on the wealthy will be used for raises for credentialed teachers, 25% to boosting wages for cafeteria workers, bus drivers and other support staff, and the rest for teacher training, vocational education and other initiatives.

Small business income is now taxed at the individual level and is subject to the surcharge. Mesnard said proponents of the tax said it would not affect small businesses and that some voters who backed the measure did not like how it might affect businesses but wanted the new revenue to fund education.

He also said in an interview that he’s not worried about the voter referral.

"I’m not concerned about it because I think it’ll be a landslide election," Mesnard said earlier this week. "And then it will be voter protected, which I don’t typically think is good public policy as a matter of rule, but if it’s voter protecting helping small businesses I could probably make an exception."

The Arizona Constitution allows voters to block any law passed by the Legislature from taking effect by collecting signatures from 5% of the people who voted in the last general election, which this year would be nearly 120,000. Voters then have the final say in the next general election and can either approve or repeal the bill.

A massive tax cut included in the already-signed budget package reduces income taxes by about $1.9 billion and shields the wealthy from the new surcharge by keeping their top rate at the current 4.5%. The general fund would use hundreds of millions of dollars a year to directly fund the new education spending in Proposition 208, siphoning off money that could be spent on other priorities.

Backers of Proposition 208 are collecting signatures to refer the tax cuts to the ballot and plan to do the same with Mesnard’s bill now that it had been signed into law.

Thomas said he believes Ducey and the Republican-controlled Legislature will face a backlash from the tax cuts and other steps they’ve taken this year in response to Democratic wins in the November election. The Legislature stripped power from the elected Democratic secretary of state and education chief and is auditing the results of the election.

"It’s unbelievable how they’re trying to overturn the will of the voters in every instance they can," Thomas said. "And I believe there’s going to be a reckoning."

Bill approved to restrict sex education

The governor also signed a measure that tightens the state’s sex education law and requires parents to give permission for instruction that includes sexual issues in non-sex ed classes.

Ducey vetoed an earlier version of the sex education bill, citing concerns that it was overly broad and vague and that its ban on classes before fifth grade could put children at risk by limiting sexual abuse prevention education.

The new version specifically allows such "good-touch, bad-touch" teaching and stripped out a double opt-in for discussion touching on sexual orientation or gender issues. But it still requires notice and parental pre-approval for any discussion of sex-related material outside of sex ed classes.

The broad requirement would block discussions of historic events that have a sexual component, like the 1969 Stonewall riots in New York, considered the genesis of the modern gay rights movement, or even the U.S. Supreme Court ruling legalizing gay marriage, without parental pre-approval.

"Parents should have the right to know what their children are learning in school," Ducey said in a statement. "This is a no-brainer piece of legislation that protects our children from learning materials that aren’t suited for them. Every family has their own priorities for their children’s education, and parents should get to weigh in."

Republican backers of the bill say it is needed to boost parental rights, while detractors say those rights are already in Arizona law and say the bill is an assault on LGBTQ students.