Special session looms to replace huge Arizona tax cuts

Arizona certifies referendum seeking to repeal big tax cuts

The Arizona secretary of state's office on Nov. 19 certified that opponents of massive tax cuts enacted by the Legislature and signed by Republican Gov. Doug Ducey collected enough signatures to block them from taking effect until voters can weigh in next November.

PHOENIX (AP) - Talks among Arizona Republican lawmakers who want to sidestep a voter referendum that has blocked the nearly $2 billion income tax cut they passed last year are heating up, and a special session to repeal and replace the tax cuts could be called at any time.

Lawmakers have been talking for months about repealing last year’s flat tax plan to get around opponents who collected enough signatures last summer to put it on hold until voters can affirm or reject them in November.

GOP House and Senate leaders must line up the support of all their members before a special session is actually called by the governor. House Majority Leader Ben Toma said Tuesday that those talks are ongoing. All 31 House Republicans and 16 GOP senators must agree on the plan in order for it to pass with no Democratic support.

Minority Democrats are powerless to stop the effort, and they were seething when it became clear Tuesday that a special session was closer to reality.

"A blatant undermining of Arizona voters," Senate Minority Leader Rebecca Rios said on Twitter. "This move is to prohibit AZ voters from voting against (Ducey’s) 2 billion dollar tax cut for Arizona’s wealthiest. He does not want voters to decide. I wonder why."

Republican Senate President Karen Fann said she’s not sure when or even if a special session to repeal last year’s tax cuts will be called. C.J. Karamargin, spokesman for Republican Gov. Doug Ducey, said he’s open to calling one.

"We are always open to any and all ideas that reduce taxes and advance the governor’s agenda," Karamargin said.

GOP lawmakers first floated the repeal and replace plan in December. One roadblock to the plan was removed last week when a judge permanently blocked a tax increase on the wealthy passed by the state’s voters in 2020 as Proposition 208.

Toma was one of the key architects of the flat tax proposal and bills that also sidestepped Proposition 208 last year.

Tax rates for most taxpayers would drop to a flat 2.5%, and revenue would be cut by $1.9 billion once the tax cuts are fully in place. That’s down from a range of 2.59% to 4.5%.

The cut were to start at $1.3 billion this year go to $1.9 billion once revenue targets were hit.

Toma said that those revenue targets have been reached much earlier than many expected, and the Legislature can accelerate the tax cuts and avoid the phase-in. He said he’s ready for a special session to act.

"I can’t speak for the Senate or the governor -- at this point, I don’t know that they’re ready to go," Toma said. "But whenever they are ready to go, I’m more than supportive of us going as well."

The tax cuts mainly benefit the wealthy. The average Arizonan earning between $75,000 and $100,000 will save $231 a year in state income taxes, while the average taxpayer earning between $500,000 and $1 million a year will save more than $12,000, according to the Legislature’s budget analysts.

The special session would also work on a fix to a bill hastily passed two weeks ago that inadvertently eliminated elections for precinct committeemen. Democrats in the Senate refused to provide enough votes on Monday to pass the election restoration with an emergency clause it needed to take effect immediately.

So Toma said passing it in a special session will let that election fix go into effect before the August primary, even without Democratic support.