Legislature About to Make the 2006 Mistake Again?

From David Lujan of the Arizona Center for Economic Progress.

While Arizona’s public schools are once again being asked to wait for the funding just to get back to 2008 levels, some lawmakers are using the need to conform to the federal tax changes as an excuse to push forward $386 million dollars in permanent tax cuts as part of state budget negotiations.

Doing so could put Arizona in a real fiscal bind down the road.  Many of the provisions in the 2017 federal tax changes which will lead to increased state revenues are temporary and will expire after 2025. 2025 is also the last year Arizona’s public schools will receive the $251 million in annual funding provided by the passage of Proposition 123. The combination of both sets up the possibility for Arizona facing a significant fiscal cliff in 2025.  

The last time Arizona passed a $300 million individual income tax cut was 2006.  That year, similar to this year, Arizona enjoyed a $1 billion budget surplus. The following year, in 2007, the national recession officially began. By 2009, Arizona faced a $1 billion budget deficit and the largest cuts in state funding to public education in the nation.  

We hope lawmakers will learn from the past.  Passing a tax cut now would not only be fiscally irresponsible, it will make it almost impossible for Arizona to ever get out of the bottom in public education funding. 

Please read our latest fact sheet on this issue and let your legislators know that you want to see a state budget with no new tax cuts.

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