A sharp drop in corporate tax payments is believed to be the first sign that a phased-in cut in corporate taxes is starting to weigh on the Arizona treasury.
A report from the Legislature's budget analysts released Wednesday shows December's $68 million in corporate tax collections was 46 percent lower than the previous year.
The lower revenues have long been projected but were thought to have been delayed as corporations filed for extensions.
Former Gov. Jan Brewer championed a nearly 30 percent cut in corporate taxes and other tax cuts in 2011 that began phasing in in 2014. The state will forego an estimated $538 million annually by 2018.
Total tax collections were up more than 3 percent between July 1 and Dec. 31 from the prior year.