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Governor Ducey includes big tax cut in his 2021-2022 budget, some say it's too drastic

Posted at 7:01 PM, Jan 15, 2021
and last updated 2021-01-16 07:16:29-05

PHOENIX — When the legislature shut down in the spring, there were fears Arizona’s budget deficit would exceed a billion dollars by July 2021. It’s not going to happen. In fact, the state is expecting a $351 million surplus.

“This is probably one of the budgets I felt most comfortable starting out with,” State Representative Regina Cobb (R) Kingman District 5 said. Cobb is the Chair of the House Appropriations Committee. “We’re still going to have a lot of negotiating going forward but I feel very comfortable where it’s starting at.”

The governor’s budget dedicates $6 billion to education. But that’s deceptive because nearly a third of the money comes from federal COVID-19 relief funds. Superintendent of Public Instruction Kathy Hoffman criticized the lack of a permanent funding source. Hoffman said, “Public schools need sustainable, predictable operational funding to recruit and retain highly qualified educators and staff.” She added permanent funding is needed to support student mental health and bridge the opportunity gap for every student. Hoffman says she will work with lawmakers to try and get that funding added.

While the governor’s education plan relies on federal money, it does include re-investing $389 million schools lost this year when students stopped attending class. The money will fund a grant program to provide targeted support to students who are struggling academically in the pandemic. There would also be funding for eligible students to receive free or reduced lunches, money for summer programs, and supplemental help for small group or one on one instruction.

“We certainly think that there are more resources than existed prior to the pandemic,” Governor Ducey’s Chief of Staff Daniel Scarpinato said.

What will have most people talking about the governor’s budget proposal is his call for a $1.2 billion income tax cut for individual earners and small businesses. It’s spread out over three years; $200 million in 2021, $400 million in 2022, and $600 million in 2023.

“I think every household within the state of Arizona will feel this,” Representative Cobb said, “and they will see what the reduction will be. It’s going to be large.”

Too large for Phoenix Mayor Kate Gallego, who says the tax cut will cost Phoenix $25 million, which the mayor says is dedicated to police and fire.

The governor’s budget also calls for nearly $14 million to outfit the Department of Public Safety with body cameras.

$54 million is also set aside to pay for delayed capital improvements at state prisons.

Governor Ducey is proposing to spend millions for a major expansion of broadband, establishing corridors along I-19 from Tucson to Nogales, I-17 from Anthem to Flagstaff, and I-40 from Flagstaff to the California border.

Democratic leaders in the legislature say they appreciate the governor’s inclusion of money for body cameras and opioid treatment. But they oppose his tax cut proposal, saying now is not the time. They want more money to go to public education as well as additional funding for the state’s unemployment insurance fund.

Republicans also want to see more money go toward unemployment. Although not necessarily in increased payments to people who have lost their job.

“I think we would like to beef up the replenishment part of the unemployment insurance because I think it helps every business,” Chairman Cobb said. Cobb expects there will be a bill passed in the legislature that will increase funding to the unemployment trust fund.