If you’re sick of politics and just want the SparkNotes version, here it is:
Yesterday afternoon, the Legislature passed a $12.8 billion budget that includes the largest income tax cut in state history. While the spending plan is on its way up to the governor’s desk, the Legislature still has work to do before adjourning the 2021 session sine die. Both chambers will reconvene on Monday to reconcile differences in several bills and wrap up some procedural work.
Now, if you want the deets on what has made this among the most contentious (and one of the longest) legislative sessions, keep on scrolling.
And then there were two…
While the budget process has never been a particularly pleasant or easy process, negotiations this year were especially hostile. For starters, Republican leadership struggled to get two GOP holdouts on board with the spending plan, resulting in weeks of gridlock. Rep. David Cook and Sen. Paul Boyer had withheld their votes over the size of the income tax cut and the resulting loss of revenue to cities and towns, which get a share of state income tax dollars and would therefore lose money from any cut. With mounting pressure to get the budget bills passed to avert at least a partial government shutdown July 1 when the old budget expires, the Governor’s Office and legislative leadership unveiled a compromise spending plan earlier this week.
The deal includes a phase-in of a 2.5% flat income tax in three different stages if specified state revenue triggers are met—a target proponents say we’ll ideally hit by 2025. Under the compromise, cities will see their share of state income tax revenue go from 15% to 18% (leadership had initially proposed 17%, which was rejected by the two GOP holdouts). According to the Legislature’s budget analysts, 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. In effect, the flat tax shields the wealthiest Arizonans from the full impact of Proposition 208—the voter-approved 3.5% surcharge on earnings over $500,000 a year to help fund schools. The tax plan also creates a new tax category for small businesses, a move that removes it from the purview of the educating funding initiative. The brainchild of Sen. J.D. Mesnard, it imposes an income tax of 3.5% on these tax filers and drops it over time, ending at 2.5% in 2025.
As expected, the budget passed on a party-line vote, with Democrats vehemently opposed to the tax cuts, arguing that the surplus could give the state a rare opportunity to finally fully fund schools and social programs that were never completely restored after the Great Recession.
Kitchen-sink budget bill
But it wasn’t just the issue of funding that fueled the hostility we saw this week. The 11-bill budget package is packed with dozens of contentious policy issues. While not necessarily uncommon for policy-related provisions to be tacked on to budget bills, the sheer volume of policy changes that have been creatively woven into this package is unprecedented, particularly given that many of the issues were the subject of heated debates and failed to pass earlier in the session. The following were among the more contentious policy proposals included in the budget:
- Creation of a $12 million election integrity fund to pay for election security updates, including requirements that ballots contain anti-fraud features such as watermarks, holographic foil and specialized inks
- Establishment of a special legislative committee tasked with reviewing findings from the ongoing election review (conducted by the Florida-based firm Cyber Ninjas) and making recommendations to the Senate president based on those findings, including calling for a special session to take up legislation
- Allocation of $500,000 in state funds to study political bias on social media, a proposal that follows major social media companies banning the former president after the events on Jan. 6
- A ban on teaching so-called critical race theory in K-12 schools – a bill the Senate rejected just three weeks ago – that would make teachers liable for fines of up to $5,000
- A ban on cities requiring COVID-19 vaccines or ordering mask mandates if the pandemic again surges; similar restrictions for schools and state colleges and universities
- A limitation on the governor’s ability to issue emergency declarations (which Gov. Doug Ducey agreed to in order to get the last vote necessary for his tax cut plan), including a cap on future declarations to no more than 120 days unless respective 30-day extensions are approved by the Legislature
- Partial repeal of existing statutes that now allow the governor to order mandatory COVID-19 vaccinations of those with certain illnesses; the change would allow people to opt out based on “personal beliefs”
Seat backs, tray tables in full upright position
Just as we thought the final descent into adjournment couldn’t get any bumpier, the Senate said, “hold my beer.” On Thursday, senators voted to override a weeks-old veto from Gov. Doug Ducey, making it the first veto override in 40 years and only the third in state history. While the actual content of the bill was of minor significance (it consisted of technical corrections to current statute), the act in and of itself sent a blaring message up to the Ninth Floor. Just hours earlier, the Senate passed new versions of all 22 bills vetoed by the governor earlier this month in an effort to expedite budget negotiations, further emphasizing that the override was strictly intended to establish the Legislature’s standing as a co-equal branch of government. The House did not have the two-thirds vote needed to enact the legislation without Ducey’s signature, sparing him from becoming the first governor since Gov. Bruce Babbitt in 1981 to have a veto overridden.
But the fun isn’t over just yet, as changes to several bills still need to be reconciled before adjournment, including potential expansion of the state’s private school voucher program as well as a highly controversial proposal from Republican Rep. Judy Burges that would require the state Board of Education to adopt a civics curriculum focused on political ideologies like communism and citizens’ responsibility for defending "the blessings of liberty."
Both chambers will reconvene on Monday for the 167th day of session—just seven days shy of making this the longest legislative session in state history.