Arizona Legislators Debate Tax Conformity and Education Funding Issues

As Arizona legislators gear up for their upcoming session, key issues regarding tax policy and education funding are front and center. While discussions around school vouchers have not yet been officially scheduled, both major political parties are keen to influence the agenda regarding this contentious topic.

Tax Policy Conformity Challenges

The legislative session is poised to address the critical matter of aligning Arizona's tax regulations with the recent federal tax cuts. The cuts enacted earlier this year under President Trump prompted Democratic Governor Katie Hobbs to suggest similar tax relief aimed at Arizona's middle-class, which reflects some aspects of the federal changes.

Nonetheless, Governor Hobbs is selective in her support, stopping short of advocating for a complete alignment with all federal tax cuts. This is a point of contention for Republicans, such as State Senator John Kavanagh (R-Fountain Hills), who argues for full accommodation, stating, “The governor wants to do just individual tax breaks, which is about $220 million, and the Republicans would like to do the full $440 million, which includes businesses.”

Republican lawmakers express concerns that a lack of uniformity between state and federal tax cuts may lead to confusion among taxpayers, making it a top priority for their legislative discussions. In response, Governor Hobbs has proposed reducing funding for Empowerment Scholarship Accounts to manage any revenue shortfalls, a proposition likely to face opposition from Republican members.

Proposition 123 Extension Considerations

In addition to tax issues, the upcoming legislative session necessitates a decision on the extension of Proposition 123, a key funding source for Arizona's public schools based on state land trust revenues. A previous failure to present this proposition for voter approval resulted in legislative backfilling that lawmakers wish to avoid this year.

Senator Kavanagh stressed the importance of timely action, noting, “We didn’t send it to the voters for renewal and we had to backfill it. We don’t want to do that again this year, but a lot of members want to have some protections for ESAs, along with that Prop. 123, which goes to district schools.”

The discourse on Proposition 123 is complicated by differing viewpoints on the inclusion of private school vouchers. While Democrats prefer to keep discussions about school vouchers separate from those concerning Proposition 123, Republicans are advocating for the extension to be coupled with more robust protections for Empowerment Scholarship Accounts.