PHOENIX (AP) — Republican lawmakers on Tuesday defended tax cuts in the budget deal they made with Arizona Gov. Doug Ducey despite demands from teachers for an end to further revenue cuts until schools are fully funded.
The $11.9 billion plan laid out in budget legislation includes $386 million in cuts to fees and taxes, including more than $325 million in income tax cuts. Republicans said it is disingenuous to label them cuts.
“Not true, not true,” Republican Rep. Ben Toma said when asked about the tax cuts. “It’s an offset, it’s not a tax cut. It’s an offset of a tax increase.”
Toma led House negotiations on the tax package and pointed to an expected $217 million state tax increase triggered by the 2017 federal tax cut law. The Legislature also is using $85 million in new tax revenue from taxing out-of-state internet sales and lower interest payments on debt to pay for the tax overhaul package.
“And we’re restoring a lot of funding to education,” Toma said. “Lots of money, lots of money going to education. Over $500 million actually total this year is going to education in this budget.”
A group of retired teachers at the Capitol on Tuesday said the windfall should be going to schools that have been underfunded for a decade.
“We know that they want to cut taxes rather than use that windfall amount of money that came from the tax reform,” said Ann Myers, a retired elementary school teacher from Mesa who was wearing red to signal her support for the “Red for Ed” movement about school funding and teachers. “There’s extra money and we think that should be going toward education, not cutting taxes.”
“Very angry,” retired Mesa teacher Marcie Hutchinson said when asked how she felt about the tax cuts. “Angry, frustrated that we cannot seem to get them to understand that the investment in kids is an investment in the democracy, it’s investment in the economy and it’s investment that we make in each other.”
Tens of thousands of Arizona teachers went on strike last April, marching to the Capitol and closing schools statewide. About a million schoolchildren were out of class for six days.
The teachers demanded a 20% pay raise, raises for support staff, yearly teacher raises, restoring funding to 2008 levels and an end to tax cuts until Arizona per-pupil funding reaches the national average. Teachers won a 20% raise over three years, but per-public funding remains near the lowest of all 50 states.
The budget deal majority Republicans in the Legislature reached with Ducey, also a Republican, delivers a 5% raise for the coming school year and accelerated restoration of nearly $400 million in school funding cuts made after the Great Recession. The governor originally wanted to keep the extra income tax cash, while he was silent on what to do with new revenue from taxing some internet sales that is now allowed after a U.S. Supreme Court decision.
In addition to an across-the-board income tax cut, the budget package adds new charitable deductions, cuts sales taxes on fertilizer farmers buy, and repeals a $32 fee for registering vehicles over five years.
Republicans who hold just a 31-29 majority in the House mainly appear to support the plan, and appropriations committee hearings are set for today. That is not the case in the Senate, where the GOP has a 17-13 majority and at least five GOP members oppose the current budget deal for various reasons. Minority Democrats who weren’t involved in negotiations mainly don’t support the plan. That means hopes to pass a budget this week — before many schools shutter for the summer and free up teachers to return to the Capitol en masse — are in doubt.
Republican Sen. Michelle Ugenti-Rita said she won’t vote for the budget if the current five-year repeal of the vehicle license fee remains.
“I have a variety of concerns, but my top concern is this deceptive tax that was passed last year and the need to repeal it,” she said. “That raises an additional half a billion dollars before that tax eventually gets repealed. That’s unacceptable.”
Sens. J.D. Mesnard and David Farnsworth want the income tax overhaul changed so the people paying additional taxes are held harmless. Right now, the plan spreads cuts across the board instead of directing them to people affected by the higher taxes.
Sen. Paul Boyer said he won’t back a budget unless his plan increasing the statute of limitations for child sex assault victims to sue gets a vote. There’s no sign that is happening.
And Sen. Heather Carter is upset with the whole process because the budget didn’t fund key items that had broad support in the Legislature, including a $50 million proposal to train more primary care doctors.
“It’s almost like we have all these committee hearings, talk about the budget priorities, get tremendous support, get our taxpayers to come down to the Capitol and express what their priorities are, then the budget spreadsheets come out and you’re like, ‘What happened to all that?’” she said. “It’s extremely frustrating,”