AFT's Super Seven Tax Bills

NEWS & ANALYSIS

The Super 7—AFT’s Top 7 Most Important Tax Bills

By Chad Kirkpatrick and Tom Jenney
March 9, 2006

There are lots of smaller tax bills that are worth supporting, but the Arizona Federation of Taxpayers considers these to be the most important. Here they are, in numerical order, beginning with the Arizona House of Representatives.

IMPORTANT ACTION ITEM: the Taxpayer Appreciation and Investment Act went to a floor vote TODAY (see second item).

HCR 2022/SCR 1017—The Taxpayer Bill of Rights/Budget Stabilization Act. This voter referendum, introduced by Rep. Russell Pearce (R-Mesa) and Sen. Dean Martin (R-Phoenix), would limit the growth of government revenue and spending to the rate of population growth plus inflation. The reform is crucial for two reasons: first, because our politicians will not learn how to prioritize spending and cut costs until they face a firm spending cap; second, we cannot allow government to grow faster than the private economy. This legislation is modeled on Colorado’s highly effective Taxpayer Bill of Rights (TABOR), with several modifications, including: 1) the Arizona versions eliminate the “ratchet effect” (which caused the Colorado spending limit to fall sharply during the last recession), 2) our versions apply only to state spending (rather than city and county spending), and 3) our versions provide for a generous “rainy day fund,” which would help Arizona government save money for use in economic downturns and strictly-defined emergency situations.

STATUS—The Senate version has not yet had a committee vote. In the House Appropriations Committee, HCR 2022 was withdrawn, having received only seven (out of eight necessary) AYE votes, from Reps. Biggs, Boone, Farnsworth, Gorman, Groe, Pearce and (Jerry) Weiers. It received no votes from Reps. Aguirre, Cajero-Bedford, Knaperek, Lujan, and Tom. Reps. Brown and Burges were absent, and Mason passed. In the House Rules committee, HCR 2022 was voted constitutional and in proper form by Reps. Pierce, Robson, Stump, and Tully; it got no votes from Reps. Lopes, Lopez, and Rios; Reps. (Jim) Weiers and Quelland were absent.

ACTION—Taxpayers need to keep the pressure on their legislators, and make sure that either HCR 2022 or SCR 1017 gets a floor vote in both chambers, so that every legislator has to cast a vote on this reform. To get to the ballot, this bill does not need the governor’s approval. To find your legislators, visit the state legislature’s website, and search under the members section for the House or Senate: http://www.azleg.state.az.us/. For help, contact AFT executive director Tom Jenney, at vc@aztaxpayers.org.

HB 2489—The Taxpayer Appreciation and Investment Act, introduced by Rep. Laura Knaperek (R-Tempe). The TAIA would reduce the state’s personal and corporate income tax burdens by roughly 10 percent for all brackets, ultimately saving taxpayers over $400 million per year. This is a good bill, with strong chances of passing, but it’s really the bare minimum for tax reform, as AFT sees things. It has already been watered down by a two-year phase-in, and there is no excuse for our legislators—or our spend-a-holic governor—to water it down further.

STATUS--The TAIA passed the House Rules Committee unanimously, then passed the House Ways and Means Committee with aye votes from Reps. Gorman, Huffman, Nichols, Reagan, Stump, and Yarbrough. Reps. Brown and Landrum-Taylor voted no, and Rep. Kirkpatrick was absent. If it passes the House today, the TAIA will go to the Senate, and could end up in the “Granddaddy” omnibus tax bill (see SB 1545 at bottom).

ACTION—The TAIA went to a floor vote in the House late today.

SCR 1025—Two-Percent Limit on Property Valuation Increases, introduced by Sen. Ron Gould (R-Lake Havasu City). This voter referendum would reduce dramatically the allowable increases in property valuations for the purpose of property tax assessment, from 10 percent to two percent. The two-percent limit would also be extended to property valuations related to interest payments on bonds, special taxing districts, and budget override votes. If this bill were to pass this year and head to the November ballot, it would take some of the wind out of the sails of a Prop-13-style ballot initiative, but—as Marc Goldstone (www.ArizonaTaxRevolt.org) explains—the Tax Revolt initiative has the added features of 1) equalizing assessment ratios for all categories of property and 2) setting a firm one-percent cap on all property tax rates. In any case, keep circulating those petitions.

STATUS—This bill passed the Senate yesterday (March 8), with aye votes from Sens. Bee, Bennett, Blendu, Burns, Flake, Gould, Gray, Harper, Huppenthal, Jarrett, Johnson, Leff, Martin, Tibshraeny, Verschoor, and Waring. No votes came from Sens. Aboud, Aguirre, Carolyn Allen, Arzberger, Brotherton, Cannell, Cheuvront, Garcia, Hale, Hellon, Miranda, Mitchell, Rios, and Soltero.

ACTION—SCR 1025 goes to the House next. Taxpayers need to put pressure on their representatives to support this bill. To get to the ballot, this bill does not need the governor’s approval. To find your representatives, visit the state legislature’s website, and search under the members section for the House: http://www.azleg.gov. Or contact AFT executive director Tom Jenney, at vc@aztaxpayers.org.

SCR 1027/HCR 2021—Truth-in-Budgeting and Accounting. In theory, Arizona is supposed to have a balanced budget every year. In reality, the big spenders (with help from governors) have frequently spent more money than revenues would allow by engaging in various Enron-style accounting gimmicks, including raiding special state funds and not paying K-12 education expenses on time through a device known as a "rollover." By some calculations, the budget deficit going into this fiscal year is as high as $550 million. That means that a large chunk of this year’s surplus will be used to bail out the big spenders, rather than give it back to the Taxpayers. This voter referendum, introduced by Rep. Russell Pearce (R-Mesa) and Sen. Dean Martin (R-Phoenix) would go a long way toward eliminating deficit spending gimmicks.

STATUS—The House version passed the House Appropriations Committee with aye votes from Reps. Biggs, Burges, Farnsworth, Groe, Knaperek, Pearce, and (Jerry) Weiers. Reps. Aguirre, Boone, Brown, Gorman, Lujan, and Tom were absent. Rep. Cajero-Bedford cast the lone vote against this common-sense bill designed to stop Enron-style gimmicks. The Senate version passed the Senate Appropriations Committee with aye votes by Sens. Burns, Harper, Johnson, Martin, and Waring; no votes came from Sens. Aboud, Cannell, and Garcia; not voting were Sens. Arzberger, Gould, and Huppenthal.

ACTION—Taxpayers need to keep up pressure on their legislators, and make sure that HCR 2021 and SCR 1027 get floor votes, so that every legislator has to cast a vote on this reform. To get to the ballot, this bill does not need the governor’s approval. To find your legislators, visit the state legislature’s website, and search under the members section for the House or Senate: http://www.azleg.state.az.us/. For help, contact AFT executive director Tom Jenney, at vc@aztaxpayers.org.

SB 1289—Elimination of the County Education Property Tax, introduced by Sen. Dean Martin (R-Phoenix), with a House version introduced by Rep. Steve Huffman (R-Tucson). Eliminating this $200 million tax (which is really a state tax, not a county tax) would save homeowners roughly $100 a year on a $250,000 house. The bill also includes provisions strengthening the truth-in-taxation rules for increasing property tax levies.

STATUS—SB 1289 passed the Senate Monday (March 6), with aye votes from Sens. Bee, Bennett, Blendu, Burns, Cheuvront, Gould, Gray, Harper, Hellon, Huppenthal, Jarrett, Johnson, Leff, Martin, Tibshraeny, Verschoor, and Waring. No votes came from Sens. Aboud, Aguirre, Carolyn Allen, Arzberger, Brotherton, Cannell, Flake, Garcia, Hale, Miranda, Mitchell, and Rios. Sen. Soltero did not vote.

ACTION—SB 1289 goes to the House next, and could end up in the “Granddaddy” omnibus tax bill (see SB 1545 at bottom). AFT will keep you posted on developments, but to send an email in support to your representatives, visit the state legislature’s website, and search under the members section for the House: http://www.azleg.gov. Or contact AFT executive director Tom Jenney, at vc@aztaxpayers.org.

SB 1465—25-in-5 Income-Tax Reduction, introduced by Sen. Dean Martin (R-Phoenix). This bill started out as a 20-year phase-out of the state’s personal and corporate income taxes. According to AFT projections, a 20-year phase-out of the income taxes would have the effect of reducing revenues to point that the General Fund would grow at the rate of population growth plus inflation—the goal of the Taxpayer Bill of Rights. Unfortunately, the version of 1465 passed Monday by the Senate is not as ambitious. Still, it would reduce the rates on the state’s personal and corporate income taxes by 25 percent over five years, so that in 2010, the top personal rate would be 3.79 percent and the top corporate rate would be 5.25 percent.

STATUS—SB 1465 passed the Senate Monday (March 6), with aye votes from Sens. Bee, Bennett, Blendu, Burns, Flake, Gould, Gray, Harper, Huppenthal, Jarrett, Johnson, Leff, Martin, Tibshraeny, Verschoor, and Waring. No votes came from Sens. Aboud, Aguirre, Carolyn Allen, Arzberger, Brotherton, Cannell, Cheuvront, Garcia, Hale, Hellon, Miranda, Mitchell, and Rios. Sen. Soltero did not vote.

ACTION--SB 1465 goes to the House next. The 25-in-5 cut is also included in the current language of the “Granddaddy” omnibus tax bill (see SB 1545 at bottom). AFT will keep you posted on developments, but to send an email in support to your representatives, visit the state legislature’s website, and search under the members section for the House: http://www.azleg.gov. Or contact AFT executive director Tom Jenney, at vc@aztaxpayers.org.

SB 1545—The “Granddaddy” Omnibus Tax Cut Bill, (Sen. Martin, again), which is a possible final destination for the Taxpayer Appreciation and Investment Act (the 10-percent income tax cut, HB 2489) and the elimination of the County Education Property Tax (SB 1289). Currently, SB 1545 includes a version of SB 1289 and a 1465-esque proposal to reduce income tax rates by 25 percent over five years. Substituting HB 2489 for the 25-percent cut would water down the current proposal, but leadership will have a hard enough time getting even the weaker version past the desk of our spend-a-holic governor. One possibility that might arise—thanks to increased revenue estimates—is to reinstate the TAIA’s original reduction of 10-percent-in-one-year.

STATUS—This bill is sitting on the bench, waiting until later in the game.

ACTION—Wait and see. We’ll keep you posted.

Chad Kirkpatrick is chairman of the Arizona Federation of Taxypayers, and Tom Jenney is vice-chairman and executive director.