Bill Comments

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SB1577 & SCR1035 Income tax rate; reduction; surplus

HB2003 Corporate income tax; rates

HB2014 STOs scholarships; corporate tax credits

HB2061 & SB1063 Food; municipal tax; exemption

SB1577 & SCR1035 Income tax rate; reduction; surplus

Sponsored by: Senator J.D. Mesnard
AZCenter position: Strongly Oppose

What do these bills do? Require the Department of Revenue to reduce the individual income tax rate if the Joint Legislative Budget Committee determines that the state’s structural surplus (ongoing revenues in excess of ongoing expenditures) exceeds the growth limit defined in the bill. The income tax rate reduction will reduce the structural surplus by 50 percent.

Why do we strongly oppose? These bills will automatically reduce state resources with no
oversight by the legislature. The tax cuts required would take precedence over any other
priorities, such as increasing funding for K-12 public schools, economic development and job
training, and state highways. If SCR1035 (the ballot referral) was passed, the provisions would be voter-protected – leaving the legislature with no authority to override the tax cut to use the funds for other purposes. There are also no provisions to increase tax rates should revenues fall.

HB2003 Corporate income tax; rates

Sponsored by:  Representative David Livingston
AZCenter position: Oppose

What does this bill do? The corporate income tax rate would be cut nearly in half, from 4.9 percent to 2.5 percent, phasing in over a four-year period.

Why do we oppose? This tax cut would mean $669 million less in state revenues when the
phase-in is complete. The state’s General Fund already receives only seven percent of its
revenue from the corporate income tax compared to 38 percent from the individual income tax and 46 percent from sales taxes. In the tax year 2019 (the latest data available), 71 percent of corporations paid the $50 minimum tax.

HB2014 STOs scholarships; corporate tax credits

Sponsored by: Representative David Livingston
AZCenter position: Oppose

What does this bill do? Increases the amount corporations can claim in tax credits for
contributions to student tuition organizations (STOs) from $6 million to $15 million for fiscal year 2024 and $20 million for each subsequent year. STOs use the contributions received to award scholarships to students attending private schools. Unlike individual income tax contributions, which are capped for each person or couple filing jointly, corporate contributions are capped in the aggregate. This could allow a handful of corporations to donate large sums to avoid paying corporate income taxes to the state.

Why do we oppose? We oppose the increase in the aggregate cap. Corporate tax credits for donations to STOs already redirect $141 million from the state’s General Fund.

HB2061 & SB1063 Food; municipal tax; exemption

Sponsored by: Representative Leo Biasiucci and Senator Sonny Borrelli
AZCenter position: Oppose

What do these bills do? Eliminate the sales tax on food for home consumption. While Arizona has no sales tax on food, 65 of the 91 cities and towns in the state do.

Why do we oppose? While these bills do not impact state revenues, they would reduce local revenues by nearly $200 million by fiscal year 2026. It would also result in cities and towns losing revenues in the middle of their budget years because the law would become effective in late summer/early fall. While some cities and towns may have sufficient resources to cover the loss, others would not, forcing them to either increase other sales tax rates or cut services.

When the legislature passed the flat tax for individual income taxes, it also increased the
distribution of shared revenues to cities and towns. This legislation provides no such
adjustment.

While the stated purpose of these bills is to provide tax relief to Arizonans with low incomes,
they reduce taxes for all Arizonans regardless of income. Many low-income Arizonans receive Supplemental Nutrition Assistance Program (SNAP) or Women, Infant and Children (WIC) benefits are already exempt from taxation.

HB2108 Unemployment benefits; requirements; disqualifications

Sponsored by: Representative David Livingston
AZCenter position: Oppose

What does this bill do? Institutes anti-fraud measures for the Unemployment Insurance (UI) Program. These measures require the Department of Economic Security (DES) to
withhold paying benefits until the information is cross-checked through seven databases. Individuals receiving UI will be automatically disqualified and referred for prosecution if information fails to match a database. It also requires that people receiving UI complete five work search activities per week (current requirement is four).

Why do we oppose? Anti-fraud measures in this bill would be counterproductive to ongoing
modernization efforts already addressing this issue. Significant increases in fraud during the
COVID-19 pandemic was attributed to the inability of the state’s outdated computer system to verify the integrity of large volumes of UI claims efficiently. DES recently initiated a two-year technology modernization project that will greatly improve the ability to detect and prevent fraud in the future, particularly during periods of high unemployment.

With only one in six unemployed workers receiving UI in Arizona, this bill creates more barriers for people who need UI as a safety net until they find another job. In particular, workers of color face disproportionate obstacles to obtaining UI as a result of structural racism in the economy. The digital nature of work searches creates challenges and stress for people living in rural areas, those who are not digitally literate, or with no internet access.

HB2211 Supplemental nutrition assistance program; eligibility

Sponsored by:  Representative Justin Wilmeth
AZCenter position: Support

What does this bill do? Removes duplicative requirements for individuals with drug-related
felony convictions who have already completed terms of probation to access the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps).

Why do we support? Currently, individuals with drug-related felony convictions after August
1996 must agree to random drug testing and enroll in a substance abuse treatment program or provide documentation exempting them from enrollment to be eligible for SNAP. We should not re-punish individuals who have already met these requirements in probation. This bill removes unnecessary barriers for justice-involved people, in particular, seniors with decades-old convictions who have difficulty obtaining and providing this additional paperwork to qualify for SNAP.

HB2284 & SCR1011 Homelessness; facilities; housing

Sponsored by:  Representative David Livingston and Senator Steve Kaiser
AZCenter position: Oppose

What do these bills do? Require the Arizona Department of Housing to accept appropriated funds (from the Housing Trust Fund in SCR1011) to primarily spend on services for individuals experiencing homelessness and limit investments in permanent housing. These bills also require cities to enforce policies criminalizing camping or sleeping in public areas.

Why do we oppose? Providing services and criminalizing homelessness fail to address the
root causes of homelessness. Evidence shows the “Housing First” approach adopted in other states, prioritizing access to unconditional permanent housing for people experiencing homelessness, is more effective. This approach provides the stability needed for people
experiencing homelessness to pursue things like getting a job or addressing substance abuse
issues.

HB2401 & SB1033 TPT diapers; feminine hygiene; exemption

Sponsored by:  Representative Alma Hernandez and Senator T.J. Shope
AZCenter position: Oppose

What do these bills do? Eliminate sales tax for feminine hygiene products and diapers.

Why do we oppose? Exempting feminine hygiene products and diapers from sales tax does not guarantee equitable savings for Arizonan families with low incomes and will reduce state revenues needed to support public schools, health care, and other resources by $30 million annually. Check out our recent blogs on the diaper and feminine hygiene products sales tax exemptions for a more detailed analysis.

SB1167 Unemployment insurance; benefit amounts; definition

Sponsored by:  Senator Steve Kaiser
AZCenter position: Oppose

What does this bill do? Reduces the current maximum of 24 to 26 weeks unemployed workers in Arizona may receive Unemployment Insurance (UI) benefits to maximums of 12 to 20 weeks based on the state’s average unemployment rate in the prior calendar quarter.

Why do we oppose? The average weekly UI benefit amount of $256 in Arizona ranks second lowest in the nation relative to the cost of living. This bill further reduces the adequacy of UI as a safety net – especially at the start of future recessions. It also disproportionately harms Arizonan workers who typically experience unemployment at higher rates than the statewide average, such as workers of color or those who live in rural and Tribal communities.

It also risks corrupting the current UI computer system. This bill requires reprogramming the UI system every quarter so that the average unemployment rate passes the proposed thresholds. While the Department of Economic Security works on modernizing the UI system in the next two years, the current outdated system requires manual coding that could seriously jeopardize the current jerry-rigged computer system.

HCR2001 & SCR1009 School district expenditures; authorization

Sponsored by: Representative David Cook and Senator Ken Bennett
AZCenter position: Support

What do these bills do? These bills allow school districts to spend funds more than the
aggregate spending cap for the 2022-23 school year.

Why do we support? If these bills had not passed, school districts would have been forced to reduce their current year budgets by 17.5%, effective April 1, only weeks before the school year ends.

HCR2050 & SCR1041 School districts; expenditure limit; authorization

Sponsored by:  Representative Matt Gress and Senator David Borrelli
AZCenter position: Support

What do these bills do? These bills allow school districts to spend funds more than the
aggregate spending cap for the 2023-24 school year. Though the legislature raised the
aggregate spending cap for school districts for the 2022-23 school year earlier in the legislative session, the cap would have applied to the next school year without the passage of this legislation.

Why do we support? Arizona voters need the opportunity to repeal the aggregate spending
cap through a ballot measure, so the legislature does not have to raise the school spending limit each year. In the meantime, this legislation enables public schools to fully budget for the 2023-24 school year without the fear that they could face an abrupt budget cut on April 1, 2024, only weeks before the school year ends, which could result in school closures or teacher layoffs.

HB2819 & SB1729 K-12 education; 2023-2024

Sponsored by:  Representative David Livingston and Senator John Kavanagh
AZCenter position: Oppose

What do these bills do? Adjust the K-12 funding formula, including increasing the weight for students eligible for the free- and reduced-price lunch program. These bills also require that the Department of Education’s quarterly report on the Empowerment Scholarship Account (ESA) program includes information on how many of the students qualifying
under the universal category come from a public school and the student’s zip code.

Why do we oppose? Although these bills include annual adjustments to the K-12 funding formula vital for supporting Arizona’s public schools and new reporting requirements for ESAs, it falls short.

The final version failed to include triggers that could cap the enrollment of students in the universal ESA category. The Arizona Department of Education expects the ESA program to cost the state $900 million for the 2023-24 school year due largely to the universal ESA program. It could also have been strengthened by requiring all private school employees at schools that receive ESA dollars to undergo fingerprint screening – just like employees at public schools – to protect student safety.

HB2824 & SB1734 Taxation; 2023-2024

Sponsored by:  Representative David Livingston and Senator John Kavanagh
AZCenter position: Oppose

What do these bills do? Create a one-time income tax rebate for taxpayers with dependents who paid at least $1 in state income taxes for tax year 2021 (or 2019 or 2020 if they owed nothing for 2021). The rebate is $250 for each dependent younger than age 17 and $100 for each dependent over age 17 with an overall cap. Taxpayers who eliminated their tax liability by using tax credits are ineligible.

Why do we oppose? While this rebate will reach many Arizonans, it does not help those with the most need – families with insufficient taxable income to pay income taxes
and taxpayers who do not have dependents, such as older Arizonans. It assumes that the
state’s $2.5 billion surplus is due to income tax revenues when, in fact, sales tax revenues make up a larger portion of state revenue.