Arizona Legislature Needs Reality Check on Budget Proposal

Arizona’s budget debate is stuck in a place that no longer reflects reality.

For years, state lawmakers have treated tax cuts as a default strategy, arguing that they will magically produce growth, attract business and solve economic challenges. But budgets are not built on magic. They are built on math. And right now, the math doesn't add up.

The latest budget proposal makes that clear. The state is facing real constraints, yet instead of addressing the revenue shortfall, lawmakers are doubling down on the same approach: cutting taxes and hoping for a different result.

That is not a strategy. It is a gamble Arizona can no longer afford.

Cutting taxes cuts funding for strong economy

At its core, this is a simple dollar-and-cents issue. You cannot cut revenue year after year and still expect to fund the basic building blocks of a strong economy. And those building blocks are affordability, family wealth building and the very investments that make Arizona competitive.

Child care.

Public K-12 education.

Health care.

Housing.

Water.

These are not optional line items. They are the foundation of whether people can work, whether businesses can hire and whether communities can grow.

When childcare is unaffordable, parents leave the workforce. When public K-12 schools are underfunded, businesses struggle to find an educated workforce. When health care is out of reach, productivity declines and costs rise elsewhere. When housing costs spike, workers can’t live where the jobs are. When water infrastructure is uncertain, long-term economic planning becomes impossible.

This is not theoretical or philosophical. It is the economy.

And yet, Arizona continues to move in the opposite direction — shrinking the very revenue needed to sustain these systems. Over the past 30 years, Arizona has lost nearly $11 billion to tax cuts; our tax system remains one of the most regressive in the nation.

Who benefits from flat tax rate?

The flat income tax is a prime example. It was sold as a way to drive growth and make Arizona more competitive. But in practice, it has overwhelmingly benefited the wealthiest households while draining billions from the state’s ability to invest in its own future. Even a partial adjustment — like applying higher rates only to incomes above $250,000 — could generate hundreds of millions of dollars.

Tax breaks for large corporations are often justified as necessary to attract business. But businesses do not choose locations based on tax rates alone. They choose places where they can find skilled workers, reliable infrastructure and a high quality of life for employees.

In other words, they choose places that invest in the community.

We need to change our thinking

Arizona risks undermining its own economic case. A low-tax environment does not mean much if the workforce is underprepared, if families cannot afford to live and work here, or if essential systems are stretched too thin.

This is where the conversation needs to shift — from narrow ideology to reality. Because the current path leads to a cycle that is hard to break: declining revenue, reduced services, greater strain on families and ultimately a weaker economy. That is not growth for Arizona’s future. That is erosion as deep as the Grand Canyon.

What makes a responsible state budget?

A responsible budget requires balance. It requires recognizing that revenue is not a burden — it is the mechanism that makes everything else possible. It is what allows a state to educate its workforce, support its families, and create the conditions businesses need to succeed. Before the Great Recession, the state made significant investments in affordable childcare and all-day kindergarten, policies that not only help working families but also boost future productivity.

This is not about politics. It is about priorities and basic arithmetic.

Arizona’s leaders need to have a reality check. Continuing to pursue tax cuts without a plan to equitably sustain revenue is not fiscally responsible. It is fiscally shortsighted.

If Arizona wants a strong economy in the years ahead, we must be willing to invest in it. That begins with acknowledging a simple reality: You cannot build a thriving state without the revenue to support it.

This op-ed was published in The Arizona Republic on May 11, 2026.