Skip to main content

Arizona Legislature Once Again Shirks its Responsibility to Review Billions of Dollars in Tax Credits

State law requires the Joint Legislative Income Tax Credit Review Committee to submit a report of its findings and recommendations to the Governor and legislative leadership by December 15. Four tax credits were scheduled for review this year, including the largest credit available to Arizonans, the Research and Development Tax Credit, which has nearly $2 billion in available credits. 

Tax credits continue even when the legislative committee fails to complete its review. Since 2016, the tax credit review committee has met only once. The last time the committee met to review the four credits scheduled for this year was ten years ago. 

Most of the work required of the committee is actually performed by the Joint Legislative Budget Committee (JLBC) staff with input from the Department of Revenue. Even when the committee has failed to meet, the JLBC conducts the research and produces reports. Since 2003, JLBC has made the same recommendations for improving the Research and Development Tax Credit by gathering and reporting the following data: 

  • Total research dollars spent in AZ each year 
  • Number of persons employed in research activities 
  • Total research payrolls 
  • Introduction of new products 

In 2013, the committee voted to amend state law to adopt some of the performance measures. However, no legislation was ever introduced to enact those recommendations. 

Arizona taxpayers have more than $2.8 billion in tax credits available to use to offset their state income tax liability. According to the Department of Revenue, only 52 of the 279 corporations that claimed the Research and Development tax credit in 2011 paid any taxes that year after using their tax credits.  

“Arizonans expect our legislators to do the jobs they were elected to do,” said Joanna Mendoza, Executive Director of the Arizona Center for Economic Progress. “Especially as the state faces a $400 million budget deficit, it is vital that policymakers are making sure that these credits that divert dollars from the state budget are producing the benefits that were promised when they were put into place.”

More News

Welcome Joseph Palomino: Our New AZ Center Director

The Arizona Center for Economic Progress (AZ Center), an affiliate of the Children’s Action Alliance, is pleased to announce Joseph Palomino as its new Director starting June 3. In this role, Joseph will lead the strategic…

Clock Ticking: $715 Million Deficit Still Looms

Since last October, fiscal analysts have been warning that the state’s revenues are not sufficient to support the budget that was passed a year ago.  The latest Monthly Highlights issued by the Joint Legislative…

Tax Day Tip: It’s Time to Face Reality That State Revenues are in Disarray

Governor Hobbs and the state legislature have until June 30 to pass a budget. The major problem they face is state revenues that are lower than expected when they passed the budget last year. They need to not only adopt a…