AZCenter Analyses Outline Path Forward as Arizona Budget Negotiations Resume
Op-ed and analyses highlight what went wrong in Round 1, what Arizona must get right next, and how the state can move forward by investing in families instead of doubling down on tax cuts
PHOENIX — As Arizona lawmakers return to budget negotiations following the governor’s veto of the legislative budget proposal, the Arizona Center for Economic Progress released a new package of analysis and commentary showing that the state is not out of options — but it must stop relying on tax cuts, one-time fixes, and budget gimmicks that fail to meet the needs of Arizona families.
The package includes a recent op-ed by AZCenter director Joseph Palomino and three analyses examining what the first round of budget proposals revealed, what policymakers must get right in the next round, and how Arizona can responsibly raise revenue to invest in policies that lower costs, strengthen economic stability, and build a more sustainable budget.
“Arizona’s budget debate needs a reality check,” Palomino said. “For years, state leaders have treated tax cuts as the default strategy and expected families to live with the consequences when the math doesn’t add up. The state has choices. It can continue cutting revenue and hoping for a different result, or it can invest in the things that actually help families afford to live, work, and thrive in Arizona.”
The full package includes:
Arizona Legislature Needs a Reality Check on Revenue
In a recent op-ed, Palomino argues that Arizona’s budget debate is stuck in a place that no longer reflects reality. The piece makes the case that lawmakers must stop relying on tax cuts as a budget strategy and instead confront the revenue choices needed to meet the state’s needs.
Arizona’s Budget Reset: Lessons from Round 1, Priorities for Round 2
This analysis examines what the first round of budget negotiations revealed and identifies the unresolved challenges lawmakers must address in the next round, including formula-driven costs, one-time funding for ongoing needs, insufficient investment in child care, housing, school meals, SNAP administration, school buildings, and health care, and the continued pressure to match federal tax cuts at the expense of Arizona’s revenue base.
5 Things Arizona Must Get Right in Next Round of Budget Negotiations
This snapshot piece outlines five priorities lawmakers should carry forward to build a budget that actually works for Arizona families. The analysis urges policymakers to focus on household reality, stable funding for ongoing needs, realistic planning, long-term fiscal capacity, and investments in education, health care, housing, and workforce systems that strengthen economic stability.
Arizona’s Budget Is Stuck. Here’s a Way to Move Forward
This analysis outlines a practical revenue path lawmakers could use to fund a fully refundable Child Tax Credit and other affordability investments. Options include rethinking special tax treatment for long-term capital gains, asking the most profitable corporations to contribute more, reevaluating data center tax subsidies, modernizing the corporate tax code, modestly increasing severance taxes on copper mining, and taking a hard look at the revenue loss caused by Arizona’s flat tax.
Together, the pieces show that Arizona’s budget debate is not stuck because policymakers lack options. It is stuck because the state has repeatedly chosen to reduce revenue while families face rising costs for housing, child care, food, health care, and other basic needs.
A stronger budget would make different choices: invest in policies that directly lower costs for families, rebalance a tax code tilted toward corporations and wealthy households, and restore the state’s ability to fund the building blocks of a strong economy.
“Budgets are not built on magic. They are built on math,” Palomino said. “And right now, the math is clear: Arizona cannot keep cutting revenue and expect to meet the needs of its people. The way forward is to invest in families, protect core services, and make sure the tax code is working for the whole state — not just those at the top.”
