A legislative panel has given a thumbs-up to permanently repealing a state property tax suspended three years ago that is slated to come back online this year, despite a struggling economy that has left the state staring at a $3 billion budget deficit in the upcoming year.
"This is a way to avoid raising taxes," said Rep. Andy Biggs, who sponsored the bill.
The move came over the objections of Democrats, who said it was bad public policy to eliminate $250 million in potential revenue during a time of budgetary crisis. They also said large businesses would benefit much more than homeowners.
"We're making our job much more difficult," said Rep. Steve Farley, a Tucson Democrat. "Why make the problem worse, simply for bailing out these corporations?"
But supporters said allowing the suspension to lapse would equate to raising taxes by $250 million when many homeowners and businesses are struggling to keep their heads above water.
"It doesn't justify raising taxes in the worst recessionary time since the 1930s," said Biggs, a Gilbert Republican.
The committee approved the legislation, H2073, by a 5-3 vote. The split was down party lines.
Business advocates backed the measure, which legislative Republicans have said is their top priority this year. Glenn Hamer, executive director of the Arizona Chamber of Commerce and Industry, said keeping the tax off the books will help spur economic growth and create jobs.
But letting it return would be disastrous, he said.
"If that tax comes back, more Arizonans will lose their jobs. More Arizonans that are struggling to keep their homes will continue to do so," Hamer said.
Barry Aarons, a senior research fellow for Americans for Tax Reform, said letting the tax return would equate to supporting policy that encourages economic recession.
"Do not succumb to this concept that you have to raise taxes, because you will take a bad situation and make it worse," he said.
Democrats argued that taking the revenue off the table when the state faced a historic deficit would necessitate more cuts to balance the budget. Those cuts would likely be made to programs that help the disadvantaged, they said.
The $250 million would go a long way to helping "crippled children," said St. John's Democrat Jack Brown, who noted that some of his Republican colleagues "don't have much heart" for helping the poor and needy.
But Republicans said arguments like that dodged the real issue – creating jobs – while painting supporters of the tax repeal in a negative light.
"These are visceral arguments and that's really unfortunate," Biggs said.
Elizabeth Slaine, a Tucson high school English teacher, said repealing the tax would ultimately hurt education in Arizona.
"As a homeowner, I'm willing to pay the $7 a month to make sure children have adequate education," she said.
However, Biggs said that an educated workforce won't matter much if there aren't any jobs in the state. Raising the property tax would mean job losses would continue, he said.
"I just think that you're not facing reality," he responded.
Some members in the Senate urged leadership this week to move forward with its version of the tax repeal.