Legislative budget analysts have concluded that an amendment to a Republican-sponsored tax cuts bill would reduce the cost of the bill by about $300 million.
The bill, H2250, was expected to cost the state about $950 million in tax revenue. But a strike-everything amendment that is scheduled to be heard in the Senate Finance Committee April 12 would remove an individual income tax cut that was included in the original bill, thereby lowering the cost to the state to about $650 million.
The strike-everything amendment resulted from an agreement between Senate President Bob Burns, Gov. Jan Brewer and House Speaker Kirk Adams, who sponsored H2250.
The way it stands now, the bill would cut property and income taxes for both businesses and individuals, and establish a series of tax credits for companies that relocate to Arizona and pay above-average wages. The tax cuts would be phased-in, with total implementation in 2017.
Although the House approved the bill in January, Burns did not assign it to a committee until March, citing concerns about the impact the measure would have on the state’s revenues.
Brewer, too, reportedly expressed concerns over cutting business taxes at the same time she and lawmakers are asking voters to increase the sales tax for the next three years. Democrats have latched on to the issue, accusing Republicans of seeking a sales tax increase on all Arizonans to cover tax cuts for businesses.
The proposed strike-everything amendment to H2250 will eliminate a 10-percent cut to individual income taxes in the original bill. Budget analysts had said that would cost $361 million in general fund revenues.
Other changes in the amendment include delaying the phase-in of corporate property tax cuts so they do not begin until after the temporary sales tax is set to expire, tweaking a business property tax reduction so it won’t affect the general fund and reducing small-business capital gains taxes.
A memo from JLBC to Burns, who requested a revised analysis of the fiscal impact, noted that such long-term forecasts are “speculative” because of unforeseen economic changes.