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Arizona Senate OKs tax cuts as session nears end

Arizona lawmakers advanced tax cut legislation Thursday as they pushed to end their regular session, despite complaints that they courted danger by moving forward with proposals put on their desks just hours earlier.

In other action, the Senate approved Gov. Jan Brewer’s proposal to redesign the state government’s personnel system by making it more like those of private businesses. House approval would complete legislative action.

The centerpiece of the tax package approved by the Senate was a phased-in 25 percent reduction in the state individual income tax on capital gains.

Capital gains are profits on investments, and supporters said that part and other parts of the package should spur economic development.

“This will contribute to the pro-business atmosphere of Arizona,” said Sen. Melvin, R-Tucson. “We need to get it done now because our people need to get it back to work.”

Critics questioned whether the state will actually benefit and said they weren’t given time to study large amendments formally proposed and adopted Thursday after last-minute negotiations.

“This is ridiculous. This is how bad things happen when we don’t run things through the process,” said Sen. Ron Gould, R-Lake Havasu City. “I don’t know what’s in this bill.”

Sen. Steve Yarbrough, a Chandler Republican and one of the plan’s Republican architects, acknowledged that some parts were only assembled Thursday. But he said all the issues involved were discussed throughout the legislative session when lawmakers consider earlier versions of that bill and others.

Other parts of the package included letting businesses claim a bigger deduction from the property tax on business equipment and creating a new tax credit for investments in new manufacturing plants, research facilities and corporate headquarters.

The first of the provisions would start taking effect in mid-2013. Legislative budget analysts estimated annual lost revenue and taxpayer savings at $74.8 million by 2016 and $107.8 million by 2019.

The package that was the focus of months of negotiations between Republican legislators, business lobbyists and Brewer’s office also contains small business tax breaks.

A companion bill would provide a sales tax subsidy for local governments building sewers and other infrastructure for new manufacturing plants.

Brewer before and during the session said she supported tax changes to spur the economy but warned that she wanted to hold down revenue losses to the state.

Brewer spokesman Matthew Benson did not immediately respond when asked Thursday whether the governor supported the final version.

The personnel system bill was a top Brewer priority for the session. It would lift civil-service protections for thousands of state employees, making it easier for managers to fire workers and scaling back appeal rights.

Other changes include putting more agency directors under the governor’s authority.

Brewer says the legislation would make state government more efficient and productive.

Critics say the changes will centralize power with the governor, demoralize state workers, open the door for political favoritism and allow retaliation against whistleblowers.

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