Republican senators on May 31 endorsed a proposed 10 percent income tax cut despite mayors’ objections that the proposal could undermine essential city services in years to come.
The Finance Committee voted along party lines in favor of the tax cut, an expanded version of one approved last week by the GOP-led House. Similarly, the Senate Appropriations Committee earlier May 31 approved other elements of a Senate version of a House-approved budget for the next fiscal year that starts July 1.
Besides expanding the tax cut approved by the House, the Senate is adding dollars for all-day kindergarten and providing pay raises to teachers. Both are priorities of Governor Napolitano for the next state budget.
Mayors from numerous cities held a Capitol news conference attended by firefighters and other municipal workers to criticize the Republican budget plans as likely to undercut growing cities’ abilities to provide needed services.
Both Republican budget plans include reducing the state income tax by 10 percent, the Senate in one year and the House over two. The state funnels 15 percent of its income tax revenue to cities and towns, so an income tax cut would reduce the amount of money shared with the municipalities.
The Republicans’ budget plans include a $684 million advance appropriation in the 2008-2009 fiscal year to prevent any dip in revenue sharing that year, the first that would be affected by the tax cut because of a two-year lag.
Nonetheless, mayors and other officials said the income tax reduction would undermine growing cities’ budgeting in years beyond that and could jeopardize public safety operations in the wake of recent lean budget years that crimped cities’ budgets.
Services such as police, fire, library and parks are at stake, said Apache Junction Mayor Douglas Coleman, president of the League of Arizona Cities and Towns. “These are all quality of life issues,” Mr. Coleman said.
Mesa mayor: No surplus
Unlike the state, “we do not have a budget surplus,” said Mesa Mayor Keno Hawker. “We have cut and cut. We are now down to essential services. It is not a scare tactic.”
That’s exactly what the mayors were engaging in, several Republican members of the Finance Committee charged later.
”If you brought out the endowment for the arts I don’t think that would bring people out in arms,” said Sen. Ron Gould, R-3.
The committee rejected an amendment by Senate Majority Whip Jay Tibshaeny, R-21, a former Chandler mayor, to permanently offset the income tax cut’s impact on revenue sharing by increasing the percentage given cities to 16 percent.
Committee Chairman Dean Martin, R-6, said the one-year advance appropriation can be repeated in future years if necessary and that the mayors’ concerns are unjustified.
”I find it amazing that police and fire are the first thing on their list,” Mr. Martin said. “It’s politics by scare tactics.”
League lobbyist Kevin Adam said public safety agencies account for large portions of municipal budgets and could hardly be avoided if cities have to scrimp.
”You can only fire so many librarians and park rangers,” Mr. Adam said.
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