House budget plan has more teacher pay, bigger tax cut

The opening budget proposal from Arizona House Republicans includes bigger teacher pay raises and a larger income tax cut than the governor seeks.

The $9.8 billion spending plan also excludes nearly $100 million in new proposals sought by Gov. Doug Ducey.

Republican House members were briefed on the proposal put together by House Appropriations Committee members early this week and talks were beginning with Ducey’s office and the Arizona Senate.

Also included in the proposal is a partial restoration of road funding for counties and cities that is an annual fight in the Legislature. Lawmakers have been raiding the Highway User Revenue Fund for years.

The document outlining the proposals was obtained by The Associated Press.

The House’s opening gambit for the spending plan for Fiscal Year 2018 contains room for about $30 million in other new initiatives, though Ducey wants $125 million.

In an interview, House Speaker J.D. Mesnard said that he tasked the appropriations committee members with coming up with a set of spending proposals possible with current funds, and after that was left with a “box” that can handle $30 million in other new spending priorities.

“And that is into which everything else must fit, unless you start breaking down the framework and I think that would be pretty challenging,” Mesnard said.

The plan has an open line for additional spending requests from House members, with placeholders showing they could include payments to offset costs shifted to counties for juvenile corrections, additions to the nearly $460 million rainy day fund, reducing the state’s current $7.4 billion in debt, or more tax cuts.

For the most part, Mesnard said, the big ticket items are already included in the budget proposal presented by Ducey in January.

“So we’ve just got to negotiate with the executive on what can work and what goes where to end up with a structurally balanced budget,” Mesnard said.

The teacher pay proposal from the governor was widely panned as far too low, just two percent over five years. The House plan includes a one percent raise for the coming school year at a cost of $34 million, as opposed to the governor’s $13.6 million.

Ducey requested that the personal income tax exemption be adjusted annually for inflation at a $2.8 million yearly cost. The House budget calls for an immediate $100 increase in that exemption at a cost of $11 million, as well as ongoing inflation adjustments.

Other House proposals include providing $7.3 million to the Arizona Department of Education for computer staff and projects. Superintendent of Public Instruction Diane Douglas wants $17.6 million, and the governor offered nothing in his budget proposal.

Notably absent from the House spending plan is $30 million in ongoing spending the governor proposed to help universities pay interest on nearly $1 billion in new construction bonds. Instead, the House plan contains $15 million in one-time university spending.