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Arizonans deserve better budget after difficult year


Passing a balanced state budget is the most important responsibility we have as legislators. Hence, we owe it to our constituents and our state to tread carefully. We have a real opportunity to revitalize Arizona after a difficult year and we know the decisions we make today will impact Arizonans for decades to come.

That’s why, despite coming from different political parties, we have decided to work together for the sake of the state we both care about. We share the same concerns about the economic and revenue assumptions the budget and tax cut are built upon and believe state leaders have failed to take several significant economic factors into account.

Pandemic Effects on TPT Revenues

Sean Bowie

Sean Bowie

The pandemic encouraged local consumption at extremely high levels which we do not believe are sustainable long term. The purchase of consumer durables like cars and housing have seen significant jumps during the pandemic which has resulted in atypical high growth in transaction privilege tax (TPT) collections. However, the pandemic is winding down and consumer behavior is returning to historic patterns. The Legislature should not base a long-term permanent tax cut based on a temporary snapshot of state revenue collections during a global pandemic.

Online Sales Tax Collections

Collections of sales tax from online purchases have certainly helped the state weather the pandemic, but we do not believe it is responsible to expect this growth to continue at the same pace long-term. All the large paying remitters like Amazon and Wal-Mart were contributing TPT to the state prior to the enactment of the Wayfair legislation and very few new significant remitters will materialize in the future.

Stock Market and Real Estate Durability

The stock market and real estate are delivering incredibly strong capital gain returns. Both income streams will evaporate as soon as the economy hits its next inevitable downturn. As former Gov. Jan Brewer pointed out in a recent column, the current revenue forecasts show a surplus of $2.6 billion.  However, it was only eleven months ago the state was projecting a $518 million deficit. Arizona’s history clearly demonstrates it is not responsible to base large tax cuts on a temporary snapshot of revenues.

Federal Stimulus Money

Paul Boyer

Paul Boyer

There has been an incredible avalanche of federal stimulus money that has been poured into Arizona. At the April 15 meeting of the Finance Advisory Committee (FAC), the Joint Legislative Budget Committee noted that over $28 billion of federal stimulus has been provided to the state, including monies to numerous state agencies including Department of Economic Security, Department of Health Services, and Arizona Health Care Cost Containment System. What impact has this federal stimulus had on Arizona’s economy during this past year, and how much of our state’s current budget surplus can be attributed to this momentary, one-time money?

A Better Way Forward

There is a better way. A budget that is focused on a stronger economy moving forward would prioritize investments in our three state universities, our community colleges, and workforce development. Our K-12 schools need additional support for special education and more counselors and social workers to help our kids after a difficult year. Paying down the billions of dollars in state debt while we have the resources to do so would put our state on much stronger economic footing when the next downturn happens. Responsible tax reform should benefit all Arizona taxpayers, through one-time checks or permanent changes like creating an Earned Income Tax Credit for working Arizona families that would put more dollars in the pockets of Arizonans who need it.

Budgets are moral documents. They show what we value and prioritize as a state. Both of us stand ready to work together with our legislative colleagues and the Governor on a responsible budget that puts all Arizonans first.

Sean Bowie is a Democratic state senator. He serves on the Senate Appropriations, Finance, and Commerce committees. Paul Boyer is a Republican state senator. He chairs the Senate Education Committee and is a Jr. High Latin teacher.

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