Republican lawmakers did an about-face on facemasks in schools in the most recent version of the state education budget bill.
The initial language, one line of the deal Gov. Doug Ducey hammered out with Senate and House Republican leadership in May, would have codified school districts and charter schools having the final authority on face mask requirements.
The new language does the opposite and would permanently prohibit school districts and charters from requiring facial coverings. Individuals would still be able to choose to wear them.
The change came after lawmakers such as Sen. Michelle Ugenti-Rita, R-Scottsdale, and Sen. Kelly Townsend, R-Mesa, threatened to withhold their votes.
“And to think until I publicly exposed it, Fauci Followers in the AZ Senate Leadership along w/@dougducey were almost successful in sneaking language into the budget giving school districts the power to force students to wear masks for any reason & for as long as they want,” Michelle Ugenti-Rita tweeted on June 5.
School districts and charters have had that individual responsibility since April. That’s when Ducey rescinded his executive order from July 2020 that required them to implement a face covering requirement for everyone over the age of 5.
The change was met with confusion and, in some cases, outrage, as districts made individual decisions on how to handle their masking policy roughly five weeks before the end of the semester.
While the school where Rep. Steve Kaiser’s children attend ditched its mask requirement, he accused local school boards of not listening to parents. He said the mask issue was a big one for the Republican base.
“I believe in local control, too, but I’m not about to let local control decide what’s best for my kids medically,” the Phoenix Republican said during a caucus meeting late last month. “I should decide that.”
Rep. John Kavanagh, R-Fountain Hills, pushed for the language to include visitors, noting an incident in Scottsdale where people came to a school board meeting to protest critical race theory but refused to wear masks, leading to the board to recess the meeting.
Rep. Melody Hernandez, D-Tempe, said the flip-flop was to secure budget votes from lawmakers who tend to “thrive on disinformation about coronavirus, masks and the vaccine and the like.”
Hernandez, a paramedic, said she doesn’t think such a move would have an immediate effect on public health because “hopefully we’re moving past the pandemic,” but that it seemed short-sighted.
“If this is successful, it’s going to unnecessarily tie the hands of administrators and educators if there’s another airborne pandemic,” she said.
Save Our Schools Arizona supports keeping mask mandate authority local.
“We support keeping that authority at the individual district level where locally-elected board members were voted in to lead on their schools’ policies,” communications director Dawn Penich-Thacker said.
Other states are also looking at the issue of who should be able to make mask mandates for schools. While most states either still have a state level mask mandate for schools or are allowing individual districts to make decisions, a handful are stripping that authority from the local boards.
In May, Iowa banned mask mandates by schools and cities. Texas Gov. Greg Abbott also signed an executive order prohibiting mask mandates in schools. In Georgia, there’s no outright ban, but an executive order from the governor says schools can no longer “rely on the Public Health State of Emergency as a basis for requiring students or workers to wear a face covering.” And in Idaho, Lt. Gov. Janice McGeachin signed a school mask mandate ban while Gov. Brad Little was out-of-state. When he returned, he rescinded it.
There’s no disputing it: Arizona is on a trajectory to be a—if not the—prime technology hub of the nation.
Helping the state reach this achievement have been investors showing they believe in what startups and others in Arizona have created to improve our lives. Encouraging many of these financial backers to get involved has been a program credited with generating more than $840 million in seed capital, venture capital and other financing.
But now we’re close to having the good news come to a grinding halt. That is unless the Arizona Legislature acts quickly to extend the highly successful Small Business Capital Investment Incentive program for another 10 years.
More commonly referred to as the angel investor tax credit program, it has helped to incentivize investment in early-stage companies and tech startups in Arizona. The program is set to expire this year on the last day of June, which means there’s not much time to prevent what could be devastating to the entire state because of the state and local tax revenues generated by the small businesses participating in the program.
Legislators established the program in 2005, authorizing the Arizona Commerce Authority to issue up to $20 million in tax credits to expand early-stage investments in small businesses in Arizona. If a qualified business locates in rural Arizona or is a bioscience company, the investor may receive a maximum tax credit of 35% spread over three years. For other types of businesses, the maximum tax credit is 30% over three years.
As a sign of the program’s effectiveness, all authorized tax credits were allocated by July 2015. A significant drop in the number of investors and investments followed, which demonstrates the program truly incentivized the investment it was intended to. In 2017, the Legislature authorized $2.5 million in tax credits to be issued annually so the program could continue contributing to Arizona’s economic success.
The fiscal 2022 budget package as introduced had included an extension of the program. Unfortunately, a few legislators have asked for its removal from the budget to garner their support of the overall budget package. Although disappointing, we are encouraged that the Legislature will still vote on the proposal as a standalone bill. If not extended this legislative session, entrepreneurs and small businesses in Arizona will no longer have this tool in their toolbox to help attract investment. Adding to that, neighboring states with their own versions of angel investor tax credits may use them to entice companies to relocate their way.
This program has more than paid back the state’s investment by generating more revenue than tax credits approved. It needs to be continued not just because it has helped Arizona’s economic success, but it also has allowed Arizonans to fulfill the American dream of being able to start and grow small businesses while providing for their families and supporting their communities.
Companies such as WebPT, CampusLogic, Qwick, Regenisis Biomedical and many others have become very successful members of the state’s technology community. They have cited the angel investment tax credit as one of the main reasons they could attract private funding.
An example is Chandler-based Keap. CEO and Co-founder Clate Mask explained in a letter to Gov. Doug Ducey last year how the program helped attract about $500,000 in angel investment as a bridge until it secured venture capital. This amount translated into the angel investors being able to use up to $150,000 in credits.
Ultimately, the company raised over $125 million out of state, which was not eligible for the angel investor tax credit but did bring money into Arizona that would not have otherwise been invested here. Combining the Keap employee payroll taxes, Keap’s unemployment taxes, and investors’ state taxes on the sale of their stock, the state received over $22 million in tax revenue from this one company alone.
Keep in mind there are other winners in this scenario. An economic impact study done by noted economist Elliott Pollack illustrates the many benefits to Arizona for the $30 million of tax credits authorized, which include:
The Legislature has the opportunity to do the right thing by recognizing the economic engine this program has been proven to be and voting to extend the angel investor tax credits for another 10 years. This is an investment in Arizona’s future, not only for the state’s startup community but also for taxpayers here and future generations of entrepreneurs.
Steven G. Zylstra is president and CEO of Arizona Technology Council
Saying the current fires are just the beginning of problems, Gov. Doug Ducey on June 10 called for a special legislative session to begin next week.
“It’s clear that we still have a lot more to do,” the governor said after taking a helicopter tour over the fires – and charred remains – of the Telegraph and Mescal fires.
“The response won’t end when the fires are put out,” he continued. “When this year’s monsoon rains come, these burned areas are prone to landslides, mudslides and flooding, which pose another threat to our communities.”
Ducey’s move comes one day after he declared a state of emergency. That frees up $200,000 for each blaze using resources under his control.
But allocating larger amounts of money, especially for future flood mitigation, requires legislative approval.
A special session technically isn’t required. State lawmakers already are at the Capitol – though they shouldn’t be this late in the year – trying to work out a deal on a spending and tax-cut plan for the new fiscal year that begins July 1.
The governor essentially acknowledged that isn’t going so well. So this, in some ways, becomes a temporary diversion.
“We can put the budget aside for a few moments and focus on Gila County, focus on this issue,” he said. “So it’s a way to just stop all the other noise that is necessary in any legislative session to get big things done and to focus on the fire and the people of Gila County.”
Yet Ducey said he has no idea how much money he wants lawmakers to approve.
“That’s what the special session is for,” he said, though he later said it could run into the “tens of millions of dollars.”
“That’s something we’re going to sit down in a bipartisan way with the leaders of the chambers and figure that out,” Ducey said. “This should be a win for Arizona.”
Ducey was in Globe to be briefed on the status of the Telegraph Fire, which as of June 10 had burned more than 85,000 acres so far and is just 40% contained, and the nearby Mescal Fire which, at 72,250 acres, is 64% contained.
“As we move forward over the next couple of days, the weather’s a big concern of ours,” said David Bales, incident commander of the Telegraph Fire.
“We all know that wind helped push it up Highway 60,” he said. “And the next few days, we’re looking at high pressure, which is pretty risky for our firefighters.”
Globe still remains at risk. And there’s also the possibility that the two blazes could merge as their boundaries are just 10 miles apart.
The fire has become personal for at least two lawmakers.
House Speaker Rusty Bowers, R-Mesa, who suggested the special session, already lost a family cabin in the Telegraph Fire. And Rep. David Cook, R-Globe, pointing to the smoke in the distance, said his cattle ranch reaches from the top of the Pinal Mountains right to the Globe city limits.
And Bowers warned that even when the fires are contained and extinguished, some real problems remain in the form of flooding.
“With what’s happened up on the mountains, it’s going to be a bad, bad summer if we get a heavy monsoon – which we need,” he said.
While Ducey hopes for quick approval of whatever funding he seeks without the distraction of the budget, some Democrats are not sure it’s possible to separate the issues.
In a Twitter post June 10, Rep. Diego Rodriguez, D-Phoenix, pointed out that a key element of the proposal by the governor and Republican legislative leaders is to create a flat income tax rate.
“A flat tax would remove $2 billion in state revenue (a year) over the next 10 years, wiping out the resources we need to fight these types of wildfires and help the people and communities recover from the devastation,” he wrote.
Ducey brushed aside the concern.
“Part of the reason we’re able to call this state of emergency, to call this special session, to move hundreds of thousands if not tens of millions of dollars forward is because the state is in such a positive cash position,” the governor said. “We’re sitting on, depending on whose number you look to, about a $4 billion surplus in our state.”
Dear Editor:
There is a way to think about the current State budget that makes more sense to me than economic theories. And that is to look at this in drug terms.
A junkie is someone addicted to a substance. For many rich people, money is their dope; they have a junkie’s insatiable desire for it. That’s a fact; look at the spiral of fiscal inequality the past several years. Like most junkies, rich people use many methods and scams to try and get their fix.
Junkies need and want a reliable supply of product and Kingpins are the major suppliers of dope that moves through many middlemen and individual pushers to the junkies. Hence, deals are made at different levels depending on the junkies need.
One big scam now in motion Arizona is to pressure the Kingpin – Gov. Doug Ducey, and county level pushers – Republican legislators, to enact a flat tax that will give them their dope; lots more dope.
Junkies don’t care who they hurt to get their fix; pushers, and kingpins don’t care who they hurt to dip their beak. In our state, millions of people will suffer some degree of harm if a flat tax is passed; public safety declines, increased fire danger, and many more services provided by cities that are the infrastructure of people’s lives. Too Bad say the junkies; I gotta’ get my fix.
Kingpins always have an eye to expand their territory. In this case the power that comes from providing dope to wealthy people could lead to more lucrative positions in bigger areas; a national territory for instance. For the pushers, the crumbs – thousands of dollars – from the big dope deal could mean a step up in the organization; maybe expanded territory, a bigger stash, and more junkies.
As the flat tax is being discussed, remember Kansas when the junkies demanded more dope, the pushers delivered it, and the consequence was depleted services throughout their state.
The way to deal with the big boy and pushers in any community, or state, that is fed up with a drug problem; bust the kingpin, destroy the network of pushers and kick ‘em out of town.
Fred Miller
Owner, Copper City Inn in Bisbee
The tax cuts that are the centerpiece of next year’s proposed budget failed in the House Monday when one Republican joined the Democrats to shoot them down.
After extensive debate, the two bills, which would phase in a 2.5% flat income tax rate and set a maximum rate of 4.5% until then to blunt the impact of Proposition 208, failed 30-30. Rep. David Cook, R-Globe, joined every Democrat in the House to oppose them.
The House has adjourned until 10 a.m. Thursday, the same day the Senate is scheduled to come back. On May 26, both chambers adjourned until June 10 to give them some time to work out the stalemate over the budget, which needs unanimous Republican support to pass but doesn’t yet have that in either body. However, Majority Leader Ben Toma, R-Peoria, had held out hope the House would come back sooner, and on Friday he said the House would come back Monday to vote on the budget whether the votes were there or not. Toma said after the House adjourned that he wasn’t surprised by the outcome but felt he needed to get everyone on record with their votes.
“We’ll continue talking and see what we can do to try to come up with something that’s workable,” Toma said.
In response to criticism of the size of the proposed tax cut, which would reduce revenues by an estimated $1.9 billion in FY24, Toma said he didn’t have a specific number in mind when he started crafting the proposal but was trying to come up with good policy. He said he would be willing to discuss a higher rate but said a higher flat rate would fall harder on lower income earners, which would go against the concerns of flat tax opponents who already view it as giving too much to the rich.
“I just don’t think they’ve thought it through,” Toma said.
Toma acknowledged the challenge of modifying the tax bills in a way that could get Cook, the lone Republican holdout, on board without losing any of the other Republicans who support the bills now.
“If we buy one but we lose five, that doesn’t work,” he said.
Cook, whose rural Legislative District 8 includes small towns such as Globe, Florence and Superior, said he supports tax cuts and has voted for them in the past, but that this proposal is too big and the state needs to focus on paying down its debt. As Cook debated and voted, he also tweeted updates on the Telegraph and Mescal wildfires threatening his district — including when, during the votes, he received word that his family had been told to evacuate his home in Globe.
“Just got word at my house that they are asking us to evacuate,” he said at 10:51 a.m. “I was brought away from my home to vote on bills that did not have the votes in the house or senate on purpose to be on record.”
A proposed amendment to one of the tax bills would have increased the urban revenue sharing distribution from 15% to 17% starting in the 2024-2025 fiscal year, an attempt to help cities and towns, especially smaller ones that are more dependent on state income tax revenue. However, Benjamin Bitter, the assistant to Florence’s town manager, said the town would still lose out even with the changed formula.
“Florence would still face about a 9% shortfall under the 17% proposal,” he tweeted during the debate.
In response to a series of questions from House Minority Leader Reginald Bolding, D-Laveen, Toma acknowledged that the proposed 4.5% maximum income tax rate would reduce taxes on high earners from what would be an 8% rate otherwise, although he said this shouldn’t change the amount of money collected for education funding under Proposition 208. Voters, he said, had approved a 3.5% surcharge for schools but hadn’t addressed what the maximum rate should be.
“Yes, the purpose of the amendment is to ensure that the max income tax percentage paid by a taxpayer in the state of Arizona is 4.5% total, because they’re the ones that make the jobs that create the economic conditions that lead to economic improvement for the entire state,” Toma said.
Opponents of the tax cut said supply side economics doesn’t work, pointing to Kansas, where tax cuts passed in 2012 led to huge reductions in revenues. The state reversed the cuts in 2017.
“It is the height of arrogance to believe that this time the flat tax is going to work when it has been shown it never has,” said Rep. Lorenzo Sierra, D-Cashion.
Democrats argued workers, not businesses, drive economic growth.
“The reality is without those working-class people there wouldn’t be jobs, there wouldn’t be an economy,” Bolding said.
Toma said that Arizona is in “a very different situation” than Kansas in 2012 – Kansas, Toma said, was trying to eliminate its income tax during an economic downturn and was then unwilling to make the needed spending cuts. By contrast, he said Arizona is growing and projecting a large surplus.
The House did vote to move one budget bill, dealing with the transportation budget, out of the Committee of the Whole, clearing the way for it to receive a final floor vote at some vote. It advanced with one amendment getting rid of a provision that would have increased towing fees, leaving the current ones in place. The changes were supported by the towing industry, which said the changes would help cover their increased costs; opponents feared they would make it harder for people to get their vehicles back and make it more likely they would lose them forever if they couldn’t pay the fees. It did not take up the other eight budget bills on the calendar before adjourning.
The House also voted to reintroduce, as new bills, the 22 bills Gov. Doug Ducey vetoed on May 28 in an attempt to pressure lawmakers to reach a budget deal faster.
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