Bill proposes extended deadline to file state income taxes


Arizonans could have more time to file their state tax returns.

A proposal from Sen. J.D. Mesnard would extend the deadline to file taxes with the Arizona Department of Revenue by two months, from April 15 to June 15. The Chandler Republican has encouraged Arizonans to delay filing their state tax returns until the Legislature approves a tax code to apply to the 2018 tax year.

SB1481 would give them even more time to do so. The bill would not affect the deadline for filing federal tax returns, which would still be due on April 15.

“It’s just for this year because now we live in the uncertainty of where we’re going to end up in the whole tax conformity discussion,” Mesnard said.

That uncertainty is the result of a spat between Gov. Doug Ducey and legislative Republicans.

The governor wants lawmakers to go along with his plan to pocket higher tax collections, which budget analysts estimate are sure to occur if the state conforms to certain changes in federal tax law. Republicans have balked at what they call a tax increase, and instead are pursuing bills to offset higher taxes.

The standoff culminated on Feb. 1, when Ducey vetoed a proposal by Mesnard to lower tax rates, a maneuver that would decrease tax collections by roughly $150 million.

As long as Ducey and his fellow Republicans are at odds, Mesnard said it’s only fair to give taxpayers more time to ensure the tax code is sorted out before they file.

The Republican governor and his party’s legislators appear no closer to reaching an accord. In fact, Mesnard said he’s moving forward with another proposal to offset higher tax collections by declining to conform six deductions in state law to the federal tax code. Those include deductions on state and local taxes and interest on home mortgages.

Mesnard cautioned that the governor can’t get his way without legislation approved by the House and Senate.

“I realize the governor has made a declaration, but a declaration is not law,” Mesnard said.

Ducey re-election campaign gets underway

Gov. Doug Ducey (Photo by Katie Campbell/Arizona Capitol Times)
Gov. Doug Ducey (Photo by Katie Campbell/Arizona Capitol Times)

Gov. Doug Ducey promised Monday to make another attempt to let police and courts take guns away from potentially dangerous people if voters return him to office in November.

In formally launching his reelection bid, the governor touted what he said is the turnaround of the state’s financial fortune, including a balanced budget, new jobs in the private sector and more money for education. Ducey said he also recognizes more needs to be done, particularly in that last category.

“So this campaign is going to be about what’s next,” he told Capitol Media Services.

Ducey did acknowledge that his 2014 campaign promise to push state income taxes to “as close to zero as possible” has not been accomplished.

Tax rates remain the same. Instead there have been a series of very discrete changes in tax law, like indexing tax brackets for inflation.

The governor said, though, voters need patience.

“To lower our income tax and for major tax reform, we’re going to need a term or two,” Ducey said.

“We’re going to need a growing economy,” he continued. “And we have a plan.”

Arizona Secretary of State Ken Bennett (AP Photo/The Arizona Daily Sun, Jake Bacon)
Arizona Secretary of State Ken Bennett (AP Photo/The Arizona Daily Sun, Jake Bacon)

But it is the issue of school safety — and particularly the question of letting judges take away weapons — which could end up being the key dividing issue in the Republican primary between Ducey and former Secretary of State Ken Bennett.

Bennett has staked out the position that it is possible to deal with school violence without the Severe Threat Orders of Protection that Ducey wants but was unable to get lawmakers to approve earlier this year.

These would allow both police and individuals like family members, roommates and school officials to seek a court order to have someone’s weapons seized, at least temporarily, if a judge determined someone is a potential threat to self or others.

Lawmakers did approve some proposals aimed at school safety, like more money for mental health counselors. But Ducey told Capitol Media Services he remains convinced that STOP orders are necessary.

“When I look what happened in Florida, Kentucky, Texas and other instances, I want our law enforcement leaders and our mental health professionals to have a tool where they can be proactive in a dangerous situation,” he said. And that, he said, means some version of a STOP order.

“You don’t sit on the sidelines and say, ‘There’s nothing we can do,’ ” Ducey said. The governor said what happened at Marjory Stoneman Douglas High School in Parkland, Fla., proves his point.

“Nikolas Cruz gave every indication, with 39 visits from law enforcement and social services, being identified by name to the FBI, and posting on YouTube that he wanted to be known as a school shooter, I think good policy is that you can stop someone like that,” the governor said.

That, however, is not Bennett’s idea of a school safety plan.

“Instead of removing guns from law-abiding Americans, it will focus on getting guns where they can help protect our children,” he told Capitol Media Services. “The best way to stop a bad guy with a gun is to have one or more good guys with a gun.”

What that means, Bennett said, is a plan similar to Ohio to train “willing, competent and capable” school staffers in armed response, including carrying firearms in schools for those who want. In fact, he said, there should be tax credits available for those who are willing to carry guns.

The plan, he said, also would train staffers in crisis management and emergency medical aid.

As far as dealing with people who may pose a threat, Bennett said there are existing laws which allow a judge to have someone locked up for evaluation if they pose a danger to self or others, meaning they will not have access to firearms. And he brushed aside claims by some mental health professionals that procedure does not work in cases where the threat is only potential.

Ducey’s announcement he wants another term is hardly a surprise.

His campaign committee actually has been in operation — and gathering donations — since September 2016. In fact he already has collected more than $3 million.

Bennett, however, is choosing to run with public dollars. If he gets the required 4,000 $5 donations he will get $839,704 for the GOP primary.

All that presumes, however, he gets on the ballot. Ducey supporters have filed suit challenging many of the signatures he submitted on nominating petitions.

A court hearing on that challenge is set for Thursday.


GOP senator wants to let Arizonans pay taxes in bitcoin

Arizonans could soon pay their taxes with bitcoins if a state senator gets his way.

Warren Petersen
Sen. Warren Petersen (R-Gilbert)

Sen. Warren Petersen, R-Gilbert, wants to require the state’s Department of Revenue to accept cryptocurrency as payment for personal income taxes. Eventually, he hopes that any tax could be paid with cryptocurrency.

“It’s an emerging industry and technology, and going along with the governor’s efforts to lead the country in business and industry, we want to make sure that people who want to use cryptocurrency will be able to use it to make their tax payments,” Petersen said.

The Department of Revenue would have 24 hours after receiving payment to convert the cryptocurrency, be it bitcoin or other new forms, into U.S. dollars. Then DOR would credit an individual’s account for the dollar amount they paid in cryptocurrency. Petersen said it’s his understanding that cryptocurrency can easily and “immediately” be exchanged into U.S. dollars, and insisted it would be no burden to the agency.

It’s unclear if similar bills have been considered in other states, but there’s at least one place in the world that’s already venturing into using cryptocurrency for government collections: Switzerland.

Chiasso, a Swiss municipality, announced in September they’ll let residents make small tax payments – up to $261 U.S. dollars – in bitcoin. The move follows that of another Swiss municipality, Zug, which has started to collect bitcoin payments for municipal services, Fortune reported.

Look back: Did Ducey deliver on major tenets of his 2014 campaign?

Gov. Doug Ducey (Photo by Katie Campbell/Arizona Capitol Times)
Gov. Doug Ducey (Photo by Katie Campbell/Arizona Capitol Times)

Editor’s note: This story has been updated. 

Gov. Doug Ducey officially kicked off his re-election campaign last week, offering up a series of campaign promises in the process.

At a recent campaign event in Tempe, the Republican incumbent promised to increase K-12 education funding above inflation and drive up teacher pay. Ducey also promised to expand career and technical education options and pass his school safety plan to prevent school shootings.

He also pledged to expand law enforcement efforts at the border by instituting 24-hour, seven-day-a-week police coverage in all border counties and promised to reduce recidivism rates by providing more addiction and mental health treatment for inmates.

But what happened to the slew of assurances on the campaign trail four years ago? He pledged to improve the state’s economy, reduce income tax rates, cut taxes, fight the Affordable Care Act and swore not to allow any new taxes.

The governor hasn’t succeeded in cutting income tax rates down to zero, let alone cutting income taxes at all. And some of his other campaign promises may as well have asterisks next to them. But Ducey clearly delivered on some of his other pledges.

He managed to cut taxes every year of his governorship — one of his biggest campaign pledges from four years ago. Another of the major tenets of Ducey’s first gubernatorial campaign was to grow Arizona’s economy by reducing unemployment and increasing the number of jobs in the state. By most measures, he has delivered.

Since Ducey first took office, Arizona’s unemployment rate has dropped from 7.3 percent down to 4.9 percent this spring — the lowest it has been in a decade, according to data from the Bureau of Labor Statistics. Employment jumped from 2.8 million to 3.2 million during the same time period. Of course, when Ducey took office, Arizona was still reeling from economic aftershocks caused by the Great Recession.

“When I entered office, our state was still struggling from the aftermath of the Great Recession,” Ducey said at a recent campaign event. “Leaders before me had made tough decisions to manage through historic economic difficulties. … Today, I’m proud to report that Arizona is on the rise.”

Meanwhile, Ducey’s primary opponent — former Secretary of State Ken Bennett — is already hitting the governor on his record. Bennett’s campaign sent out an email this week highlighting “Ducey’s Broken Campaign Promises” and saying the the governor raised taxes, did nothing to secure the border and caved to the “Red for Ed” movement.

Take what Bennett is saying with a grain of salt because he has proven that he will do whatever it takes to get elected, said Ducey spokesman Patrick Ptak.

In responding to this story, Ptak pointed to a 10-pronged pledge Ducey signed onto during his 2014 campaign as a more accurate measuring tool for whether or not Ducey fulfilled his campaign promises. In Ducey’s “pledge to the people of Arizona,” Ducey promised to defend citizens’ 2nd Amendment rights, the right to life and pledged to appoint conservative judges and support civil-justice reform legislation to end frivolous lawsuits, among other campaign promises mentioned in this story.

Here’s a glance at some of Ducey’s major campaign promises from 2014, and what he has done on those issues since he stepped off the campaign trail and into the governor’s office:

Income taxesIncome taxes

Ducey has always aimed to lower the state’s individual and corporate income tax rates “as close to zero as possible,” but he hasn’t succeeded in that goal. In the meantime, the governor has whittled away at the state’s taxes, making small cuts each year that he’s been in office — upholding a different campaign pledge.

Lowering Arizona’s individual and corporate income tax rates may well have been one of Ducey’s loftiest self-imposed goals. Even in 2014, Ducey said that reducing the income rate would require two terms, a growing economy and a shrinking government.

When he was asked about the unfulfilled campaign promise at the end of the legislative session, Ducey said Arizona faced a $1 billion budget deficit when he took office. Now that Arizona has its finances in order, the state can look toward some sort of tax reform, he said.

During his time in the executive office, Ducey has chipped away at Arizona’s taxes, but never made a major dent. Ducey entered office in January 2015 facing a massive budget crisis that tied his hands when it came to major movement, or even moderate moves on tax cuts, but he still managed to pass legislation to index the state’s tax rates eliminating what Ducey called a “hidden tax increase” that returned tens of millions back to taxpayers.

The following year, Ducey passed legislation that increased the amount of depreciation Arizonans can claim on new property, something they can deduct from their state taxes. He also pushed through a budget deal that carved out $18 million for minor tax reductions proposed by lawmakers.  

In the latter half of his term, Ducey passed a personal income tax exemption for inflation. This year, he pushed through a tax cut for veterans, though he did have to pare back his original proposal in order to free up more money for teacher pay raises.


During his first term, Ducey boosted K-12 education funding, but per-pupil spending has not rebounded to pre-Recession funding levels.

In his 2014 campaign, Ducey promised to veto any budget that cut education spending and vowed to expand school choice.

Last year, Ducey signed into law an expansion of Arizona’s Empowerment Scholarship Account program — school vouchers that allow students to use taxpayer dollars for private school tuition.

Ducey’s actions angered David Garcia — a former Democratic candidate for Superintendent of Public Instruction — to the point that he jumped into the governor’s race. The expansion also spurred the creation of Save Our Schools Arizona — a grassroots movement opposed to school-voucher expansion that is taking the fight to voters in the form of a ballot measure.

In 2016, Ducey fulfilled his campaign pledge to “fully fund the wait lists” at the state’s top-performing charter schools. Ducey pushed through legislation to create the Public School Credit Enhancement Program, which is intended to give A-rated schools more favorable interest rates when borrowing money to expand their facilities. The program is largely seen as a boon for charter schools.

Ducey has boosted K-12 education funding since taking office, but he got off to a rough start in the first year of his term. Ducey pushed a “Classrooms First” agenda that critics called misleading because they argued Ducey’s budget only funded schools enough to meet growth and inflation.

Ducey and Republican leaders cut about $117 million in non-classroom spending in the 2016 fiscal year budget, but touted K-12 spending increases elsewhere in the budget. The catch, though, was that the spending increases were legally required because the state has to meet a certain level of per-pupil funding.

State education spending has jumped from $4.4 billion in 2014 to $5.3 billion this year, which is also up from the $5.12 billion the state spent on K-12 aide in the 2007-2008 pre-recession school year.

But per-pupil spending dropped from $4,949 to 4,760 during the same time frame, according to Joint Legislative Budget Committee figures. When accounting for inflation, the current per-pupil spending is $4,157.

The most recent figures do not account for the hefty teacher pay raises Ducey promised that will go into effect in the next fiscal year and the two years following.

No new taxesNo new taxes

There are some grays areas on whether or not Ducey held true to his vow not to increase taxes.

This legislative session, Ducey extended the Proposition 301 sales tax for K-12 education funding. The 0.6-cent sales tax will renew in 2021 and last until 2041. Some have argued, extending the sales tax amounts to a tax increase — something the governor’s office and Ducey’s campaign staff have adamantly refused.

This was meant as a generational funding stream for education, said Ptak, Ducey’s campaign spokesman.

“The idea that this is a tax increase, when it goes into effect in two years, will anybody’s taxes actually go up?” he said.

Extending the tax required a two-thirds vote of the state Legislature — a requirement of any increase in state revenues. A majority of Republican lawmakers joined all Democrats in both chambers to overwhelmingly approve the bill.

In 2012, Ducey led the opposition to a 1-cent tax extension that would have permanently boosted the state sales tax rate to 6.6 percent. At the time, Ducey labeled the tax extension as a tax increase. But when he took to defending the Prop 301 extension, Ducey billed it as something other than a straightforward tax increase.

“This is a funding program, and we’re going to continue a funding program,” Ducey said last year.

Ducey also signed a bill this session to create a new car registration fee that will cost all motorists approximately $18 per year. Some legislative Republicans cried foul, calling the move a tax increase in disguise because lawmakers will not set the exact rates. That will be set by the director of ADOT. Per an Arizona Supreme Court ruling, agency-raised fees are not subject to a two-thirds vote in the Legislature. Ducey argues the new vehicle-registration fee does not count as a tax.

“A fee is a fee, a tax is a tax,” he said when reporters asked about the new fee earlier this year.


Ducey promised to cut unnecessary regulations upon entering office, and the governor’s first executive order was a moratorium on any new regulations. The governor has renewed the moratorium every year since.

One of Ducey’s common talking points in speeches is that he pledged to cut 500 regulations by the end of 2017. Then he gleefully reveals that he exceeded expectations and cut more than 600 regulations, with the total number being 676 last year.

The governor’s office claims the cuts saved Arizona businesses more than $48 million. Among the axed regulations are obsolete rules on lottery installment payments, several fees that hadn’t been charged by the Department of Environmental Quality in years and Arizona Department of Transportation rules that failed to differentiate between taxis and ride-sharing vehicles like Uber and Lyft.

But when Ducey talks about regulations as of late, his critics tend to bring up Uber’s autonomous vehicle testing program, which the company shuttered in Arizona after one of their vehicles hit and killed a pedestrian in Tempe.

Ducey didn’t cut regulations for the technology company, but he signed an executive order in 2015 aimed at luring Uber to test its technology in Arizona. Once Uber shifted its operations from California to Arizona, the company’s autonomous vehicle testing program operated with little-to-no oversight, while Ducey touted a win over California and its “burdensome regulations.

Affordable Care ActAffordable Care Act

Ducey has remained steadfast in his opposition to the Affordable Care Act, which critics refer to as “Obamacare.”

Last year, Ducey, after some hesitation, gave U.S. Sen. John McCain the go-ahead to oppose the so-called “skinny repeal” of the Affordable Care Act. But despite getting Ducey’s permission to pass the bill, McCain cast a decisive vote against the repeal-and-replace plan.

The day before the vote, Ducey tweeted “the bill on the table clearly isn’t the right approach for Arizona,” but the next day, Ducey granted Arizona’s two U.S. senators permission to vote for the bill, with the hope that the “skinny” legislation would be ironed out in conference committee.

Ducey’s major concern throughout the process had been whether Arizona would be penalized for expanding Medicaid under the Affordable Care Act, meaning the state could potentially be on the line for millions more in health care costs.

Months later, Ducey also expressed his support for the repeal plan presented by U.S. Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La., that would turn to a block grant system to give money back to the states for them to maintain their own health care structures. At the time, Ducey acknowledged the overhaul bill was not a total fix, but it was a start to ending President Barack Obama’s signature health care policy.

McCain also opposed the Graham-Cassidy repeal-and-replace plan, which may have been a blessing in disguise for Ducey as a JLBC analysis projected Arizona would lose more than $10 billion in health care funding from 2020-2026 if the bill had passed.


The way to fail Arizona taxpayers: A return-free filing system

tax or taxes concept with word on business folder index

Amidst the Covid pandemic, Arizonans and all Americans may face the most complicated tax season in history. However, instead of encouraging taxpayers to rely on accountants or tax experts to ensure they are getting all the tax credits and benefits they are entitled, some members of Congress are proposing a return-free filing (RFF) system. The truth is an RFF system would be disastrous. 

It would bury the IRS in paperwork and eliminate the role of taxpayers, accountants, and other private entities from the tax filing process. This would allow the IRS total jurisdiction over each American’s taxes. Given the IRS’ less-than-stellar performance regarding the disbursement of stimulus checks and PPP loans, how do we expect the IRS to operate effectively with this far greater level of responsibility? 

Nancy Hall
Nancy Hall

The short answer is—we can’t. The IRS is currently fixing its own backlog of unprocessed and suspended returns, and it’s costing the federal agency billions of dollars for fiscal 2020 alone. Some try to excuse the agency’s poor performance by blaming the pandemic, but Erin M. Collins of the independent Taxpayer Advocate Service does not agree. Rather, she argues the IRS’ problems stem from a lack of technological advancement.  

Collins said, “Although the IRS plans to modernize its systems to reduce the dependency on paper, it is moving toward that goal slowly due to a lack of adequate, multiyear funding. IRS modernization is not a luxury or an option anymore. The 2020 filing season highlighted the result of the IRS’s continued reliance on antiquated technology.” 

Even though the agency lacks the technological resources to function efficiently, an RFF system significantly amplifies the IRS’ already-substantial workload. This would, unsurprisingly, weaken America’s tax system. According to a 2020 report conducted by the Progressive Policy Institute (PPI), an RFF system would decrease the accuracy of tax calculations, allow for potential tax evasion, complicate the tax system (which is already complicated enough), fail to educate Americans about their own finances, and create a lack of compliance. Certainly not a ringing endorsement from PPI.  

Former Senator Bob Kerrey (D-NE)—who previously worked on tax-related issues in Congress—also opined on the issue during a recent podcast 

“I think [return-free filing is] likely to reduce the number of people who are complying because they’re going to disagree with the conclusion the government has reached, and they’re going to be unwilling to give the government even more information than they’re currently collecting, Kerrey said.   

As America works to rebuild the economy following the brutal impact of Covid, it is crucial that actions are taken to revive the livelihoods of individuals and small business owners in Arizona. Although it is widely agreed upon across the political spectrum that an RFF system would be detrimental to America’s current tax system, members of Congress must make their voices heard and stand against this harmful system if proposed as legislation.   

Nancy Hall is a certified public accountant and the owner of a successful accounting firm in Arizona.  



Wrap up with Doug Ducey

Gov. Doug Ducey (Photo by Katie Campbell/Arizona Capitol Times)
Gov. Doug Ducey (Photo by Katie Campbell/Arizona Capitol Times)

Gov. Doug Ducey finished the last session of his first term in office with a bang, overseeing a budget process that he threw a bomb into mid-session, all in an effort to avoid a historic teacher strike. The strike still happened, but Ducey is now happy to be labeled by some as the “education governor” after promising teachers a 20-percent raise by 2020. Ducey had other successes, and some failures, amid a session that went in every possible direction — from addressing the opioid epidemic to tackling sexual harassment at the Capitol.

Cap Times Q&AGive me your thoughts on the final session of your term as governor. Where did you excel, or struggle?

I thought it was a big win this session. I thought is was a really positive session. I really think the last three and a half years have been very positive. This session started off with the special session of the Opioid Epidemic Act, which we were able to pass in four days with a unanimous, bipartisan support, so we thought that was a positive. I think the focus that we’ve had on education over the last four years, highlighted of course by accomplishments like Prop. 123 and this session, the extension of Proposition 301, was a victory. And then I would also give our team a lot of credit for being able to listen, and adapt to changing circumstances, which I think is part of the definition of leadership. Sometimes you’re able to set a vision out there and present the agenda and chart the course and run it the way you want to run it, and other times there are changing circumstances, and I think the best leaders and best teams adapt to those circumstances, make sure they understand what’s happening, and are able to provide a solution.

I see the proposal in April for a significant boost in teacher pay as a good example of adapting. What was the turning point for you, to get to that proposal?

I’m not only observing and listening to what’s happening in Arizona. I can see what was happening around the country. And you could see an organized movement in West Virginia, Kentucky, Colorado, North Carolina, Oklahoma and other states. I know these governors. And what I wanted to do of course is, my number one concern in education, are kids in the classrooms. So I did not want to see a school shutdown. I did not want to see a teacher strike. So I wanted to answer, prospectively and proactively, not only what this year could look like, but what the next three years could look like.

Why is it so hard to reach a consensus on education funding? There’s always disagreement on how much funding is enough.

First I would say that I think there’s very little that you come to consensus on. This is why we have a Legislature with a House and a Senate and Republicans and Democrats and independents, is to roll these ideas through as to what can achieve the accomplishment of passage in a budget or in legislation so that we can address these issues. The thing that I think we’ve had broad support on is that our teachers deserve a raise. Our teachers have earned this raise. And what I don’t want to do as the chief executive is make spending the measure of success. And I’ve been vocal about the objective of focusing on outcomes and results inside the classroom… Arizona is improving faster than any other state in the country.

Can you address the failure to get a school safety bill out of the Legislature?

I am disappointed with what happened with school safety. I wanted to do more. I’m happy that we were able to fund these background checks, which I think is really part of what’s missing, not only in Arizona but across the country, and we have the ability now to dramatically improve our background checks. We have some dollars in there as well for behavioral health and counselors inside the schools. But I think the STOP order, the Severe Threat Order of Protection, is an excellent plan, and it was put together by listening — to kids in classrooms, teachers, principles, law enforcement leaders, mental health professionals, prosecutors from around the state, rural and urban, Republican and Democrats. And then politics intervened.

When will you continue the push for that bill? Perhaps a special session?

We wanted to get this done in the regular session. So I don’t’ know why I would call a special session to have folks come back here just so they could receive per diems and continue to play politics with this. We have seen a lot of interest since the national attention has happened around the advocacy of the plan, so we’re going to continue to work with lawmakers. I would think just like public education and the focus on results, school safety is something we’ll want to continue to focus on.

Did you like how the bill was amended in the Senate? They watered down parts of it, including eliminating part of the STOP orders.

It was still in movement, and we traditionally don’t comment on legislation as it’s moving, so I don’t know what a final product would have looked like. And I also want to acknowledge that things changed. Circumstances on the ground changed, and the top priority became teacher pay. So we did have a focus on that. So we were able to accomplish a portion of the school safety plan. That’s why I say there’s more left to do.

One campaign talking point from 2014 that went unfulfilled was lowering income tax rates. Why is that?

I said as I campaigned and I’ve said as I’ve governed that to lower our income tax, you’re going to need three things: You’re going to need a term or two; you’re going to need a growing economy and you’re going to need a plan. Now we have two of the three, the third is still to be determined. But when we came into office we had a $1 billion budget deficit. I’m a big believer that tax reform can improve the state and improve our revenues and improve our K-12 education system. But we had to get our finances in order. We have them in order now, so now there’s opportunities to look to broader tax reform and improvement.

What does that plan look like?

We’ll be talking about what our plans are during the campaign cycle and the election season. But I think the health of the economy, the attractiveness of the state, the continual job creation and formation always leads with a discussion around tax policy.

How do you feel about your re-election odds given the political climate: A potential blue wave the year after a Republican was elected president?

I’m proud of our record of accomplishment and achievement. I am confident and optimistic that when we run our campaign and communicate directly with voters, they’ll see the change in Arizona over the past four years. At the same time, I think you need to prepare for the worst. And hope for the best.