The budget bills that have been released in the state Legislature outline a fiscal year 2020 spending plan that makes Arizona more competitive, more attractive to job creation, and that is fiscally prudent. It delivers broad tax reform and it makes critical investments in core areas, all while preparing the state for the future by bringing the state’s rainy day fund to a record-high balance.
There’s much to like about the budget. Chambers across the state support the proposal, as do the fiscal hawks at the Arizona Tax Research Association, transportation leaders like the Arizona Trucking Association, and public safety groups like the Arizona Fraternal Order of Policy.
Under this budget, the state keeps its solemn promise to K-12 teachers by continuing the implementation of the statewide teacher pay raise of 20%, and it makes a bigger investment in the restoration of District and Charter Additional Assistance, funds that schools can use for a variety of reasons, including teacher pay.
The budget also nearly doubles the funding for schools that are producing outstanding results, with additional dollars for high-poverty schools; it rewards schools for producing graduates who obtain industry certifications through career and technical education (CTE) programs, building on an existing program championed by the Arizona Chamber that incents schools to produce high-school graduates with college credits already in hand thanks to Advanced Placement and similar course offerings; and it keeps our students safer on campus with funding for additional counselors and school resource officers.
And higher education wins, too. It includes new dollars for our universities, as well as for community colleges delivering in-demand educational programs in areas like allied health professions and aerospace.
The state’s healthcare community also supports a revision to KidsCare enrollment that strengthens the program.
The plan builds on the economic policy successes that have made Arizona one of the nation’s fastest-growing states, continuing to execute the pro-growth strategy that has vaulted Arizona into the top-10 on lists of best states for job growth and business climate.
The budget reflects a wise approach to conforming state tax law with federal law, reducing the number of income tax brackets and lowering the state’s top tax rate. This is especially helpful to small businesses, which file their taxes on the individual portion of the tax code. It’s no surprise that the National Federation of Independent Business in Arizona strongly supports the deal.
The budget proposal also offers good news for individual taxpayers, who benefit from the tax bracket compression, as well as an increased personal exemption that aligns to the federal personal exemption. These reforms represent broad-based tax relief for all Arizonans at all income levels, and ensure that taxpayers won’t be subject to a tax increase by virtue of the passage of the federal tax reform package. The Arizona Chamber was the state business community’s biggest champion of the 2017 Tax Cuts and Jobs Act, so we are thrilled that Arizona stands to be an even bigger winner by combining the federal reforms with this budget deal.
And while some Capitol watchers said it couldn’t be done this year, the budget package includes companion legislation that will bring greater parity between our communities’ brick and mortar retailers and online sellers. By passing legislation to align state tax law with the provisions of the U.S. Supreme Court’s Wayfair decision, Arizona can begin the collection of transaction privilege tax from remote sellers in a manner that is fair to businesses, municipalities, and consumers.
This isn’t a budget for the State of Maricopa, either. It reflects the unique needs of greater Arizona, with funding for rural area community colleges, grant funding for rural broadband upgrades, funding for local infrastructure needs, much-needed improvements to Interstate 17, and funding for the Arizona Office of Tourism, all of which are critical to the economic health of communities outside our urban hubs.
The budget makes sure Arizona will be ready for the implementation of USMCA, the successor agreement to NAFTA, by funding cold storage infrastructure for the Mariposa commercial port of entry in Nogales, one of the country’s top entry points for Mexican-grown fresh produce.
The budget fulfills Arizona’s core responsibilities, smartly reforms our tax code, keeps our promise to our educators, and ensures Arizona will continue its upward economic trajectory. The Legislature should work diligently to pass it.
Glenn Hamer is president and CEO of the Arizona Chamber of Commerce and Industry.