PHOENIX — Questions and objections from Republican lawmakers about the state’s $11.9 billion proposed budget have left GOP leaders with a basic question: Now what?
Rank-and-file legislators got their first real look late Monday at the spending and tax cut plan backed by Republican legislative leadership and Gov. Doug Ducey.
Now they’re lining up to say they need funding for one or more pet programs to secure their votes.
But there’s an even more basic issue for some Republicans.
On paper, the plan includes about $325 million in tax cuts. Most of that is designed to make up for the fact that some Arizonans will owe more in state income taxes due to changes in federal tax law.
Put simply, it’s designed to be revenue neutral, with the state taking in no more than it does now.
Only thing is, the people who would be getting the tax cuts are not necessarily the ones who will be paying more. So the net result is that some Arizonans would end up with a higher net income tax after the cuts than they are paying now.
That angers Sen. J.D. Mesnard, R-Phoenix. He’s one of the holdouts on the budget until the tax cut is rewritten to include a “hold harmless” provision to ensure that no one ends up with a higher bill.
Sen. David Farnsworth, D-Mesa, said he’s siding with Mesnard and withholding his vote.
Senate President Karen Fann, R-Mesa, acknowledged the complaint.
“No plan’s going to be absolutely perfect,” she said. But Fann said her big concern is for the people in the lower half of the income scale to make sure that they aren’t hit.
The whole idea of cutting tax rates — and making those cuts permanent, with no provision to review them as the state’s needs change — is causing its own heartburn among some Republicans.
One concern is the question of what’s not being funded.
Rep. Kate Brophy McGee, R-Phoenix, said one of her goals is restoring funding taken away from public schools during the recession.
Last year, lawmakers approved a five-year schedule to put back the $371 million that schools are supposed to get for things like books, computers and buses. And this year’s budget plan does accelerate that.
But it still leaves schools about $130 million short — in a year when lawmakers are proposing not just what some see as tax cuts, but also setting another $250 million aside into a rainy day fund.
Brophy McGee also said the state needs to do more to reimburse organizations that provide services to the disability community. She said they were hard hit by Arizona’s 2016 vote to increase the minimum wage from $8.05 an hour to $12 by next year.
Rep. Heather Carter, R-Cave Creek, has a list of her own priorities.
But what really annoys her is how the cuts in income taxes were presented as a done deal.
“Where’s the public debate?” she asked. “Where’s alternative proposals?”
Also missing, said Carter, is looking at what she says is the larger picture.
“I get we need to do everything we can to have a thriving economy in the state of Arizona,” she said.
“That needs to be balanced with the role the government has — a constitutional mandate to fund our schools,” Carter continued. “And so where’s the public debate around those issues?”
What’s worse, she said, is that some issues that did get a public debate — and public approval — are nowhere in the funding plan.
One prime example, she said, was legislation to provide grants to families of limited means to be able to keep their elderly parents at home. Carter said this would pay for things like grab bars in the bathroom.
And there are other programs that really don’t cost any taxpayer dollars. Consider the Housing Trust Fund, which is supposed to help provide affordable housing. By law it is supposed to receive half of what the state collects from the sale of unclaimed property, or more than $50 million a year.
But lawmakers, looking for quick cash during the recession, raided those dollars. And even with the state in much better fiscal health now, the proposal on the table would restore just $10 million.
Sen. Michelle Ugenti-Rita, R-Scottsdale, has her own objections to the plan.
She has made repeal of a controversial $32-a-vehicle registration fee a condition for getting her vote.
The plan does that — sort of: It proposes to phase out the fee, but not until 2024. Ugenti-Rita called that a slap.
“It really doesn’t take the opposition to the fee seriously,” she said. “That is not a meaningful proposal.”
But any effort to secure her vote by eliminating the fee immediately runs into another problem. The fee currently brings in $185 million a year to fund the highway patrol.
Rep. Noel Campbell, R-Prescott, said he worries that if the fee goes away — whether now or in 2024 — that will bring Arizona back to a situation where the state was taking money from gasoline taxes to keep troopers on the road. Campbell, a proponent of more money for highway construction and repair, said that’s a bad option.
Finally there’s the fact that Sen. Paul Boyer, R-Phoenix, is withholding his support for the budget — any budget — until he gets a vote on his proposal to give people who were assaulted and abused as children more time to file civil suits against their attackers.
Meanwhile, time is slipping away: The state is less than six weeks away from the new fiscal year.
Unlike the federal government, which can approve a “continuing resolution” to keep the doors open, there is no similar provision in Arizona law if there is no spending plan by July 1.
Fann said she’s not worried.
“This is not new,” she said Tuesday. “We do have members every year that say, ‘I’m not voting on the budget unless I get X.’ We just have to work through that.”
In the Senate, there are at least five Republicans who have said there are potential deal-killers in the budget. There are just 17 Republicans in the 30-member chamber, meaning Fann has to corral at least 16 of them.
The House presents an even tighter problem for Speaker Rusty Bowers, R-Mesa: A loss of just one of his 31 Republicans leaves him without a working majority.
