Pub. 10 2020 Issue 1

10 www.azbankers.org T HEY SAY NOTHING IS CERTAIN BUT death and taxes; at the Arizona Legislature, a discussion about tax policy in every session is guaranteed, and this year is no exception. As legislative leadership continues budget negotiations with the Governor’s office, and as the self-imposed deadline of a budget by early March nears, many Capitol observers blame a disagreement over tax policy as the reason for a looming stalemate. Arizona faces a $1 billion surplus this year, and policymakers of both parties have laundry lists of spending requests. One way many of the legislative majority would like to “spend” money is through tax cuts, although there isn’t an agreement on how to do it and how much to cut. The budget framework released by the house earmarks $50 million in one-time cuts and $100 million for ongoing reductions, while the Senate plan calls for $50 million in one-time cuts and $75 million in ongoing reductions. By contrast, Gov. Ducey’s budget only spends about $45 million in tax reductions that would eliminate state income taxes on veterans’ pensions. Sen. J.D. Mesnard (R-Chandler) has a plan that reduces commercial property taxes, lowers the State Equalization Rate on all property taxpayers, and conforms to federal income tax on accelerated depreciation. Ben Toma (R-Peoria) has a similar plan that lowers individual income tax rates slightly in lieu of Mr. Mesnard’s property tax cuts. The Senate proposal is estimated to cost $83 million in the first year, while Mr. Toma’s bill has a $162 million first-year price tag. Who’s plan will ultimately be included in the budget? Only time will tell. One thing is certain — there’s plenty of tax talk to look forward to. w John Fetherston Associate Director Veridus, LLC