After a week of fighting among Republicans, the legislature on Monday evening approved an $11.8 billion state budget for the fiscal year that begins in July.
Gov. Doug Ducey, who negotiated the budget agreement with GOP leadership, lauded the legislature’s passage of the plan, including the additional $542 million it will add to the state’s rainy day fund, which was a top agenda item of his going back to the start of the legislative session.
“With this budget, Arizona is learning from the mistakes of the past, exercising fiscal responsibility, investing in the things that matter and making a historic down payment on securing Arizona’s future,” Ducey said in a press statement.
We’re making good on our promises to invest in the things that matter like K-12 and higher education, public safety, health care and rural infrastructure – all while preparing our state for the unexpected and inevitable.
— Doug Ducey (@dougducey) May 28, 2019
The Arizona House of Representatives approved the spending plan early Saturday morning, but the package of bills didn’t win approval in the Senate until Monday because of intense infighting within the GOP majority.
The biggest battle was over legislation that wasn’t actually part of the budget: a measure that significantly expands the rights of people who were sexually abused as children to sue their abusers and institutions that protected them. Sens. Paul Boyer, R-Glendale, and Heather Carter, R-Cave Creek, had been withholding their votes on the GOP-designed budget until such a measure was passed. Lawmakers Monday afternoon unanimously approved a compromise proposal, and Gov. Doug Ducey signed it shortly thereafter.
Republican opponents of the bill, led by Sen. Eddie Farnsworth, R-Gilbert, had said that Boyer’s proposals would pose existential legal threats to institutions – such as the Catholic Church or the Boy Scouts of America or the Church of Jesus Christ of Latter-Day Saints, which to varying degrees have silenced victims and protected their abusers – and the insurance companies who would ultimately be forced to pay settlements.
But the compromise legislation, which gives victims until the age of 30 to file civil lawsuits and creates a “window” until the end of 2020 for people older than that to sue, broke the logjam in the Senate. After both chambers had approved it, the Senate swiftly set about approving the rest of the state budget.
Another major sticking point had been the phase-out of a vehicle license tax approved by the legislature and Ducey last year. The Arizona Department of Transportation had estimated that it would be $18 per vehicle, but ultimately set it at $32. The original budget plan called for it to be phased out over five years, but lawmakers shortened that timeframe to two years after Sen. Michelle Ugenti-Rita, R-Scottsdale, threatened to vote against the budget over the fee.
The budget uses unanticipated tax revenues in the current year to boost savings, give raises to police officers and prison guards and increase school funding. It also cuts about $325 million in taxes to offset higher tax collections the state anticipates from the 2017 federal tax cuts and from taxing more online sales.
Democratic opposition to the budget was particularly fierce regarding those tax cuts, and they argued the money should be spent on needs like schools and infrastructure. They opposed a provision to increase the state’s rainy day fund by more than $500 million on similar grounds.Sen. Andrea Dalessandro, D-Green Valley, said surplus revenue should go toward needs like school repairs and construction.
“Instead of doing that, we did some tax cuts and a bit too much in the rainy day fund, because clearly it’s raining now,” she said.
While Democrats criticized the tax conformity plan as a tax cut, Republicans defended it as simply offsetting the tax increase that some Arizonans will see by conforming to the federal tax code, which eliminates a host of itemized deductions.
“I take exception with people calling giving money back to the taxpayers that they are giving to the state,” said Sen. Vince Leach, R- Tucson.
The conformity plan is partially funded through $85 million in additional sales tax revenue the state will get from taxing online sales of goods from out-of-state vendors, in accordance with a recent U.S. Supreme Court ruling.
Sen. J.D. Mesnard, R-Chandler, opposed the conformity plan because he said it put too much of a burden on higher earners and championed a different plan that said was more equitable. As a result, Mesnard voted against most of the budget bills, and was the lone Republican to do so.
Among other major provisions of the budget:
- $136 million in district additional assistance to K-12 schools to partially offset cuts made in 2015
- $88 million in building renewal funding for K-12 schools
- $70 million for a “results-based funding” program for K-12 schools
- Nearly $75 million for pay raises for state troopers, correctional officers, Department of Child Safety caseworkers and other public safety employees
- $15 million in permanent funding for the teachers’ academy created in 2018
- $40 million to expand Interstate 17 between Black Canyon City and Anthem, with another $45 million coming in fiscal years 2021 and 2022