Education groups heading to the ballot to block new tax cuts

By: - July 7, 2021 9:02 am

A supporter holds a sign at the announcement of the Invest in Education Act. Photo by Jerod MacDonald-Evoy | Arizona Mirror

A coalition of public education advocates are mounting a campaign to ask voters to overturn the tax cuts that were the centerpiece of the budget that Republican lawmakers and Gov. Ducey just approved.

The tax cuts were designed to blunt the effect that Proposition 208, which voters approved in November, would have on wealthy Arizonans. That ballot measure — known as the Invest in Education Act — imposed a 3.5% surcharge on income greater than $250,000 for individuals and $500,000 for couples, with the money directed to public schools to increase teacher pay and boost overall funding.

Critics of the tax cuts that were included in the budget say it’s a massive giveaway to the rich. Nonpartisan legislative analysts noted that Arizonans making more than $5 million annually would see an estimated tax cut of more than $350,000, while those making between $1 million and $5 million would save nearly $47,000 on average. 

Meanwhile, Arizonans making between $50,000 and $75,000 — the median household income is about $62,000 a year — would see their taxes cut by a mere $96.

“We know we are going to be successful in putting this question in front of voters, and the underlying question is: Should Arizona invest in its schools and its communities, or should it give a billion-and-a-half (dollar) tax cut primarily to millionaires?” said Joe Thomas, president of the Arizona Education Association, the state’s largest teachers union.

The AEA is banding together with Stand for Children, Children’s Action Alliance, Arizona Interfaith Network, AZ center for economic progress, Save Our Schools and the Friends of ASBA (Arizona School Boards Association) to force an election in 2022 on the tax cuts. 

The coalition, called Invest in Arizona, is hoping to refer two tax cut proposals to the ballot. Arizona’s constitution allows citizen groups to block new laws until voters can weigh in, provided they collect enough valid signatures. To halt the tax cuts and send them to the ballot, opponents must collect 118,823 signatures by Sept. 28.

The two laws being challenged are Senate Bill 1827, which caps tax rate at 4.5% to benefit those with incomes greater than $250,000 for individuals or $500,000 for joint filers; and Senate Bill 1828, which creates a single 2.5% rate as soon as 2023 if state revenues hit certain triggers.

Invest in Arizona is also readying a referendum on Senate Bill 1783, which is awaiting Ducey’s signature. That bill creates a new business individual income tax with a 4.5% flax rate that some taxpayers can opt into — and any taxpayers who do so would be exempt from the Prop. 208 surcharge. 

Proposition 208 was projected to raise $970 million annually, but the new tax filing created by SB1783 would reduce that by between $263 million and $378 million every year, legislative budget analysts concluded. Of the approximately 3 million tax returns filed with the state each year, those with an income above $1 million, which is about 9,000 filers, were projected to pay 40% more in taxes under Prop. 208.

Rebecca Gau, executive director of Stand for Children, said the education groups will go to voters again to restore K-12 funding because state legislators and the governor are undercutting the voters. 

“It’s pretty clear that the governor took these steps to try to undermine Prop. 208, so our first message is that 47 Republican legislators and one Republican governor are not listening to the will of the voters,” Gau said. “These three bills put together are significantly reducing revenue to the state, and in particular reducing revenue to education or potential funding for education. We know that voters are pretty frustrated by a small group of people sort of thumbing their nose at the will of the voters.”

This isn’t the first time that education advocates have turned to voters to block changes made by the GOP-led legislature: In 2018, Save Our Schools Arizona and the Invest in Ed coalition successfully passed Proposition 305, which reversed a school voucher program expansion legislators approved that year. 

“Now our job is to once again restore more cuts that the legislature has made to education,” Gau said. “It’s the same game, it’s the same tune. We know that voters agree with us that the goal is to restore education, not to cut education funding.”

Gau said the group is also considering legal action related to SB1783, which she said directly undermines Prop. 208. In Arizona, voter-approved measures are constitutionally protected, and legislators are barred from changing or repealing them.

“There’s real needs in this state. Education is a primary function of the state, but there are other ways that some of these resources can be spent that will make this state safer both for the economy and make our communities stronger,” Thomas said. 

***CORRECTION: An earlier version of this story incorrectly identified the Arizona Interfaith Network as the Arizona Faith Network.

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