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GOP effort to avoid a ballot referendum on tax cuts runs aground in the Arizona Senate

Published: Friday, February 25, 2022 - 6:26pm

An effort to repeal and replace a nearly $2 billion income tax cut adopted last year — all to avoid giving voters a final say on whether the cut should take effect — has run aground, for now, in the Arizona Senate.

Earlier this week, Republican senators met in a closed caucus to discuss plans for Gov. Doug Ducey to call a special session next week to re-adopt the tax cut, according to Senate Minority Leader Rebecca Rios (D-Phoenix).

Ducey is eager to save the tax cuts from possible defeat at the November ballot, when voters get to decide if the plan to cut income tax rates can become law, Rios said. The governor has boasted the tax cuts fulfill a campaign promise to reduce Arizona’s income taxes as close to zero as possible.

But according to Rios, at least three GOP senators expressed opposition to the special session: Wendy Rogers of Flagstaff, Kelly Townsend of Mesa and Michelle Ugenti-Rita of Scottsdale.

None of the senators could immediately be reached for comment. 

But Townsend told KPNX’s Brahm Resnik that she’s not willing to do “anything else” at the Capitol until the Legislature tackles “serious election reform.” Townsend and other Republican lawmakers have proposed dozens of changes to Arizona election laws, many inspired by conspiracies of fraud during the 2020 election.

Senate President Karen Fann, the top Republican in the chamber, said in a text that “providing tax relief is a priority of the caucus,” but added there’s no specific timeline for a possible repeal and replacement of the 2021 income tax cuts.

A spokesman for Ducey issued a statement neither confirming nor denying the governor’s intentions.

“There will be a special session when the governor calls one,” spokesman C.J. Karamargin said.

There are only two ways lawmakers can convene for a special session — either the governor calls one, or a two-thirds majority of the Legislature votes to hold one. Rios said such a maneuver would undermine the will of Arizona voters, and Democrats will unanimously oppose the Republicans’ plan.

“There were hundreds of people that spent countless hours collecting hundreds of thousands of signatures to allow the people of Arizona to decide if the top 2% should get a $2 billion tax cut,” Rios said. “And I think the Republicans know the answer to that, so they don’t want that issue on the ballot this fall.”

Rep. Ben Toma (R-Peoria) and Sen. J.D. Mesnard (R-Chandler) acknowledged in January they’re working to repeal the tax cuts they helped shepherd through the Legislature last year.

Those cuts, accomplished by lowering the income tax rate for most taxpayers to 2.5%, mainly benefit the wealthy. The average Arizonan earning between $75,000 and $100,000 will save $231 a year in state income taxes, while the average taxpayer earning between $500,000 and $1 million a year will save more than $12,000, according to the Legislature’s budget analysts.

Legal challenges designed to stop the referendum of that tax cut have so far proved unsuccessful, but a repeal of the original tax-cut measure would block the referendum from occurring in November — if the law no longer exists, there’d be nothing for voters to decide.

Republicans could then vote to replace the law with a new version of the tax cut, which Mesnard favors given how the economic landscape has changed since 2021.

The tax cut was crafted in part to counteract Proposition 208, a voter-approved tax on the wealthy. That law has been challenged in court, and may soon be struck down in Maricopa County Superior Court.

“We would have passed a different tax package” were it not for Prop. 208, Mesnard said. As for repealing and replacing, “whether we do it in a special (session) or not, I want it to get done either way.”

Invest in Arizona, the organization responsible for the referendum, would have to once again gather more than 118,000 signatures from registered voters to halt the law from taking effect.

Ducey last called for a special session in June to help the state fight a spate of large wildfires and recover from their aftermath.

The Associated Press contributed to this report.