The state already faces a $400 million, and growing, deficit in the upcoming year
CAITLIN SIEVERS
Arizona Mirror
Arizona is one of 26 states that cut income taxes within the past few years, and a new report says that the Grand Canyon State’s cuts could shrink the state’s operating budget by more than 10%, possibly necessitating cuts to vital services like education.
The report warns that the impact of the tax cuts that Arizona passed in 2021 under Republican Gov. Doug Ducey will limit the state’s ability to continue existing services and make new investments.
The Center on Budget and Policy Priorities, a left-leaning research and policy institute that produced the report, concluded that Arizona’s cut to a flat 2.5% income tax rate, from the previous high of 4.5% for the state’s most wealthy residents, will reduce state revenues by “large and growing amounts over time.”
“We have a billion dollars less in revenue and the billionaires of our state have a billion dollars more,” Arizona Senate Minority Leader Mitizi Epstein told the Arizona Mirror. “And that will continue year after year because of this tax policy that, I feel, Republican colleagues created with their eyes closed. They said, ’Let’s just cut this tax for the wealthy,’ without even looking at what our responsibilities are as a state.”
The state is already facing a $400 million budget deficit in 2024, primarily caused by the flat tax which went fully into effect at the start of 2023. The 2024 budget was based on a projection of 1.9% revenue growth, but so far this fiscal year — which began in July — revenues have declined by 6.2%.
“I’m doing my darndest not to say, ‘I told you so,’ but I told you so,” Epstein said.
