Arizona faces full federal tax conformity and a moratorium on data center tax cuts

By Jakob Thorington | Arizona Capitol Times

Key points:
  • Legislature to send Gov. Katie Hobbs a bipartisan budget deal
  • Governor anticipated to sign, lawmakers expect to adjourn for summer on Friday
  • The $18.3 billion deal fully conforms Arizona to President Donald Trump’s federal tax cuts and pauses subsidies for new data centers for three years 

Gov. Katie Hobbs is expected to sign a bipartisan budget package now moving through the Legislature, calling the deal a compromise with legislative Republicans after including full conformity to President Donald Trump’s tax cuts and a three-year pause on subsidizing taxes for new data centers. 

The Joint Appropriations Committee passed the $18.3 billion package on Wednesday morning with only three lawmakers on the 28-member panel voting against it. Both chambers are expecting to vote on the budget package Thursday and adjourn sine die on Friday. 

Hobbs in May vetoed a $17.9 billion GOP-led budget proposal that kept the state’s sales tax exemption for data centers, but lawmakers and the Governor’s Office have reached an agreement after a month-long recess to focus on budget negotiations. 

“This bipartisan compromise shows what we can do when we put common sense before political games and focus on delivering real results for our communities,” Hobbs said on Tuesday. “It will put money back in the pockets of Arizona families and lower costs, make our communities safer and protect the vital services that Arizonans rely on.”

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