Arizona Governor Doug Ducey on June 30 signed off on a $12.8 billion state spending plan that includes $1.3 billion in immediate tax cuts and millions in targeted investments for education, child care, public safety, and wildfire prevention.
“Each and every Arizona taxpayer, no matter their income, will experience a tax cut under our historic tax reform,” Ducey said in a statement on Wednesday. “That means job creators will continue to choose our state to expand operations, working families will get to decide how they spend more of their hard-earned dollars, and those who [have] served our nation will rightfully keep more of their own money.”
The Republican governor said the budget, signed a day before the new fiscal year went into effect, fulfills his commitment to working families, veterans, and protects small businesses from a 77.7 percent tax increase.
The spending plan will reduce income taxes by 13 percent, saving the average taxpayer about $340 a year.
It also establishes a 2.5 percent flat tax, phased in over three years beginning Jan. 1, 2022. The governor hailed it as the lowest flat tax in America.
“While we’re giving money back to taxpayers, this budget makes responsible, targeted and substantial investments in the things that matter,” Ducey said. “Under this budget plan, Arizona is paying off more than $1 billion debt, we’re helping to protect families with the most sweeping child care package in the nation, and we’re making record investments in K-12 and higher education, infrastructure, public health and public safety.”
Many Democrats and some Republicans, however, have come out against the governor’s tax cuts, saying they benefit only the state’s wealthiest earners and protect them from the impact of a new 3.5 percent tax surcharge that voters approved to increase education funding.
The budget plan eliminates taxes on retirement pay, saving each veteran an additional $650 a year.
For education, this year’s budget earmarks $20 million for school transportation and another $10 million next year, and commits over $40 million for early literacy education.
Regarding education, Ducey said, “We are making targeted investments to support educators, families and students across the state so our kids continue to excel in and out of the classroom.”
In September 2020, the governor announced an infusion of $14 million to support Arizona universities during the COVID-19 pandemic. The new budget adds to that support by allotting $68.6 million to the state’s three public universities and over $48 million for scholarships for unemployed workers who return to the workforce, including in science, technology, engineering and math (STEM) programs, and rural community college financial aid.
As part of a $1.5 billion public safety investment under Arizona’s budget, $13 million will go to provide State Trooper body cameras and $55 million will be provided for border security.
“Defending Arizona’s southern border from drug cartels and human trafficking during the Biden-Harris border crisis could not be more important,” Ducey said. “Arizona’s budget delivers on border security and other critical public safety investments.”
Ducey said the budget guarantees over $900 million in spending to help child care providers with financial support and reimbursements, and covers child care subsidies for unemployed Arizona residents returning to the workforce.
Also included in the budget is $321 million for public transportation infrastructure and road rebuilding projects, and expanding safety and transportation capacity; $100 million for wildfire protection; and nearly $40 million for health and human services.