John --

Welcome to our thirteenth weekly update from the state capitol! Unlucky number 13! 

Now that committee hearings have ended (save for a random few where we approve gubernatorial appointments), that means our floor schedules have shifted a little bit. On Monday’s, we go to the Senate floor at 1:30pm as normal, but on Tuesday’s, Wednesday’s, and Thursday’s we go to the floor at 10am. 

Most of our work going forward is to debate and approve House bills that have cleared Senate committees, or doing what’s called a “final read” of Senate bills that were amended in the House and now have to be voted on again in the Senate. 

There were several days last week where we adjourned for the day around lunchtime, and most members left home for the day. For me, the afternoon’s are a good time to catch up on emails, do additional research on bills coming forward, and continue to have budget conversations with my colleagues.

Yesterday was a long day, with the Senate adjourning after 7pm after a floor session of several hours. We spent all of that time on one bill - SB 1797, the bill that will legalize online sports betting and update the compact that the state has with our Native American tribes across the state. 

I voted yes on the overall bill, even though I had some concerns about the way the licenses will be doled out and where the revenues from expanding gaming will go. The bill passed with a strong bipartisan margin of 23-6, and is now headed to the governor for his signature.

This means that in the next couple of weeks, you will be able to legally place online sports bets on things like Diamondbacks games, Coyotes games, and Suns games. Several of the tribes across the state will also be allowed to open a couple of extra casino locations over the next couple of years.

SB 1797 is an example of one of the bigger issue bills that we’ve now tackled, with a few more to go in the next couple of weeks. But other than tackling these larger issues, most of the extra time we have at the capitol right now is focused on our state budget, and coming to an agreement before we adjourn for the year.

Ahh yes, the budget. What’s going on there? 

My colleagues in the House Republican caucus announced last week their opening gambit on the budget, which includes a $1.5 billion annual tax cut. To put that in perspective, that’s over 10% of the revenue in our budget!

Yes, the state has a healthy allotment of one-time surpluses, due in part to stronger than expected state revenue numbers and the dollars the state is receiving from the federal government through the American Rescue Plan and CARES Act.

But that’s the thing: most of those dollars are one-time. So to plan permanent, ongoing policy using one-time revenues…that’s a little concerning.

I am very, very open to the conversation around tax reform. I have, in fact, introduced legislation this session to create a NEW tax cut, SB 1040. That legislation would create a state Earned Income Tax Credit (EITC), with dollars going directly to low-income, working families.

But the price tag on that bill is on the small side: about $70 million a year. I could have written the bill to be much larger in scope, but I wanted to start small with the hope that my colleagues on both sides of the aisle would support it. That worked: it passed the Senate by a vote of 26-3 back in February.

There is obviously a big difference between $70 million and $1.5 billion. I could potentially live with tax reform that comes in around $200-$300 million, but anything close to $1 billion or above is a non-starter for me.

We have too many investment needs in our state, not to mention how we would pay for that large of a tax cut on a permanent basis. There are plenty of one-time investments we could make as a state this year that would create jobs and help grow our state’s economy.

Those investments include the New Economy Initiative, which would fund specific, targeted programs at our three state universities. We could invest in infrastructure, including specific road and bridge projects throughout the state (including one close to my district: widening the I-10 between Ahwatukee and Casa Grande).

Housing is an important issue for me and many of my colleagues, and an investment in our state’s Housing Trust Fund is long overdue.

These are not luxury items; these are core functions of state government, and if you polled Arizona residents, I am fairly confident that a very large majority of voters would support them. Those investments are harder to do if we are cutting over ten percent of the revenue in our state budget.

Not to mention the fact that for Arizona taxpayers not paying the Prop 108 surcharge (that’s individuals making less than $250,000 a year, or couples making less than $500,000 a year), Arizona’s state income tax is in the bottom quartile in the country. The House Republican proposal would take our state income tax from four brackets (where you pay a higher tax rate the higher your income goes) to just one bracket, where all Arizona taxpayers would pay the same rate, regardless of how much money you make.

Any conversation on tax reform should also include a conversation about our state sales tax, which it’s worth pointing out is one of the ten HIGHEST in the country. So in a state with a relatively low income tax and a pretty high sales tax rate, the talk at the capitol is centered around…further reducing our income tax.

What I can tell you, based on the conversations I have had with my Senate Republican colleagues, is that the House proposal does not have enough votes in the Senate to pass. 

So in the mean time, I will continue to do what I have always done, which is to work my colleagues in the majority on ways to grow our economy, make critical investments, and consider reasonable tax reform.

I expect us to be in session for at least a couple more weeks, so stay tuned to future weekly updates for more thoughts on what is going on at the capitol!

That’s it for this week’s update; remember that you can always get more frequent updates on my social media accounts.

Thank you,

Sean

http://www.seanbowieforaz.com/

Paid for by Sean Bowie for State Senate. Authorized by Sean Bowie.