John --

Good morning, and welcome to our eighteenth weekly update from the state capitol on all things legislative session!

Today is May 18th, and in most years, we would have already completed the budget and adjourned. But as you could probably tell from my updates this year, 2021 has not been a typical year at the capitol.

My colleagues in the majority are feverishly hoping to wrap up the state budget this week, holding small group meetings and trying to get all of their members on board.

I’ll get to why I don’t think the budget will be happening this week in a moment, but first, once the budget is actually agreed upon and ready to go, how long does the actual process take?

You may have heard of something called the “three day rule” at the legislature, meaning that any bill has to take at least three days before it can be approved and sent to the governor.

Because the budget bills have not been introduced and “first read” yet, that means the earliest the budget could happen is this Thursday, if the bills were introduced today. Of course, when I say Thursday, that could mean early Thursday morning after 12:01am. That’s why recent sessions have sometimes led to budget votes at 3am. Not the most ideal time to vote on a $12 billion budget, in my opinion!

When I say “budget bills,” it’s important to point out that the budget is usually about a dozen different bills, not one single bill. For short, we call them budget burbs, or BRB’s (budget reconciliation bills).

You will have budget bills by general policy issue (education, health care, environment, etc), that mostly includes policy changes, and you also have what’s called the “feed bill,” or the General Appropriations Act. That’s the budget bill that has all the money in it and outlines where money is going.

I voted for the “feed bill” in two previous budget years: 2018 and 2020. 

Typically, budget bills are single assigned to the Appropriations committee in both chambers, and they meet the day after the bills are formally introduced. So if the budget bills are formally introduced on a Tuesday, the Appropriations hearing would take place on Wednesday.

Once the budget bills pass Appropriations, they are ready for floor action. Once they hit Committee of the Whole, that’s where amendments can be offered on each section of the budget. This is normally when the minority party offers amendments that reflect their budget priorities, and will almost always fail on party line votes. 

Once the bills go through Committee of the Whole, they can get voted on in each chamber. The budget bills will be swapped, meaning both the House and Senate are voting on the exact same bills so they can go to the governor.

So that whole process takes three days. And because we don’t normally come in on Friday’s or weekends, it generally means that if budget bills aren’t introduced near the start of the week, it’s likely not happening that week.

Based on what I’ve gathered about the budget process so far, it still sounds like the big sticking point is the House tax plan, which would dramatically cut our state income taxes. The cost is somewhere around $1.5 billion per year, or over ten percent of the revenue in our state budget.

I’m still hearing there are quite a few Republicans in both chambers opposed to that big of a tax cut, and the impact it could have on our budget in future years, especially if there is an economic downturn or revenue projections don’t pan out as currently forecasted.

It’s also worth pointing out the impact on our local cities and towns as well. Our cities receive a share of the income tax collected at the state level, and any cut in the income tax rates at the state level trickles down to the local level as well.

For the four cities I represent (Chandler, Mesa, Phoenix, and Tempe), the House tax plan would constitute a $103 million loss per year, with Phoenix alone coming in around $60 million per year.

Because cities typically spend over half of their budgets on public safety, this would threaten funding for core priorities like police officers, fire fighters, and first responders.

Defunding our police and firefighters at the state level shouldn’t be our priority. 

There are many rural Republican members concerned about these cuts, and that’s why I don’t think the tax plan has the votes, at least currently.

As I’ve said in recent updates, I am open to supporting a budget that includes tax reform, but I can’t support the flat tax plan as currently constituted. We have way too many pressing needs as a state going forward to risk losing over ten percent of the revenue in our state budget.

A potential compromise going forward could be this: modest tax reform (something in the range of $300-$400 million), coupled with significant commitments to paying down state debt (like pension obligations, the K-12 rollover, and buying back the rest of our state buildings), and investments in core need areas like the New Economy Initiative, infrastructure, and housing.

This is a budget I could potentially support, depending on the details of course. And while we are talking about tax cuts, I of course will fight for my own tax cut bill, SB 1040, to be included. It only costs $75 million a year, and it would create an Earned Income Tax Credit (EITC) that would help tens of thousands of working Arizona families. 

Barring some kind of dramatic, sudden change, I don’t see how we do a state budget this year without gravitating towards what I outlined above.

But then again, the budget is never moving until it finally is. The reality on the ground could always change at a moment’s notice, with little advanced warning.

So while we wait, expect to see very little floor votes, with most of the time spent behind the scenes twisting arms and trying to secure sixteen votes in the Senate and thirty one votes in the House.

Stay tuned!

Thanks for reading this week. As always, you can follow me on Facebook and Twitter for more frequent updates!

Thank you,

Sean

http://www.seanbowieforaz.com/

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