Lawmakers act to cut taxes - if it's possible

Wednesday, 12 January 2000

By Howard Fischer
Capitol Media Services

PHOENIX - State lawmakers took preliminary steps yesterday to cut taxes - even though no one is sure whether there's enough money in the budget to do it.

Members of the House Ways and Means Committee voted for a 5.2 percent reduction in individual income taxes. If that becomes law it will cost the state more than $100 million - money even the bill's sponsor concedes the state lacks.
That didn't stop the same committee from then voting to make every Feb. 14 a sales tax holiday, with no state or local taxes to be collected on any item sold that day. That bill would cost the state another $10 million.
Committee members also voted to amend the state constitution, giving voters the power to override tax increases approved by cities, counties and the state.
Sponsor Bill McGibbon, R-Green Valley, said that plan is designed to give voters a voice where they lack one now. He pointed out that a proposed referendum to kill a property tax increase in Pima County fizzled after county officials said such a move is now illegal.
The tax-cut plans come as legislators attempt to figure out how to balance the budget for the coming year.
Gov. Jane Hull said it can be done - assuming the state borrows $125 million to finance needed school repairs and renovations. A legislative budget forecast unveiled yesterday says borrowing isn't needed because more tax money will be collected this coming fiscal year than anticipated.
Even with that, legislative analysts predict there will be only $36.2 million to divide up once lawmakers fund all necessary programs.
McGibbon, who also is sponsoring the income-tax cut, said he doesn't know if that is the real number. Whatever it is, he said, taxpayers deserve a break.
Under his plan the average taxpayer would save $53 a year.
So eager were lawmakers to approve his plan that they refused to even consider an alternative that would have cut taxes by only half that much.
Any plan to use excess proceeds for a tax cut will run into opposition from Hull. She told senators yesterday that any extra money they have should go toward funding education needs.
The sales tax holiday is also McGibbon's idea. He chose the date because that is the day in 1912 that Arizona became a state.
``We're going to rival the day after Thanksgiving for shopping if this is enacted,'' he said, as Arizonans take advantage of the fact they would not have to pay the 5 percent state sales tax and any local sales taxes.
The timing worried Rep. Barbara Leff, R-Phoenix, who noted that Feb. 14 also is Valentine's Day. She said shoppers might save their expensive jewelry purchases for that day, costing the state even more revenues.
Rep. Marilyn Jarrett, R-Mesa, agreed. She said someone buying a $150,000 motor home is bound to wait until the tax holiday to save $7,500 in state taxes.
The tax referendum measure is aimed largely at Pima County, where supervisors just enacted a primary property tax increase of 39 cents per $100 of assessed valuation.
``This merely gives the taxpayers a remedy to override a tax increase they feel is inappropriate,'' McGibbon said.
The concept alarmed Deputy Pima County Administrator Martin Willett. He said a petition drive could paralyze the county, forcing it to halt services and lay off workers even if voters subsequently ratify the higher taxes.
That is because a successful referendum drive - in this case, one that has the signatures of 20 percent of voters - bars a measure from taking effect until the next election. And that might not take place for more than a year, long after the city or county's fiscal year has ended.
``Most of our services are mandated,'' said Willett. ``Do you lay off cops? Shut down your hospital for three months?''
McGibbon said that was not his intent. He said he simply wants voters to have an opportunity to rescind tax increases after they have been enacted.

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Find information on pending bills, state legislators, and Arizona laws at the Arizona Legislative Information System.

 

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