Irresponsible GOP tax cuts and private school vouchers put budget $400 million in red
FOR IMMEDIATE RELEASE
October 12, 2023
PHOENIX – Despite a growing economy, Arizona will face a $400 million state budget shortfall in the coming year -- and similar shortfalls the next two years totaling $1 billion – because of reckless Republican tax cuts under Governor Ducey and unaccountable private school tuition subsidies for the wealthiest in the state.
This week the Finance Advisory Committee updated its revenue forecast and reported projected shortfalls of $400 million in the current fiscal year, a $449 million shortfall in FY 2025 and $188 million shortfall in FY 2026. The primary cause of the decline is the so-called "flat tax," an irresponsible permanent $2 billion income tax cut primarily benefitting wealthier Arizonans passed by a thin Republican majority and signed by Ducey in 2022. Income tax collections have since dropped by 27.4 percent.
Adding to the deficit is an out-of-control private school voucher expansion that now allows families already in private school to get thousands of dollars of state subsidies. Sold to the public as a $33 million expense when passed, the too-good-to-be true subsidies for private schools, ski trips, luxury driving lessons and home gyms could top $1 billion.
"Unless Republicans come to their allegedly conservative fiscal senses and agree to put the brakes on their voucher program, they risk devastating cuts to vital state responsibilities like district and charter public schools, public safety and healthcare," said Representative Athena Salman, the ranking Democrat on the House Appropriations Committee. "We will already need to approve at least $40 million in supplemental funding in the next session to pay for their spiraling voucher costs. If Republicans are going to cut revenue to the bone, the least they could do is not spend it so irresponsibly."
Representative Seth Blattman, the ranking Democrat on the House Ways and Means Committee, said the flat tax overwhelmingly benefits wealthier taxpayers and has now created a deficit in a growing state with a growing economy that should easily be producing adequate revenue to cover its obligations.
"This is the predictable consequence of a flat tax policy whose only real goal is to help the ultra-rich," Blattman said. "We are now looking at budget cuts because of the deficit created by the counterproductive flat tax policy of the previous administration."
Blattman added, "Flat tax is a misnomer as it’s a regressive tax policy, as in those who make less money pay a higher effective tax rate than those who make more. Now the neediest among us will get hit on the other side when we have to decide what services to cut to benefit the ultra-wealthy."
Democratic Whip Nancy Gutierrez, a public-school teacher who was appointed to a House ad hoc committee to provide oversight of the voucher program, said Republicans have so far shown no appetite for curbing voucher costs even amid reports of extravagant spending and despite the state budget falling into the red.
"What's really disappointing is we will have to contemplate budget cuts while vouchers are being used to take ski trips, buy grand pianos, food of the month club memberships, and driving lessons in luxury cars," Gutierrez said. "This was completely predictable and predicted."
Gutierrez added, "I was excited to be appointed to the ad hoc oversight committee to propose some controls and limits, but based on our first meeting, we have a long way to go. Hopefully this new data will wake up our colleagues on the other side of the aisle. We need to come together in a bi-partisan way to get a handle on these costs for the good of our state. But unfortunately, at the moment at least, Republicans are representing the state of denial."