Guest Opinion: Legislature met many of its goals

Thayer Verschoor is the Arizona State Senate majority leader from District 22 in Gilbert.

East Valley Tribune

July 25, 2007

As a state legislator, I am proud of the accomplishments made this session by the entire 48th Arizona State Legislature. As the Senate majority leader, I am especially proud of the hard work of the members of the Senate Republican Caucus that resulted in the achievement of nearly all of the Senate Majority Program objectives.

Many of these accomplishments were enacted with the adoption of the $10.6 billion state General Fund budget for fiscal year 2008. That budget contained more than $600 million in tax relief for Arizona taxpayers, and made significant increases in funding for school districts, charter schools, Arizona's higher education institutions and many other priorities of the state. It also kept spending down to one of the smallest General Fund increases in recent history and, very importantly, the Republican arguments for fiscal responsibility prevailed in the fight to ensure that the budget did not rely on gimmicks or debt financing for ongoing spending obligations.

Several legislative accomplishments will be of particular interest to taxpayers.

EASING TAX BURDENS

Arizona is known nationally for its complicated and inequitable property tax system. The extraordinarily high property tax burden on businesses in Arizona has been one of the most well-documented obstacles to economic development. Led by Senate Finance Chairman Jim Waring and House Ways and Means Chairman Steve Yarbrough, the Legislature succeeded this year in accelerating the reduction in the assessment ratio for business property taxpayers from a 10-year phased reduction to six years so that the ratio will be 20 percent by 2011. Describing the significance of this accomplishment, Kevin McCarthy, president of the Arizona Tax Research Association, said, "The Legislature's enactment of this reform marks the most significant progress in decades to address Arizona's inequitable property tax burden. This promises to have a tremendous impact on capital expansion and job creation in our state."

Similarly, with the prompting of our two Commerce Committee chairwomen, Rep. Michele Reagan and Sen. Barbara Leff, the Legislature took action this session on another serious impediment to economic growth by enacting legislation that significantly reduces the taxable value of new business equipment purchases.

One of the most serious concerns we hear from both business and residential property taxpayers is the skyrocketing tax burdens that result when taxing authorities fail to reduce tax rates to offset increases in assessed property values. This year, as it has for the nearly a decade, the Legislature responded. From its enactment in 1998 to the present, the state's statutory calculation known as "truth in taxation" has saved Arizona property owners more than $885 million in taxes. This includes a reduction in school district tax rates of 27 cents this year that will save property taxpayers $135 million statewide, without negatively affecting local school budgets.

The Legislature also adopted a state budget that includes the second year of a three-year suspension of the state equalization property tax rate, saving taxpayers more than $200 million for each of the three years that suspension is in place. Many legislators, including myself, are supporting efforts to make this tax relief permanent by repealing the state equalization rate before the suspension ends.

The Legislature also continued limits on the authority several school districts have had to increase taxes without voter approval. Similarly, property taxpayers will benefit from last November's voter approval of Proposition 101, a constitutional amendment that was referred to the ballot by the Legislature last session. This new law will ensure that counties, community colleges, and cities cannot increase primary property tax rates above established limits without voter approval.

MORE TO BE DONE

The state budget also included income tax relief in several areas. Legislators responded to concerns raised by many Arizona families who are concerned about their ability to save for their children's college education. For tax years 2008 through 2012, Arizonans can reduce their taxable income up to $1,500 (married filing jointly) or $750 (single or head of household) for contributions to college savings plans established under section 529 of the federal tax code.

Legislators also enacted an income tax credit for tax years 2008 through 2012 for cash contributions to the Military Family Relief Fund, with a $1 million cap.

These tax relief provisions follow several multi-year tax relief measures enacted during the 2006 legislative session that are part of the 2008 budget, including the second of two 5 percent reductions in individual income tax rates, saving taxpayers $178 million.

Our legislative system relies on taxpayers and voters evaluating whether their elected representatives are successful in addressing their needs and solving the state's problems. It is also a healthy fact that Arizona taxpayers are often wisely skeptical about claimed accomplishments politicians make on behalf of taxpayers. I acknowledge, as do many other legislators, that there is much more to be done to reduce tax burdens on Arizona citizens and families. As taxpayers engage in efforts to obtain the information they need to evaluate the product of the Legislature's work, I want simply to reiterate how proud I am to be a part of the Senate Republic Caucus of the achievements of the 48th Legislature.