SCOTTSDALE, Ariz. (AP) - Gov. Doug Ducey said Friday that a law he signed earlier this year indexing income tax rates for inflation was an important first step to his goal of cutting incomes taxes every year he’s in office.
The Republican governor told hundreds of people attending the Arizona Tax Research Association’s outlook conference that indexing rates prevents a “stealth tax increase” that can hit people when they get a raise. The indexing bill he signed will save taxpayers who would have been bumped into a higher tax bracket about $15 million a year.
“In short, if you were getting a raise you were likely being punished for it in higher taxes,” Ducey said to applause from the crowd. “Not anymore.”
The governor touted other changes he made to bring his first budget into balance, including one that will cost Pima and Pinal counties about $21 million because the state capped backfilling of payments for exceeding a property tax limit. He said more revisions are needed to keep property taxes low.
He vowed to continue making targeted income tax cuts in the coming year.
“I think if you look to the last budget session and how we took care of something by indexing the income tax to inflation it was a responsible reform and we’re going to continue putting responsible reforms forward,” he told reporters after his presentation. “I’m here to represent the taxpayer.”
The governor vowed to work to muster voter support for a May 17 special election that is required to approve a 10-year, $3.5 billion school funding plan pushed through the Legislature in a special session last month. The plan mainly uses state land trust cash and avoids raising taxes to settle a lawsuit filed by schools which didn’t get required inflation boosts during the recession.
“I don’t think we should take anything for granted and I will be spending large parts of my time and my calendar to lead the charge to that we are successful on that day,” he said. “I’m glad that we can get this plan on the ballot for Arizonans so we can keep higher taxes off the ballot.”
The governor also said he will continue to work on a plan to simplify the state’s school financing formula, and said getting the school funding lawsuit off the table also means he will be able to focus on other priorities - including tax cuts.
It appears Ducey will have the money to make those cuts, although there is pressure to spend it instead on boosting funding for K-12 schools, universities, child safety and the Department of Corrections. The Legislature’s top budget analyst told the group the state will have a $555 million budget surplus as of July 1, although only $240 million is expected to be ongoing revenue. If the governor holds the line, the state will have its first truly balanced budget since 2006 in the 2017 budget year that starts July 1.