A new reveals Arizona voters would support a slight increase in an existing sales tax in order to fund K-12 education, but they want new funding tied to improved academic outcomes.

Voters were asked which method of taxation they would prefer to be increased for education. Respondents chose sales taxes over income or property taxes by a wide margin. While a sales tax increase was supported by nearly 45 percent of respondents, only 18.5 percent supported an increase in the state income tax, and only 16.6 percent supported a property tax increase.

Support for an increased sales tax is limited, however, and it comes with strings attached.

Fifty-eight percent of respondents said they support increasing the existing .6 percent sales tax to a full penny. Support dropped to 45 percent when respondents were presented with the option to raise the sales tax to 1.5 cents.

Respondents also said funding should be driven by outcomes.

Fifty-five percent of respondents said schools should be rewarded based on student academic growth and achievement with an emphasis on schools serving high poverty communities. Support was strong across all partisan affiliations and several subgroups, including Hispanics, who support results-based funding by 56 percent.

Only 31 percent of respondents support school funding based solely on socioeconomic status without a requirement to demonstrate academic growth or improved student performance.

Arizona Â鶹´«Ã½Ó³»­ of Commerce and Industry spokesman Garrick Taylor said the poll’s findings should buoy Gov. Doug Ducey, who supports results-based funding.

“Resoundingly, when presented with a choice, voters in both parties and across various demographics prefer funding schools in a way that rewards excellence and achievement, which is the strategy preferred by Gov. Ducey,� Taylor said. “When provided the option either to increase funding to schools earning improved student outcomes versus funding schools without demanding results, voters want to see more K-12 dollars invested in a way that brings more accountability to classrooms and rewards those teachers and students beating the odds.�

Voters also support the governor’s plan to raise average statewide teacher pay by 20 percent by the 2020 school year. Eighty-one percent of those polled responded in support of the teacher pay plan when they learned more about it.

Respondents were mostly unaware that the fiscal year 2020 state budget adopted by lawmakers in June contained a $660 million investment in K-12 education.

“While we have seen considerable local and national attention focused on Arizona’s education system and the gains made at the legislative level and the ballot box in recent years, voters are still significantly under-informed about the state of education in Arizona,â€� said George Khalaf in a Ìýaccompanying the poll results. Khalaf is president of the firm Data Orbital, which conducted the poll. “When presented with actual policy proposals, we found that voters want to see more accountability in education funding and more flexibility in dollars following a student. Support for Results-Based Funding is strong and widespread, crossing partisan boundaries and drawing strong favorability from Hispanic voters. Looking ahead to 2020, education will continue to be a significant factor with 22 percent of voters ranking it their top issue, just behind healthcare and immigration.â€�

Despite the increased education spending, more than half of respondents said that more K-12 investment is still needed.

“The more voters learn about the financial commitment the governor and state Legislature have made to K-12 funding, the more they like,� Taylor said. “Still, voters are looking for increased investments to be combined with their desire for improved educational outcomes. Proponents of increased funding would be wise, though, not to overshoot. Voters aren’t going to write a blank check.�

The poll also found that voters are happy with the current state of affairs in Arizona, with 51 percent saying the state is on the right track. Gov. Ducey also has a favorable perception in the state with 36 percent favorable, 26 percent unfavorable.

Data Orbital conducted the through a live survey that collected 50 percent of the results from landlines and 50 percent from cell phones. The poll has a margin of error at plus or minus 4.18 percent.

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With another move attacking Arizona Public Service, it appears California billionaire and now presidential candidate Tom Steyer cannot seem to quit Arizona.

Steyer’s attacks against the Â鶹´«Ã½Ó³»­tility date back to the 2018 election cycle when his attempt to mandate onerous new renewable energy standards was rejected by voters in a 2 to 1 margin.

Now, Steyer is using a digital ad to accuse the company of corruption. This is the second time in recent months that Steyer has inserted himself into Arizona issues.

Many observers attribute his behavior to a desperate attempt to increase his name ID in the state and salvage his reputation after and painful and expensive loss in the fall.

“California billionaire Tom Steyer can’t stop meddling in Arizona politics,� Arizonans for Affordable Electricity spokesperson Matt Benson said. “It was just last year that Arizona voters overwhelmingly rejected Steyer’s Prop 127, which would have added $1,000/year to the typical family’s electricity bill. Now he’s back – this time as a self-described ‘ratepayer advocate.’

“You’re not fooling anybody, Tom.â€�

The California billionaire, who made millions investing in fossil fuels, is inserting himself in Arizona policy conversations claiming the state is being misguided by corporations and elected leaders. But the state’s economy has been booming for the past year with local economists touting the diversity in job and industry growth.

Arizona’s economy continues to grow at one of the fastest rates in the nation, rankingÌýfourth in the U.S. for GDP growth last year and second in the country for personal income growth.

More thanÌý300,000 new jobs have been added since 2015Ìýand Arizona is projected toÌýadd another 165,000 new jobsÌýby 2020.

Also, the greater Phoenix metropolitan area has officially eclipsed its pre-recession job peaks in almost every industry.

“Arizona is open for business and our economy is booming,â€� said Governor DougÌýDucey in a statement. “It’s not by accident: Arizona’s pro-business policies, low taxes and light regulations are delivering more job opportunities and bigger paychecks for Arizona workers.â€�

Business community advocates say Steyer’s latest advertisements are likely to prove as unsuccessful as his previous political activities in the state.

“This guy apparently can’t take a hint,â€� Arizona Â鶹´«Ã½Ó³»­ of Commerce and Industry spokesperson Garrick Taylor said. “Arizonans have rejected over and over Steyer’s job-killing agenda, but yet he keeps coming back here. Arizona’s economy is doing just fine without Steyer, thank you very much, in large part because lawmakers and the governor have studiously avoided the sort of policies he advocates.â€�

Steyer’s efforts in Arizona began in 2018 when his progressive political action committee, NextGen Climate Action, launched an effort to mandate that utilities provide half their annual retail sales from renewable energy sources by 2030 “irrespective of cost to consumers.� The effort excluded zero-emission nuclear energy from the definition of renewable energy.

Then in May, Steyer portrayed himself as a ratepayer advocate by engaging in an APS rate case before the Arizona Corporation Commission. Many were quick to point out that his 2018 energy mandate, known as Proposition 127, would have increased costs on Arizona residents, including low-income families and small businesses. Estimates revealed the typical Arizona family would see its utility bills increase by $1,000 or more over the course of a year.

In addition to the $28 million Steyer dumped into the failed campaign, he also attacked Republican candidates, spending more than $3 million against Attorney General Mark Brnovich and engaging in the Arizona Corporation Commission race through dark money groups such as ChispaAZ.

On Tuesday morning, Steyer announced his candidacy for president in a digital video. Steyer plans to spend at least $100 million on his campaign.

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In a baffling vote, Phoenix City Council members voted 6-3 to shut down the city’s two Mexico trade offices while the awarded contract is being protested.

The city currently contracts with public affairs firm Molera Alvarez to provide trade development consulting services to facilitate economic activity between Phoenix and Mexico in Mexico City and . The contract is set to expire this year, and Molera Alvarez was recommended by the scoring committee for the new contract. Yet, on June 17, the city received two protests, including one from law firm Ballard Spahr, of the award recommendation.

City staff recommended the council extend the current contract for 60 days while the new award is being protested. According to the council summary presented last week, the extension request was made “to avoid any lapse in these important economic development consulting services.�

The summary stated that “without this extension, trade development activities conducted by the consultant will cease, and the City will no longer have contract staff in the Mexico City and Hermosillo offices.�

Councilwoman Thelda Williams made a motion to approve the request for extension, but Councilman Michael Nowakowski made a motion to amend, asking the council not to approve the extension.

Mayor Kate Gallego, Vice Mayor Jim Waring and councilmembers Sal DiCiccio, Carlos Garcia and Betty Guardado voted in favor of Nowakowski’s motion to deny extension. According to Nowakowski, his motion was an effort to protect contract protests even though the offices will be closed for the duration of that process.

“The council decided that it was in the best interest of taxpayers to not grant an extension to the current contract holder of our city’s Mexico Trade Office while the process of contract protests play out,� Nowakowski said. “If the contract were extended over the summer, the current contract holder would be allowed to use taxpayer dollars to host staff and officials and possibly sway the outcome of the protests. To be fair to all parties involved, we decided to let the contract expire while the protests work their way through the proper channels.�

The agenda item presented to the council stated the contract extension would not have an impact to the city’s general fund. It would have been funded by the Downtown Community Reinvestment Fund, which collects lease payments from developers.

According to city staff, the offices have never been closed. Reconsideration is not an option, because it is less than 24 hours before the next council meeting, which is scheduled for tomorrow morning at 10:00 a.m.Ìý The only remaining way to keep the offices open is for the mayor to call a special council meeting.

Leaders from across the state, including business and tourism organizations, expressed disappointment and confusion at the council’s decision, considering the amount of effort by the City of Phoenix and state leaders to develop a strong relationship with the Arizona’s number one trading partner in recent years.

Earlier this year, Gov. Doug Ducey and the Arizona Legislature doubled down on in Mexico by adding two trade offices in Chihuahua and Guanajuato. These offices, along with the two operated by the City of Phoenix, show the potential for further collaboration and investment between Arizona and Mexico.

“The City of Phoenix trade offices have been a positive development between the city and Mexico,â€� said Mike Huckins, vice president of public affairs for the Greater Phoenix Â鶹´«Ã½Ó³»­. “It would be unfortunate to shut down these offices during such a crucial time in the bilateral relationship. We urge the council to reconsider its action and keep the trade offices running at this critical juncture.â€�

The purpose of the trade offices is to help Phoenix-based companies access the Mexican market and attract more foreign direct investment. In the past two years, the Phoenix trade representatives in Mexico have identified 105 trade leads, including Phoenix companies with export opportunities in Mexico, and Mexican companies looking to invest or source products in Phoenix. They have also attended 29 trade shows, conferences, and summits in key sectors such as aerospace, manufacturing and energy. Without the offices in Mexico, that work comes to a halt.

“At a time when we’re on the verge of passing the best trade agreement in the history of our country, the USMCA, and increasing trade with Mexico, it’s a big error to close the trade offices for our state’s largest city,â€� said Glenn Hamer, president and CEO of the Arizona Â鶹´«Ã½Ó³»­ of Commerce and Industry. “Phoenix has been a model for cross-border leadership. It would be a shame to squander it. The major statewide and regional business and tourism groups support keeping the offices open.â€�

Earlier this year, the City of Phoenix celebrated the two-year anniversary of the trade office in Hermosillo with a delegation of education, business and city leaders. During the celebratory event, Mayor Célida López Cárdenas of Hermosillo touted the strong working relationship between her city and Phoenix.

“The economy in Phoenix and Hermosillo is very strong, but we need to improve more relations between business,� Cárdenas said. “This office is very important because [businesses] can find advice about opportunities [in Phoenix].�

The temporary closure will impact existing projects with Arizona and Mexico businesses and community organizations including new trade, tourism and direct foreign investment opportunities.

“It is deeply concerning that the Phoenix City Council has decided not to extend the current contract for the trade offices in Mexico,� said Steven G. Zylstra, president and CEO of the Arizona Technology Council. “This temporary closure will impact dozens of current projects involving technology companies in both Arizona and Mexico and is detrimental to cross-border collaboration.�

According to city staff, if the companies who filed the protest continue to exhaust the appeals process, it could be 12 to 20 weeks until a final decision is made. Without further council action, the Mexico trade offices will remain closed the entire time.

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In this exclusive interview, Gov. Doug Ducey discusses his role as chair of the Arizona-Mexico Commission and why Arizona’s relationship with Mexico is important to the state.

Question: Governor, what are your duties as the chair of the Arizona-Mexico Commission?
Answer: My duties as the chair of the Arizona-Mexico Commission are to make sure that we’ve got the right people in the room so that we can best advocate for this most valued relationship that Arizona has with our number one trading partner, Mexico. It’s a position and responsibility I embrace as governor.

Q: Why do you think the work the Arizona-Mexico Commission does is important for Arizona?
A: First, I don’t think it can be stated enough that the work the Arizona-Mexico Commission does builds relationships across the border with areas of influence across the sphere—public sector, private sector and education. I come at it, first and foremost, from a commerce perspective because Mexico is our largest trading partner. I think it’s important that we maintain that relationship, but also build on it—focusing on the things we can do together, like making sure that commerce can flow more freely across the border, what we’ve done with Unified Cargo Processing, tourism, joint law enforcement efforts and more. All of these issues are real issues for both myself and Governor Claudia Pavlovich and the Arizona-Mexico Commission has been a leadership organization for solutions.

Q: What are the top trade opportunities between Arizona and Mexico in the next few years?
A: I would begin with our trade relationship and I would start with the USMCA. I’m someone who is a huge fan of this idea. I believe in free trade and if this is how we’re going to define free and fair trade. I want to make sure that Congress gets this ratified. I think another reason that the USMCA is so important is not only do we want to protect the agricultural relationship that we have with Mexico right now along with the manufacturing relationship, but it’s really these ideas of the future. It’s what’s coming that we can’t see. We’ve seen how the economy has been transformed over the past ten years; I think it’s only going to change exponentially going forward.

Q: Why is it important for Arizona to focus on maintaining and continuously build a relationship with Mexico?
A: Arizona should continually focus on its largest opportunities and its best friends and partners. I mean, you can always do more with the relationships that you already have and that are existing. We have an incredible relationship with the nation of Mexico and an incredible relationship with Sonora, which is beginning to grow with other states in Mexico. It is one where I think Arizona is the lead advocate, the ambassador state, for what can be done when you have the leader-to-leader relationships.

Q: The Arizona-Mexico Commission is celebrating its 60th anniversary, what has been its biggest achievement in the last 60 years?
A: First, I want to say happy anniversary. It is something to be celebrating the 60th anniversary of the Arizona-Mexico Commission. And if I had to pick one single accomplishment, I think that would be very difficult to do. I would actually point to the totality of the relationship and how our economy is fundamentally dependent on the Sonora and Mexico economies and I believe vice versa. It shows the work ethic and the relationship that has been built by people that came long before I came into this office and it’s something that Governor Pavlovich and I both want to see outlive our administrations. We think that this type of relationship, this type of spirit and partnership and friendship that we’ve seen over the past four years is the way that it should be for the next 60 years and beyond.

Q: What is your top priority regarding our relationship with Mexico for 2019?
A: My top priority with Mexico every year is to build on the relationship. We’re seeing our economy boom here in the state of Arizona. We’re seeing our population grow at record numbers and that provides opportunity for all of our citizens, and the relationship that we have with Mexico brings jobs to the state of Arizona, it brings companies that relocate to the state of Arizona outside of our urban core. So, it’s something that’s really benefited the state of Arizona and I think if we take care of the relationship leader-to-leader, we make sure that we have the proper delegations of influencers and decision makers, we make sure we have the education exchange opportunities, that will maintain the relationship, that will help us weather whatever storm.

Q: Is there anything else you’d like to mention about the Arizona-Mexico Commission?
A: I just want to say one of the things I’m most proud of as governor is what we’ve been able to do with the Arizona-Mexico Commission over the last four years. I think it’s not only been reset, it’s been refreshed and recharged for the future and I think everyone in Arizona knows what’s possible with this positive and productive relationship we have with the nation of Mexico and the state of Sonora. And I think the future has never been brighter.

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A by Arizona economist Jim Rounds paints a bleak picture for the state’s economy should President Trump’s proposed tariffs on Mexican imports become a reality next week.

The analysis, prepared for the Arizona Â鶹´«Ã½Ó³»­ of Commerce and Industry, notes a 5 percent tariff increment would equal 6,000 job losses in Arizona. If the tariffs are fully implemented within five months, the cost to Arizonans would increase to approximately $300 per person with job losses totaling 30,000.

“This assessment of the impact of tariffs on Mexican imports is serious, but unfortunately it’s not unexpected,â€� said Glenn Hamer, president and CEO of the Arizona Â鶹´«Ã½Ó³»­ of Commerce and Industry, which commissioned the analysis. “These findings are consistent with aÌýÌýby the U.S. Â鶹´«Ã½Ó³»­. These new tariffs would weaken our economic growth and cost jobs.â€�

Last year, Arizona imported approximately $9 billion worth of goods from Mexico, ranging from agricultural and food products to high-value computer and electrical equipment. The variety of these imports will create short term impacts and longer-term changes in purchasing behavior.

“In the short term, the cost burdens from tariffs are passed on to consumers and importers,� said Rounds in the analysis. “Over a longer period of time, consumers and businesses will shift their behavior in favor of more affordable goods from other countries and the economic impact is lessened. This will not happen when trade disputes occur with multiple countries at the same time.�

Last week, President Trump announced tariffs on imported goods from Mexico to the U.S. that amount to about $350 billion a year in response to the migrant crisis at the border. If Mexico can stop or slow the stream of migrant caravans to U.S. borders to a level the president finds satisfactor, the tariffs will end. If not, trade taxes will rise 5 percent every month until they reach 25 percent in October.

Luis Ramirez, president and CEO of consulting firm Ramirez Advisors Inter-National, said that the reported impact is what many feared.

“I think that the repercussion of tariffs is that someone has to pay for it,â€� Ramirez said. “The second issue is that companies facing higher cost structures have to make decisions, and those decisions are, ‘do I pass that onto my buyer/consumer, or do I absorb part of that?’ Right now, we see a mad rush of anything that was ready to be shipped that was waiting for next week is being shipped this week. They’re hoping to avoid tariffs going into place on Monday.”Ìý

Although Arizona’s economy has been booming for the past few years, Rounds warns that a prolonged tariff war with Mexico could change the trajectory of the state’s economic climate.

“The job losses do not account for the fact that if this is long-lasting, it will also reduce our rate of growth,� Rounds said. “However, if it gets resolved sooner than later, the Arizona economy is strong and can withstand short-term shocks like this. But it’s not so strong that it can withstand it over a long period of time.�

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Governor Doug Ducey made a series of announcements today, including the appointment of former Arizona Speaker of the House Andy Tobin to serve as director of the Arizona Department of Administration. Tobin has resigned from his seat on the Arizona Corporation Commission.

“I’m honored that Governor Ducey has entrusted me with this important role,� Tobin said. “I am excited to hit the ground running and get started working with the team at ADOA and throughout state government to best serve the taxpayers and the people of Arizona.�

Replacing Tobin on the Arizona Corporation Commission is Lea Marquez Peterson, former president and CEO of the Tucson Hispanic Â鶹´«Ã½Ó³»­ of Commerce.

“I’m honored to receive Governor Ducey’s appointment to serve on the Corporation Commission,� Marquez Peterson said. “With a booming economy, more businesses and people are coming to Arizona. This is creating more opportunities for our citizens throughout the state than ever before. I look forward to drawing on my experience in the business community as a voice for all Arizonans.�

Before his appointment to the Commission in 2015, Tobin served as the director of the Arizona Department of Insurance and the interim director of the Arizona Department of Financial Institutions. Prior to those appointments, he served as director of the Arizona Department of Weights and Measures and in the Arizona Legislature.

“I’m thrilled to be able to bring Andy back into our administration,� Gov. Ducey said. “His passion for public service is unmatched and his understanding of state regulatory and administrative policy will serve the Department of Administration well as we continue to streamline and improve government.

In 2017, Marquez Peterson was recognized with a Top Latino Leader Award by the National Latino Leadership Conference. Prior to that, she was appointed by the Obama administration to the National Woman’s Business Council (NWBC) a group that advises the President, Congress and the Small Business Administration on challenges facing women-owned businesses.

“I want to thank Lea Marquez Peterson for answering this call to public service,� Gov. Ducey said. “Lea brings a unique and important voice to Arizona’s Corporation Commission. Lea is extensively involved in the Southern Arizona community, having led the largest Latino business organization in Arizona, and brings decades of leadership experience that has earned her bipartisan accolades. As an entrepreneur, she knows firsthand the challenges businesses face navigating a complex government bureaucracy, and will bring a fresh perspective on the commission.�

Community leaders across Arizona cheered today’s news.

“Gov. Doug Ducey has made an excellent, trailblazing selection in appointing Lea Marquez Peterson to the Arizona Corporation Commission. I have known Lea for years, and I can assure Arizonans across the state that she will be an excellent commissioner, looking out for ratepayers and ensuring our energy regulatory system remains competitive and open to innovation,â€� Arizona Â鶹´«Ã½Ó³»­ of Commerce and Industry President and CEO Glenn Hamer said.

“The Greater Phoenix Â鶹´«Ã½Ó³»­ is thrilled to hear of Governor Ducey’s appointment of Lea Peterson to the Arizona Corporation Commission. A true champion of business, Lea was the longtime leader of the Tucson Hispanic Â鶹´«Ã½Ó³»­ of Commerce. She has also served on the Arizona Â鶹´«Ã½Ó³»­ board of directors, and is an active member of the U.S. Â鶹´«Ã½Ó³»­ and the U.S. Hispanic Â鶹´«Ã½Ó³»­. She is a great friend to Arizona businesses, and we look forward to seeing great accomplishments in her new role,” Greater Phoenix Â鶹´«Ã½Ó³»­ President and CEO Todd Sanders said.

“Lea Marquez Peterson is a great selection. It’s exciting to have someone with her experience and Southern Arizona perspective on the Corporation Commission. I am sure she will have great success,”ÌýSouthern Arizona Leadership Council President Ted Maxwell said.

“Congratulations Commissioner @LeaPeterson on your appointment to the @CorpCommAZ� said State Representative Cesar Chavez in a tweet.

President and CEO of the Arizona Commerce Authority Sandra Watson chimed in on Twitter, “This is exciting news! There’s no one more qualified than @Andy_Tobin to head up @ArizonaDOA! Andy brings years of knowledge and expertise from both the private and public sector to this role. Congratulations, friend!�

State Representative Jeff Weninger tweeted, “Huge congrats to @Andy_Tobin.ÌýCan you say state level blockchain implementation. Boom.”

“Congratulations Mr. @Andy_Tobin excellent choice @dougducey,� tweeted Robert Uribe, Mayor of Douglas.

Photo courtesy of the Office of the Governor Doug Ducey

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After intense negotiations over the holiday weekend, Arizona lawmakers passed the fiscal year 2020 budget last night along party lines.

The deal was struck over the weekend as Republican legislators reached a compromise on a child sexual assault bill that extends the statute of limitations for victims and survivors and extends a new window to bring civil suits forward that were subject to the previous statute of limitations.

The $11.8 billion spending package includes additional dollars for K-12 education as well as reforms to offset potential tax increases due to the federal tax reforms.

“With this budget, Arizona is learning from the mistakes of the past, exercising fiscal responsibility, investing in the things that matter and making a historic down payment on securing Arizona’s future,� Governor Doug Ducey said.

House Speaker Rusty Bowers stressed the education investments in the budget.

“Governor Ducey and the Legislative Republicans have crafted a budget that spends $5.6 billion, almost half the state’s general fund budget, to continue our investment in K-12 education, including money for the 20×2020 teacher pay raises, over $136 million in district additional assistance, and $70 million in Results Based Funding,â€�ÌýBowers said. “In addition to the investments made in K-12 education, the budget also includes $37 million to community colleges for expansion of healthcare, aviation, and STEM programs.â€�

Senate President Karen Fann tweeted, “Thank you Governor and the entire team in the exec tower. This was a challenging budget year and glad we all worked together to make it happen.”

Thank you Governor and the entire team in the exec tower. This was a challenging budget year and glad we all worked together to make it happen

— Karen Fann (@FannKfann)

Highlights of the budget package include:

Economic Development, Taxes, Debt

• Reduces the number of income tax brackets from five to four, lowers the state’s top tax rate to 4.5 percent, and conforms the state’s standard deduction with the federal standard deduction of $12,000 for single taxpayers and $24,000 for married couples.
• $542 million deposit into the Rainy-Day Fund.
• Reduces state debt by $220 million.
• $475,000 for two trade offices in Mexico and one in Israel.
• Requires remote sellers of tangible retail goods to pay state and local sales tax. This requirement will also apply to third-party facilitators such as E-Bay. It also exempts micro businesses and hobbyists with less than $200,000 in gross annual sales, a threshold that steps down to $100,000 after three years; and also establishes a single tax retail base, in which definitions and treatment are uniform across the state.

K-12 Education

• $165 millionÌýfor the second installment of the 20 percent teacher pay raises by school year 2020.
• $136 millionÌýfor District and Charter Additional Assistance.
• $88 millionÌýfor school building renewal.
• $76 millionfor new school construction.
• $30 millionÌýin new dollars for results-based funding, for a total of $68 million.
• $10 millionÌýfor Career and Technical Education programs at public high schools.

Higher Education

• $15 million to expand the Arizona Teachers Academy.
• $15 million for the Pima Community College Aviation Technology Center.
• $14.2 million for rural community colleges.
• $6 million over three years for STEM programming at Maricopa and Pima Community Colleges.
  

Infrastructure & Natural Resources

• $130 million over three years to expand Interstate 17.
• $3 million to expand broadband services in underserved rural areas.
• $700,000 for a Mariposa Port of Entry Cold Inspection Facility.
• $37 million to implement the multi-party Drought Contingency Plan.
• $2.6 million for Nogales wastewater treatment infrastructure.

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In January, Governor Doug Ducey (R-AZ) released his proposed fiscal year (FY) 2020. Now, the Arizona Legislature is taking steps to pass a final plan.

Over the past few months, state legislators have debated how the state government should allocate its money, including additional dollars for results-based funding and how to handle tax conformity.

Now, lawmakers are moving a budget package that reflects a compromise between the governor and Republican leaders. Both the Senate and the House of Representatives are slated to debate the package today. Here are the major highlights.

Tax Conformity, Rainy Day Fund and Debt

This tax season a broke out at the Capitol regarding the best way to conform to the new federal tax changes after the 2017 Tax Cuts and Jobs Act (TCJA).

If the state simply conformed to the new Internal Revenue Code (IRC), the Joint Legislative Budget Committee (JLBC) Arizona to receive $205.5 million in additional revenue resulting from Tax Year 2018.

Gov. Ducey wanted to save the additional revenue and put it towards Arizona’s rainy day fund, while others pushed legislation to reduce income tax rates.

The current budget proposal reduces the number of income tax brackets from five to four, lowers the state’s top tax rate to 4.5 percent, and conforms the state’s standard deduction with the federal standard deduction of $12,000 for single taxpayers and $24,000 for married couples.

According to the Governor’s Office, based on federal estimates, as many as 90% of taxpayers could be taking the standard deduction on both their state and federal forms.

The current proposal also includes a $542 million deposit into the Rainy Day Fund and reduces state debt by $220 million.

WayFair

In February, legislation was introduced to correct what proponents called a “fundamental unfairness� in Arizona tax law that provides an advantage to out-of-state sellers without a physical presence in the state by exempting them from state sales tax when selling to Arizona consumers.

A 2018 U.S. Supreme Court decision, South Dakota v. Wayfair, allows states to require remote (out-of-state) retailers and marketplace facilitators, such as eBay or Amazon, to apply local sales tax to purchases by in-state residents.

Local stakeholders have debated Wayfair implementation for months and have reached an agreement reflected in the current budget proposal.

The proposed law changes will require remote sellers of tangible retail goods to pay state and local sales tax. This requirement will also apply to third-party facilitators such as E-Bay. It also exempts micro businesses and hobbyists with less than $200,000 in gross annual sales, a threshold that steps down to $100,000 after three years; and also establishes a single tax retail base, in which definitions and treatment are uniform across the state.

“The introduced version of the Wayfair legislation raised concerns for NFIB members,� NFIB Arizona State Director Chad Heinrich said. “We are thankful for the opportunity to work with the sponsor and stakeholders in revising the legislation to remedy the issues that we identified. The revised version simplifies the Arizona retail tax base in a way that is fair to remote sellers—many of which are small businesses.�

Education

The K-12 and higher education budget proposals reflect a number of Governor Ducey’s original funding requests, including:

• The second installment of the 20 percent teacher pay raise for the upcoming school year.
• $136 million in restored “additional assistanceâ€� for schools.
• $68 million for Results-Based Funding, representing an additional $30 million over last year’s investment.
• $100 million, including a supplemental for this current year, for building renewal dollars and another $79 million to build new schools.
• Establishes a funding bonus for schools producing high-school graduates with industry certifications.

“The proposed expansion of Results-Based Funding to low-income schools on the cusp of excellence will be a game changer for students across Arizona, providing teachers and staff the resources necessary to continue to improve and expand,� A for Arizona Executive Director Emily Anne Gullickson said.

The proposal also includes new dollars for state universities, as well as for community colleges delivering educational programs in areas such as allied health professions and aerospace.

• $5.8 million to MCCCD nursing expansion
• $15 million to Pima Community College Aviation Program
• $15 million to AZ teacher Academy divided between University and post-baccalaureate community college programs

Transportation/ Infrastructure

The proposal includes grant funding for rural broadband upgrades, local infrastructure needs, and improvements to Interstate 17.

• $130 million is slated to expand the I-17 over the next three years between Anthem and Black Canyon City.
• $700,000 for the Mariposa Port of Entry Cold Inspection Facility.
• $3 million for broadband grants.

Another issue addressed in the budget proposal in the Highway Safety Fee. Last April, a $32 fee was added to Arizona vehicle registrations to fund the Arizona Department of Public Safety’s highway patrol operations. State legislation granted the Arizona Department of Transportation (ADOT) the authority to establish amount.

Since the registration fee passed last year, multiple state lawmakers have come out in opposition to it. The current proposal phases out the fee within five years but Senator Michelle Ugenti-Rita announced yesterday a deal to eliminate the fee in two years.

“AZ still has a HUGE transportation funding shortfall (about $62 billion) and we need to seriously address our funding needs if AZ is going to remain competitive in the marketplace, but it is good to see policymakers putting money into the infrastructure that drives our economy,� said the Arizona Trucking Association in a series of tweets. “Also of note, is the repeal of the Highway Safety Fee (HSF) over five years. While well intended, the HSF was bad public policy. There are better ways to fund public safety and our roads.�

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Arizona’s former solicitor general says the state Senate should adopt legislation passed by the state House of Representatives that would reduce fraud in the gathering of initiative petition signatures and would provide greater clarity over the role of the state attorney general in the preparation of the brief descriptions of initiatives that appear on voters’ ballots.

In a to the Arizona Â鶹´«Ã½Ó³»­ of Commerce and Industry, Dominic Draye, who is now with the law firm of Greenberg Traurig, writes that Senate Bill 1451 “provide(s) clarity that ballot language drafting is a cooperative effort between the Secretary of State and the Attorney General.â€�

Draye, a graduate of Penn Law School and a former clerk on the federal Fifth Circuit Court of Appeals, was appointed to solicitor general in 2017, a position charged with preparing legal opinions and litigating the state’s most important appeals.

The bill, sponsored by state Sen. Vince Leach (R-Saddlebrook), contains several provisions designed to reduce fraud among petition signature gatherers who must register with the Secretary of State’s office because they collect signatures for pay.

The bill was amended in the House to clarify that the state attorney general may accept, reject, or modify ballot language prepared by the secretary of state.

During a debate in the House, opponents of the amendment by Rep. Kelly Townsend (R-Mesa) argued the amendment would be a departure from current practice, while proponents argued the amendment simply clarified the scope of the attorney general’s role as the state’s chief legal officer.

Some Republican senators voiced concern about the changes during a recent party caucus meeting. All Senate Republicans voted for the bill in its original form before it was amended in the House. Because of the House amendment, the Senate must vote on a version reflecting the House’s changes.

“The Secretary of State retains her role as the official who initially drafts the ballot language. At the same time, the Attorney General retains his role as the official tasked with approving the language as drafted or with modifications,� Draye writes. “If a rewrite is in order, the Attorney General can reject the language, requiring the Secretary of State to prepare another draft. These functions have been in practice for decades. The amendments simply provide additional statutory specificity.�

The Arizona Â鶹´«Ã½Ó³»­ of Commerce, one of the bill’s supporters, agreed with Draye’s assessment.

“Despite claims to the contrary, the House amendment is not a major revision of current practice,â€� Arizona Â鶹´«Ã½Ó³»­ President and CEO Glenn Hamer said. “This bill will prevent fraud and, thanks to the House amendment, will diminish the chances that activist groups will attempt to use the process to sink the state into costly, time-consuming litigation.â€�

Opponents of the bill have circulated a counterproposal to the Townsend House amendment that, according to Draye, should be a non-starter.

The opponents’ counteroffer “will expressly authorize and expand pre-election litigation over ballot measure language in state court,� Draye writes. He calls the offer “ill-advised for several reasons.�

The Â鶹´«Ã½Ó³»­â€™s Hamer says his group will continue to urge support for the bill in its current form.

“This is a commonsense bill that will reduce fraud and needless litigation,â€� Hamer said. “We’ve identified this bill as a top priority for the 2019 session. The Â鶹´«Ã½Ó³»­ believes this bill is a must-have. For too long, the state’s initiative system has been gamed by interests who don’t have Arizona’s best interests at heart. Senate Bill 1451 takes a big step toward preventing fraud and abuse of our initiative system.â€�

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Like a jilted lover refusing to accept rejection, California billionaire Tom Steyer is back in Arizona after an epic loss last election cycle.

Steyer, whose attempt to increase renewable energy standards and costs in the state crashed out on the November ballot, has launched digital ads asking the public to sign a petition urging the Arizona Corporation Commission to reverse an Arizona Public Service (APS) rate increase that passed in 2017 by a 4 to 1 commission vote.

In a ruling against a complaint filed by a local political activist, an independent administrative law judge confirmed that APS implemented its rate increase according to industry accepted standards.Ìý Still, Steyer has decided to launch an attack against the company, apparently in an attempt to repair his image after his bruising 2018 defeat.

Even his former allies are questioning the move, upset that Steyer has once again decided to meddle in local Arizona issues.

“There are 10 better things you could’ve spent your $$ on in AZ,� tweeted Stacey Champion, who filed the initial complaint. “This battle aint’ one of them & I’m both pissed + insulted [sic].�

Steyer’s efforts in Arizona began in 2018 when his progressive political action committee, NextGen Climate Action, launched an effort to mandate that utilities provide half their annual retail sales from renewable energy sources by 2030 “irrespective of cost to consumers.� The effort excluded zero-emission nuclear energy from the definition of renewable energy.

In his latest effort, Steyer claims to be an advocate for the ratepayer, although his 2018 energy mandate, known as Proposition 127, would have increased costs on Arizona residents, including low-income families and small businesses. Estimates revealed the typical Arizona family would see its utility bills increase by $1,000 or more over the course of a year.

“Talk about sour grapes,� said Matthew Benson, spokesman for the No on Prop 127 campaign

“California billionaire Tom Steyer couldn’t buy his way into our Arizona Constitution, so now he’s tapping his accounts to meddle in a local utility rate case. Arizona voters couldn’t have been clearer in 2018: We’re setting our own energy future. California billionaires need not apply.�

More than 300 groups and individuals representing a wide range of interests joined to oppose Proposition 127. saying it would hurt consumers, cost jobs and eliminate tax revenues for schools and government agencies.

The Arizona Residential Utility Consumer Office also warned the initiative would force the closure of Palo Verde Generating Station, the country’s largest provider of emissions-free electricity. The loss of Palo Verde would have wiped out 3,000 jobs in the West Valley.

But as the election neared and it became clear the measure would fail, Steyer and his teamed quickly abandoned their ballot proposition and shifted tactics, attempting to smear state Attorney General Mark Brnovich and other local and statewide Republican candidates.

Steyer’s group spent more than $3 million in ads attacking the attorney general.

There was also the emergence of a progressive dark money group, ChispaAZ PAC, which dumped nearly $4 million in independent expenditures supporting Democratic candidates, including Sandra Kennedy, who was elected to the Arizona Corporation Commission.

ChispaAZ PAC is a project of the League of Conservation Voters, a left-wing activist organization focused on environmental policies that also has ties to Steyer.

“The idea that Tom Steyer is suddenly a ratepayer advocate doesn’t pass the laugh test,â€� Arizona Â鶹´«Ã½Ó³»­ of Commerce and Industry spokesperson Garrick Taylor said. “In November he’s pushing an initiative that would jack up electricity rates, and six months later he says that he’s looking out for the consumer in a 2017 rate case? He can’t even keep his own positions straight.â€�

Proposition 127 was dealt a crushing blow on Election Day, failing 69 to 31 percent after proponents dumped $28 million into the campaign.

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