Last year, under the guise of public safety, a bill was passed at the legislature to charge Arizona drivers an additional VLT (vehicle license tax) fee. Although it was purported as a dedicated funding source for Highway Safety Patrol, the money was immediately swept to support payment of the Governor’s 20×2020 teacher salary raise plan.
fee was passed with all Democrats and a handful of Republicans, with
conservative Republicans getting rolled on the bill. Despite the claims that the fee would be $18,
the bill gave unilateral authority to the Department of Transportation to set
the tax, and when finally assessed the fee doubled at $32.
the New Year, without ANY organized opposition, Arizonans all over the state started
expressing their outrage
to lawmakers about the tax. Several
legislators immediately filed bills to repeal and/or cap the fee.
Michelle Ugenti-Rita (the main champion of the full repeal) sponsored Senate
Bill 1001, which sailed out of the senate with a 24-6 vote. Many of the lawmakers who supported the bill
last year have now backtracked on their vote.
bill was never given a full vote in the House as it got caught up in budget negotiations with the Governor’s office.
budget bills have been released which showed a 5-year phase out of the
tax. With Senator Ugenti-Rita holding
the line, the Governor’s office finally ceded to a 2-year phase out of the fee.
taxpayers won’t being seeing a refund of that $32. However, this is a tremendous win for
legislators and taxpayers! Not only were
they successful in getting a tax eliminated that should have never been passed
to begin with, but they are in the process of repealing some of the worst
public policy to ever pass out of the legislature.
As the Club has covered for
over a year, Arizona taxpayers are facing the largest income tax increase in
state history if a proper federal tax conformity plan is not adopted by the
legislature. The department of revenue estimates that the conformity tax
increase would be over $200 million dollars in the first year, with some
estimates as high as $300 million.
The good news is that
policymakers appear to be on the same page that any additional conformity
revenues must be given back. This is a big win for taxpayers. What remains an
open question is the manner in which the money is returned.
The second issue is just as
important as the first. Though a simple
approach on stopping the tax hike (such as cutting all the tax rates) could be
done, the Club has advocated that the conformity issue be used as an
opportunity to reform and simplify our income tax code.
Reforming Arizona’s income
tax code is long overdue, and if done right could be bring us closer to
neighboring states Utah and Colorado with a simple flat income tax. If we can’t
eliminate the tax, a simple/flatter system is the next best choice.
Unfortunately, most of the
discussions related to conform and reform have been behind closed doors in
budget meetings, with little input from the public. Though various components
have been leaked, it has been extremely difficult to determine which proposals
are best without reviewing the projected impact on taxpayers.
For example, adopting a
reform model that cuts taxes for some taxpayers while raising taxes on others
(picking winners and losers) would be suboptimal. The only way to figure this
out is through modeling from the Department of Revenue. Yet most of this data is only accessible to
lawmakers and the executive branch; it leaves interested observers and
stakeholders at a disadvantage on making an informed decision.
Without a front row seat to
the debate or access to modeling, the Club has been seeking out a reform plan
that both returns all of the money and holds taxpayers across all income ranges
3 Bracket Solution
Last week a conform a reform
plan was released that appears to do the trick (The plan can be viewed by
Developed by Senate Finance
Chairman JD Mesnard, his 3-Bracket model would implement the following income
- Offset the entire conformity income tax
increase and return the money to taxpayers.
- Provide an offset for additional tax revenue
generated by the proposed implementation of an online sales tax (a.k.a.
Wayfair) thereby preventing another tax increase.
- Collapse Arizona’s income tax brackets from 5
- Mirror Federal Tax Reform by doubling the
standard deduction for all taxpayers.
- Keep the medical deduction and add a new
- Implement a new child and new family tax
Why the 3-bracket plan? This
is only plan so far released that will hold individual income taxpayers (which
include small businesses) harmless across all income thresholds and stops
multiple tax increases, saving taxpayers over $300 million per year. Other reform
plans, though well intentioned, appear to shift taxes across income levels that
would trigger a tax increase on thousands of Arizona families and small
As structured, the 3-bracket
plan would provide taxpayers making $50k or less with a substantial income tax
cut. Taxpayers in this income group would see their tax bill slashed by an
average of 20 percent.
Finally, the 3-bracket
solution would simplify our tax code while flattening out the brackets.
Reducing the progressivity of our income tax code should be the cornerstone of
any reform package.
As the legislature
(hopefully) heads into the final stretch, it the Club’s hope that the 3-bracket
plan is seriously considered and adopted as the conform and reform solution in
There is an open secret regarding Arizona’s initiative process, one known by political insiders, ignored by the media and accepted by every group looking to buy their way onto the ballot box. It is that committees that run ballot initiatives hire felons and fraudsters to collect signatures to qualify propositions for the ballot.
This statement is factually true and supported by evidence, yet is immediately denounced by liberal opponents and the media as a cynical attempt to thwart access to the ballot.
It is why when initiative reform measures are proposed such as Senate Bill 1451, no time is spent debating the actual provisions of the bill designed to crack down on the abuse. They fear this debate because it will expose the true intentions of their opposition. Instead, the howls of “voter suppression” get louder to avoid confronting these questions.
How bad is the abuse? In 2018, undeniable evidence was discovered that the “Outlaw Dirty Money” initiative hired several criminals to collect signatures on their behalf. These individuals’ wrap sheets included offenses such as theft, assault, insurance fraud and robbery.
Paid and out of state circulators are legally required to register with the Secretary of State. However, this registration requirement does not prohibit felons or others convicted of identity theft from signing up to collect. There is also no penalty for paid circulators who provide false information on their registration form. Unsurprisingly, many of the paid circulators working for Outlaw Dirty Moneyfalsified information on their circulator registration forms – lying about their permanents addresses and even using fake names.
They would have gotten away with this scheme if not for an extensive review of the petitions by opponents of the measure. When the felons and fraudsters were discovered and challenged in court, 15 of the paid circulators working for the measure ignored the issued subpoenas and simply refused to show up in court.
This wasn’t the only initiative that employed shady or illegal practices.
In the case of Proposition 127, the committee’s own campaign manager admitted in court that most of their signatures were likely invalid. Of the over 240,000 invalid signatures they submitted, over 20,000 of them were submitted by circulators with felony records.
It is for these reasons that Senator Vince Leach introduced Senate Bill 1451, to address these abuses of our initiative system. SB1451 includes two significant reforms:
- Prohibits felons and criminals convicted of fraud and identity theft from registering as paid circulators. Right now, there is no prohibition for these individuals to register as paid circulators.
- Makes it a Class 1 misdemeanor for individuals to knowingly omit or falsify information on their circulator registration form. Candidates, elected officials and lobbyists file registration forms and financial disclosures under threat of perjury. Paid circulators should be punished just like anyone else who files falsified information with the Secretary of State.
Yet one would never know just how necessary and reasonable these reforms are over the cries from opponents claiming this will end the initiative process.
The reality is this: groups looking to buy their way onto the ballot box have no desire to police their own people, they are okay with fraud in the initiative process, and they don’t believe there should be consequences when people are caught red handed committing fraud.
But outside of the echo-chamber of the state capitol, the average Arizonan disagrees. Over 85 percent of Arizonans polled supported the exact type of anti-fraud provisions included in SB1451 – including prohibiting felons from collecting their personal information.
Voters know this is wrong. Most lawmakers know this is wrong. The passage of SB 1451 is long overdue.
There has been an important
policy debate stirring in Arizona over a proposal to mandate the construction
of electric vehicle (EV) charging stations by utility companies. The current proposed
policy would benefit a few select companies and electric
vehicle car owners at ratepayer expense.
conversation has not been happening in the transparency of the state Capitol
amongst the state’s elected lawmakers – but by the Arizona Corporation
Commission (ACC) – whose
primary charge is to set utility rates. This is inappropriate.
Voters expect policies of
such sweeping state implication to be the purview of the Arizona State House
and Senate, not the Corporation Commission.
existing subsidies for electric vehicle owners
such as the utilization of the HOV lane, significant reductions in the cost to
register an electric vehicle, and an exemption on the first year for vehicle
emissions testing are all statutory laws that went through the more public and
rigorous legislative process.
Aside from the ACC being the
wrong venue for this discussion, there are deep policy flaws with the
First, the evolution of new
technology into the automotive and energy marketplace has been good for the
economy, consumers and the environment. But building charging stations would
inject another subsidy into the rate base that picks winners and losers among
ratepayers. Less than 1 percent of the
population own and operate an electric vehicle, yet they will benefit from this
program at the expense of the other 99 percent. Additionally, since most
electric vehicle owners are overwhelmingly wealthy and affluent, this is a
subsidy that will be paid for by the middle class to benefit the rich.
Secondly, as cited, electric
vehicle car owners already receive favorable tax treatment and do not need an
additional subsidy. Currently, the majority of Arizona’s transportation
infrastructure is financed through vehicle fuel taxes. There is not a
comparable EV tax, which is a great deal for adopters of the technology. If the
Commission moves forward with subsidizing charging stations, internal
combustion car owners would be getting hit at the pump as well as through their
The ACC proposal is simply
Thirdly, the construction of
charging stations should be a function of the private sector. If the belief is
that electric vehicles are the future of transportation, then there will be a
market and viable business model for the construction of charging stations
throughout the state. The government will only depress the cultivation of the
EV charging station marketplace if the Commission moves forward with this
Finally, this proposal would
set a precedent for additional subsidies to preferred constituencies. For
example, if we are to build charging stations for electric cars, why not for
electric scooters or golf carts? Once the Commission begins handing out special
deals to one class of ratepayers, it should expect others to get in line asking
for their sweetheart deal as well.
The Club understands the
desire of the Commission to promote new ideas and technology, but mandating the
construction of EV charging stations is not the right approach.