A recent op-ed in the Arizona Republic by the Arizona Center for Economic Progress argued that the legislature’s budget “doesn’t add up” and that Arizona needs a “reality check.” We agree a reality check is in order, but definitely not the kind being offered. 

The argument, which has become the standard refrain from the Left on tax policy, is that Arizonans have enjoyed too many tax cuts over the years (the fault of Republican lawmakers), and that this has left the state anemic in revenues and starved of the ability to provide essential government services. 

But the average middle-class, tax-paying resident would probably scratch their head at this. They still have roads to drive on. The police still come when they call (except maybe if they live in Tucson). There are still bureaucrats employed to receive their tax filings and permit fees.  

No matter how much the Left likes the story that government is running on fumes, people don’t believe it – and their intuition is right, because none of the actual data supports it. The reality is the very opposite. Arizona’s state budget has been ballooning for years. Our welfare programs have never been more riddled with fraud. And governments of every size in the state just keep sizing up. But most concerning about the myth that state government is poor and taxpayers are too rich is that it belies a philosophy that every Arizonan should find alarming. 

Revenue Is Growing, Not Shrinking 

The op-ed claims Arizona is “shrinking the very revenue needed to sustain” essential systems and has “lost nearly $11 billion to tax cuts.”  

This is simply false.  

Since the 2.5 percent flat tax took effect in 2022, state general fund revenues and state shared revenues have both grown. In fact the State’s General Fund has doubled in a decade – from roughly $9.1 billion in FY2016 to over $18 billion in FY2026. Total state spending now exceeds $60 billion. The state is sitting on a $1.63 billion rainy day fund. Revenue did not shrink, it grew immensely. Lower tax rates made Arizona a more attractive place for job creators and productive people in general – in other words, it grew the economy. 

And if anyone is genuinely concerned about pressure on state revenues, instead of looking at the taxpayers who generate that revenue (the goose that lays the golden egg), they may want to look to the other layers of government draining it. When the flat tax was adopted, the legislature increased the share of state income tax collections passed onto local governments from 15 to 18 percent to “hold cities harmless.” This turned out to be the biggest lie since “you can keep your doctor.”  

The result has been a massive windfall in revenue for municipalities. According to the Common Sense Institute, cities have pocketed $7 billion in excess revenue from the state since 2021, a figure projected to reach $11 billion by 2028. The state has overpaid municipalities by roughly $3 billion through FY2029. And city budgets have grown by 67 percent in just five years, according to the Arizona Tax Research Association.  

The state is effectively subsidizing a slush fund for municipal government, which they use to go out and buy things like a $2 Million dollar sign along Mill Avenue, which is a far bigger drain on the treasury than letting families keep more of what they earn. 

Waste Is Everywhere You Look 

With massive increases in government spending, and the scandal that broke on USAID, no one is surprised to hear that the government doesn’t spend every dollar responsibly. Arizona’s AHCCCS system lost an estimated $2.8 billion to a single sober living fraud scheme – what the U.S. Department of Justice called the largest fraud targeting a single demographic group in American history. Total questionable behavioral health billing exceeded $3.1 billion between 2021 and 2023 alone. Only $139 million has been recovered. These programs are crying out for a line-by-line audit, something Republican lawmakers may ask voters to approve in the form of a ballot measure in November since Governor Hobbs and Attorney General Mayes have shown little interest in addressing the problem. 

Then there’s the governor’s own ledger. Her Office of Tourism blew $700,000 on a hideous and unnecessary logo rebrand, a project so tainted by cronyism that the tourism director had to resign. Her Arizona Commerce Authority violated the state’s gift clause, spending $2.4 million in taxpayer money on Super Bowl tickets and CEO cocktail parties. Her housing department wired $2 million straight to overseas fraudsters because no one bothered to write a wire transfer policy. And her illegal housing moratorium, struck down in court for violating private property rights, may have put taxpayers on the hook for over $1 billion in legal liability.  

Yet after three years of fiscal malfeasance and her own problems with pay-to-play bribery allegations, Hobbs’ big “solution” is to launch a Trump-inspired “efficiency initiative” promising $100 million in savings. The governor doesn’t need an efficiency initiative, she actually just needs to stop being the source of waste, fraud and abuse.  

Your Paycheck Is Not the Governments to Lose 

But the most disturbing element of the Left’s argument is the premise hiding beneath it: that The State of Arizona has “lost” $11 billion. Lost it to whom? To the families and businesses that earned it. This framing is a stunning admission. In this worldview, all wealth generated by productive and free people belongs to the government first. Whatever the state doesn’t confiscate in taxes is a “loss.” Whatever it allows private citizens and businesses to keep is a generous gift. 

If you start from that premise, then the government is entitled to 100 percent of everything, and no one should balk at high taxes. But as Thomas Sowell observed, “I have never understood why it is ‘greed’ to want to keep the money you have earned but not greed to want to take somebody else’s money.” The flat tax didn’t rob Arizona of a dime. It let workers, families, and small businesses keep more of what they earned, and revenues grew anyway, because that is what happens when you let free people build things. 

Critics of the legislature’s budget say budgets are built on math. They’re right. And the math shows revenues growing, billions vanishing to cities and fraud, a governor whose own budget was built on a hope and a prayer, and waste everywhere you look. The legislature’s budget spends only the revenue the state actually has and delivers the full tax conformity relief Arizonans are owed under the One Big Beautiful Bill. 

Arizona doesn’t need a reality check on tax relief. It needs a reality check on spending, on fraud, and on the belief that your paycheck belongs to the government before it belongs to you. 

Help Protect Freedom in Arizona by Joining Our Grassroots Network

Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.