Now Is Not the Time for a Legislative Pay Raise

Now Is Not the Time for a Legislative Pay Raise

Inflation is through the roof, gas prices are higher than ever before, out-of-state money was being used to put historic tax cuts on hold, and now lawmakers want a pay raise. Yes, while the Bidenflation tax is cutting deeply into the pockets of hardworking Arizonans and small businesses, lawmakers want their pockets deepened—to the tune of a 137.5% pay increase. That is what is being proposed in SB 1180 and SCR 1018.

Under Arizona’s constitution, any increase in the salary of state lawmakers must be approved by voters. In the past 50 years, legislators and the AZ Commission on Salaries have sent a pay raise to the ballot 18 times. All but two of them have been shot down by the voters. The most recent referral, in 2014, to raise legislative salaries to $35,000 was rejected 68%-32%.

Interestingly enough, lawmakers actually gave themselves a pay raise just last year, sidestepping the constitution and voters in the process. They accomplished this by increasing their per diem pay from $60 per day to over $200 and locked it in to be adjusted annually for inflation. As a result, lawmakers outside of Maricopa County are now eligible to receive over $50,000 in annual compensation, more than double the amount approved by voters.

Under SB 1180, legislative compensation would surge to over $80,000 a year. And this wouldn’t be just a one-time pay raise. Tired of the voters refusing a salary increase at the ballot time and time again, they would rather just have the voters tie their pay to 60% of the Governor’s salary. That way, when the Commission on Salaries (not the voters) decides to increase the Governor’s pay, lawmakers will benefit too.

In their defense of Senate Bill 1180, the measure’s sponsor lamented that lawmakers are working hard to negotiate a multibillion-dollar budget while making as much as minimum wage dishwashers. Some lawmakers believe they are very important people, doing very important work. And surely, they should not have to have their salaries determined by those pesky dishwashers at the ballot ever again.

And if increasing their pay wasn’t enough, the proponents of the bill found time to stick sweeping changes to legislative term limits into the package as well. SB 1180 would have increased the length of time a member may serve in the House or Senate from a total of 8 to 12 years and would have increased the length of a single Senate term from 2 years to 4.

Unlike most other major pieces of legislation, this pay/term limit plan wasn’t introduced at the beginning of the legislative session as a standalone bill with an accompanying ballot referral. No, both were pushed as strike everything amendments to completely unrelated bills, during the last week of committee hearings on a jampacked agenda.

It was obvious that the goal was to ram this through quickly and with as little scrutiny as possible from the public. And thankfully the plan didn’t work. SB 1180 failed 5-8, with five democrats and three republicans voting “No” and five republicans voting “Yes.”

Unfortunately, as one Republican who voted for the bill noted in his vote explanation, bad ideas never truly die at the legislature. With sine die and a budget deal a long way off, there is still plenty of time for a pay raise revival. So, taxpayers will have to be prepared if/when this pay raise package finds its way back—hopefully to help it fail again.

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A New Sales Tax for Fire Districts Is Unfair and Unnecessary

A New Sales Tax for Fire Districts Is Unfair and Unnecessary

The last thing the people of Arizona need right now is a sales tax increase. But leave it to state lawmakers to try to push one through by proposing a referral to put a tax hike on the ballot to fund fire districts.

The bill is SCR1049. And if it makes it onto the ballot—and gets approved by voters—it would create a 20-year statewide 0.1% sales tax to fund Arizona’s 144 fire districts. It would also distribute the funds proportionally to the fire district’s equalized property valuation, but not to exceed 3% to any one fire district.

To the average voter, this may not sound like a big deal. After all, firefighters provide an important service that keep people and their property safe.

But this policy would be a disaster.

If enacted, all Arizona taxpayers would be forced to subsidize 1.5 million other Arizona taxpayers despite already paying taxes for fire and emergency services in their own communities. This is not only redistributive, but it’s unfair. And that’s not the only problem.

This policy is essentially a bailout for fire districts who have recklessly and wastefully spent taxpayer money. Having Arizona’s taxpayers indiscriminately subsidize districts that are not good stewards of taxpayer money is a perverse incentive. And it does nothing to require accountability. After all, these taxpayers have no say in the election of fire district board members. That means you will have no representation when it comes to how your money gets spent. Not to mention the fact that the proponents of the bill have not even tried to present a business case for why this new tax will help solve their underlying issues.

And what’s to stop them from coming back to taxpayers for MORE money? We see it time and time again when it comes to education. Do you think fire districts will act any differently?

The reality is that Arizona’s fire districts already have access to the property tax base, rates and charges for ambulance service, and Public Safety Personnel Retirement System benefits. These are two funding streams and a major benefit that the private sector cannot compete with. It’s bad enough that public fire has already spent years trying to push private providers out of the market. Giving them a third funding stream will only make it worse. This will create more funding buckets that will make it even more difficult to ensure transparency and a proper pulse on how much money these districts are taking in.

Most of all, if it gets passed, SCR1049 would set an awful precedent. Other taxing districts will assuredly look at this policy as a clever way to reduce accountability for spending all while increasing revenues by getting a piece of the sales tax base.

That’s why it’s imperative that the legislature votes NO on SCR1049 and retains its ability to direct tax policy and pass a balanced budget. As the Club has said throughout the year, now is not the time to raise taxes on the hard-working people of Arizona. With exorbitant gas prices and rising inflation, they need every break they can get. Lawmakers got it right last year when they delivered a historic tax cut. They need to follow that same principle this year.

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!

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SB1643 Would Give Large Companies Billions in Taxpayer Dollars to Fund Liberal Causes

SB1643 Would Give Large Companies Billions in Taxpayer Dollars to Fund Liberal Causes

It is no secret that the Club is critical of special interest tax credit programs that distort our tax code and pick winners and losers in the market. Though a few of these tax credits have been enacted by the legislature over the years, there is one program on the books that has grown into the billions and has successfully evaded any real scrutiny: the Research and Development tax credit program.

The Research and Development tax credit program piggybacks off the federal program and operates under the premise that it will increase the amount of investment corporations make in Arizona on research and development. The program is very generous, allowing corporations to claim a 24% credit on the first $2.5M in qualifying expenses and an additional 15% up and above the $2.5M. If a corporation effectively eliminates their tax liability, they are allowed to carry forward the excess credits for up to 10 years. For businesses with fewer than 150 employees, the pot is even sweeter, as they are allowed to claim a refund of up to 75% of the excess credits and cash out up to $5M every year in what is called a “refundable” tax credit. In other words, direct taxpayer subsidies for select businesses.

Because of the sheer size of the R&D tax credit program and the fact that the credits are not capped, the bank of unused tax credits being carried forward has grown to almost $2B! For perspective, the state only generates around $850M in corporate taxes a year – this clearly demonstrates that there is simply not enough corporate income tax liability (taxes being paid) to draw down the available credits. As these unused credits have grown, there has been more pressure from corporate lobbies that currently have zero corporate income tax liability to find creative ways to simply cash the credits out.

This year’s attempt has taken shape in SB1643, which expands the existing program for “small” firms receiving refundable credits from $5M to $10M a year and creates a new program that allows up to $50M a year in unused credits by larger companies to be converted (i.e. made refundable) for reinvestment. This is a massive expansion in the refundability of the program and lays the groundwork for all $2 billion to be given away in subsidies to big business.

Considering how the program has ballooned, lawmakers would be far better served to examine the structure and necessity of the corporate income tax entirely, instead of creating complicated credit schemes.

SB1643 is bad policy and bad politics

Under the provisions of the bill, corporate entities can apply their unused credits at a rate of $0.60 per dollar for qualifying expenses which include everything from “sustainability” projects, updating R&D facilities, “workforce development projects,” tuition reimbursement for employees, and capital expenditures supported by federal matching dollars, or national grant programs.

In other words, large companies will get taxpayer money to fund various liberal endeavors, including efforts to combat climate change, empower HR departments’ woke workforce initiatives, and promote the out-of-control spending of the federal government.

This isn’t just conjecture—many of these corporations have implemented these activities in the workplace, and SB1643 simply forces taxpayers to now subsidize these woke initiatives.

And while republican lawmakers tell their constituents that they oppose taxpayer subsidies, oppose CRT, and dislike green new deal policies, a majority of Republican Senators voted for SB1643 as did a majority of House Republicans in the Appropriations committee. Their opposition is schizophrenic, to say the least.

Now we are moving into budget season at the legislature, and it is becoming more and more likely that this corporate welfare R&D package will be rammed into the budget. The only question now is when that occurs, who will stand up against this woke taxpayer giveaway, and who will be for it.

Tell Your Senators to Vote NO on Corporate Welfare Bill SB1643!

SB1643 would allow $50M a year in tax credits for R&D companies and increase the “refundability” from $5 M to $10 M a year. There are currently over $1 BILLION in backlogged R&D tax credits because the state programs have generously allowed these companies to entirely zero out their tax liability!!

SB1643 is a straight $10M/year appropriation to these companies subsidized by TAXPAYERS. This is CORPORATE WELFARE and it’s WRONG!!

Send a message to Arizona Senators right now and tell them to vote NO on SB1643! 

Biden’s Billionaire Minimum Income Tax Is a Dangerous Slippery Slope

Biden’s Billionaire Minimum Income Tax Is a Dangerous Slippery Slope

“Punish the rich” tax proposals never seem to go out of style—at least for the Democrats. In the 2020 Democratic presidential primaries, it was all the rage for Senators Elizabeth Warren and Bernie Sanders. But after they both failed in their White House bids, they decided to double down on their wealth tax with an ill-conceived proposal on Capitol Hill in early 2021.

So far nothing has come of that. But enter President Biden.

At the end of March, Biden unveiled his Billionaire Minimum Income Tax proposal, and it’s every bit the disaster that you would imagine it to be. The plan would tax the appreciation of financial and business assets worth more than $100 million. (That’s not exactly a billion in net worth, but math has never been a strength for the Democratic party.)

So, how would it work?

Biden’s proposal would require taxpayers who are worth more than $100 million to pay a minimum of 20% on their capital gains each year, whether they sold the assets for a profit or continue to hold them. This would put a tax on unrealized gains, completely overhauling the current tax code which only taxes gains after they are realized (e.g. when someone gains a profit from selling a stock).

The idea is quickly gaining ground with most Democrats who believe that it could create hundreds of billions of dollars in new revenue over a decade. Of course, that’s just a small drop in the bucket for Biden’s $5.8 trillion budget proposal, which means, guess what? They’re still going to come after your dollars, middle class.

But don’t tell that to Arizona State University law professor Erin Scharff. She’d rather peddle this garbage on behalf of the president and push Congress to make these $100-million billionaires “pay their fair share.”

Unfortunately, Ms. Scharff doesn’t understand that most wealthy people will still figure out ways to avoid paying the tax—even if it is implemented. And if they do end up paying it, the results would likely add more damage to our economy.

But if Ms. Scharff can’t wrap her head around that, you would think that as a law professor, she could at least recognize that Biden’s Billionaire Minimum Income Tax—much like many of his plans—is likely illegal. Other similar taxes that have targeted wealth have been reviewed in the past, and this one likely runs afoul of the “direct tax” clause in the U.S. Constitution.

It’s pathetic that an ASU law professor is pushing a tax plan that is on extremely shaky legal ground, but this is the state of “higher education” in America.

Regardless of its legality, there is no doubt that—just like the original income tax—this new billionaire tax plan won’t just be a tax on the rich. As history has shown us time and time again, the appetite for more revenue never subsides in Washington, D.C. You can guarantee that this plan will eventually apply to everyone—no matter your income or your wealth. And that just goes to show you how this proposal by Biden—and pushed by this law professor—is completely out of touch with the issues affecting taxpayers. Inflation is out of control and supply chains are still a wreck, but for Democrats and ivory tower law professors, those issues are secondary to their ideological desires to redistribute wealth.

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!

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Arizona Should Conduct an Audit on Mesa Public Schools’ Hidden Spending

Arizona Should Conduct an Audit on Mesa Public Schools’ Hidden Spending

For years now, we’ve heard the same old talking points from the left when it comes to our state’s schools. It always goes a little something like this:

    • Education is underfunded in Arizona…
    • Teachers aren’t paid enough…
    • We need to raise taxes to pay our teachers more…

Do these lines sound familiar? They should. Anytime a new proposition is rolled out to voters, teachers’ unions and other liberals push this same narrative. We heard it when they campaigned for Prop 208 a couple years ago. And despite the fact that the Arizona Supreme Court struck down Prop 208 because Arizona is already funding schools at historic levels, we continue to hear it from Red4Ed and others as they target the state’s $1.8 billion tax cuts.

That’s what makes the latest news out of Mesa Public Schools (MPS) even more outrageous. Earlier this week, AZ Free News reported that MPS won’t explain where more than $32.3 million of their federal emergency funds slated for COVID expenses went. The investigation came after reports that MPS teachers were asking parents to donate basic school supplies they were running out of because the district wouldn’t cover them.

But instead of having a clear explanation for the money that was buried under expenses listed as “other,” “indirect costs,” and “etc.,” MPS officials repeatedly dodged the question and mentioned that no records exist for those categories.

So, while their teachers are begging parents for reams of paper to finish out the school year, MPS is content to let them struggle for the sake of all these “other” expenses that are apparently too important to disclose. And all the while, Red4Ed continues to push the underfunding myth.

But maybe, just maybe the problem with education funding and teachers’ salaries isn’t a question of how much money districts have, but how districts are, you know, spending that money. Because it feels like $32.3 million in hidden expenses could go a long way toward fixing the issue. And this is just in one school district. What could this say about the rest of the school districts in our state?

Naturally, Arizona’s corporate media decided to sit this one out. They spill gallons of ink writing about charter schools and how they spend their cash. But when it comes to holding their beloved public schools accountable, they show no interest. After all, corporate media largely ignored the Higley Unified School District scandal when former superintendent Dr. Denise Birdwell was indicted on 18 felony counts related to procurement fraud, misuse of public monies, fraudulent schemes and practices, and more. And they were late to the party to report on the secret dossier on parents in the Scottsdale Unified School District back in November.

Would we expect anything else with this new situation in Mesa? Of course not. Because local news anchors don’t exactly win awards from teachers’ unions when they call into question their spending habits.

If corporate media is content to ignore this story again, at least we have some good independent media in Arizona willing to call it out. Now, our public school districts need to be held accountable when it comes to spending your hard-earned tax dollars. And if MPS won’t disclose where that $32.3 million is going, then it’s time for the State of Arizona to conduct an audit and find out how that money is being spent.

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.