Those corporate income tax cuts Arizona lawmakers enacted during the recession are finally kicking in.
Prior to 2014, corporations had a tax rate just shy of 7 percent. It is now a point below that. And after this year it will be 4.9 percent.
Legislative budget analysts figure the tax cuts that have already taken effect will reduce revenues by the end of this budget year by $97 million. By the 2019 budget year, corporations will be paying just $352 million in taxes-- half of what they otherwise would be paying.
But Daniel Scarpinato with the governor's office said Gov. Doug Ducey, who proposed a small spending increase amid concerns about future revenues, has no interest in keeping those future cuts from taking place.
"Other states are doing tax reform. Other states are figuring out how to be more competitive. And for Arizona to walk out of that game and say, 'We're not going to compete, we're going to raise taxes' would be really irresponsible," Scarpinato said.
Plus, he said, eliminating tax cuts that have not yet taken effect-- and give up revenues that are not yet due-- would effectively amount to a tax hike.
"Employers and job creators need certainty. And if we pull the rug from underneath and say, 'These are the tax rates you were expecting and now we're going to change all that,' that would be very detrimental to everyday Arizonans and to our economy," he said.
But House Minority Leader Eric Meyer said he's heard all that before. More to the point, he said he is still waiting for the economic boon that proponents said would occur the moment the phase-down of tax rates was approved.
He noted the state's jobless rate is still close to a full percentage point above the national average, and the number of people working now is still less than it was before the recession.
"And the jobs that we're creating aren't, in many cases, the high-wage, high-tech jobs that other states are creating," Meyer said.
Ultimately, he said, it comes down to a question of priorities.
"If we want to invest in education and our universities, you have to have revenues come from somewhere. And we tend to just cut taxes without any plan to fund the things that we need to fund in our state, in particular, education, both K-12 and higher ed," Meyer said.
But don't expect Meyer to try to convince the Republican-controlled Legislature to block the yet-to-be-implemented tax cuts. He said that move would take a two-thirds vote. And Democrats make up less than half the Legislature.