Arizona’s revenues last month were 44% lower than May 2022, a decline totaling $183 million.
The Joint Legislative Budget Committee had expected to see a decline, but the number exceeded expectations.
A report from the committee pinned the reduction on Arizona adopting its flat 2.5% income tax.
Sales tax collection slowed as well as national data suggests consumers may be starting to reverse pandemic spending patterns.
Democratic state Sen. Juan Mendez (D-Tempe) said the revenue drop will leave the state in a vulnerable position.
“We’re gonna have a lot of decisions that are gonna be forced on us and that is never good for people. People always lose out when we are forced to make these hard decisions,” Mendez said.
As an example, Mendez said the decline will likely mean no raises for teachers in the next year.
“I think we’re going to have more divisive politics going forward if we don’t have anything to negotiate with. But I mean the biggest thing is we need to be putting more money into schools, and this means we won’t be able to put money into schools going forward,” Mendez said.
The revenue drop is the first since March 2020 when the COVID-19 pandemic started.
