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The Arizona Legislature returns to session with Prop. 400's future on the agenda

Republican leaders of the Arizona House and Senate have reached a deal with Democratic Gov. Katie Hobbs to bring a proposal extending a half-cent Maricopa County transportation tax up for a vote when the Legislature returns on Monday.

But a large faction of GOP lawmakers known as the Arizona Freedom Caucus remain staunchly opposed to the plan to ask voters to extend the tax that has been in place for nearly 40 years. It has paid for a massive expansion of the Phoenix area’s freeway and roads system and helps fund public transit services, including the light rail.

And even if the deal confirmed by Senate President Warren Petersen and House Speaker Ben Toma to Capitol Media Services passes the Legislature and is signed by Hobbs, voters would still be able to reject the tax when it goes to the ballot next year.

If the so-called Proposition 400 extension fails on any of those steps, residents of Arizona’s other 14 counties would pay the price. That’s because without the approximately $20 billion the tax is expected to raise between 2025 and 2045, their cities and counties have to compete with Maricopa County for limited state transportation funding.

Democrats are expected to rally behind the deal, even though House Minority Leader Lupe Contreras (D-Avondale) said they have still not seen the details.

They’ve been solidly aligned with the leaders of the region’s 27 cities, three tribes, Maricopa and parts of Pinal County that belong to the regional planning group called the Maricopa Association of Governments that is pushing the tax extension.

MAG doles out the tax money for various transportation projects and crafted the initial plan that GOP lawmakers rejected.

“The one thing that we do know is that the cities, all the people that have been working on it, have blessed it,” Contreras said. “The individuals that we have been fighting for say they are good with it.”

Toma said Saturday that final details were still being worked out, and he was reticent to discuss it at length for fear of endangering a deal that already appeared shaky.

Petersen provided a two-page outline of the agreement that showed it cuts MAG’s planned allocation for transit from a range of 40-45% over the life of the plan to 37%. Freeways and major roadways get 63% of the total, an increase that could reach $2 billion over the 20 years the new tax will be in effect if approved by voters.

The deal bars any of the sales tax money from being spent to extend the region’s light rail system, cutting the total allocated to rail from 14% to just 3.5%, which can be used for major maintenance. It also bars the approved route for a 1.4 mile extension to the Capitol and cuts five years off the 25-year life of the tax as proposed by MAG.

The Arizona Freedom Caucus remains unsatisfied, tweeting that the plan is still being sold as improving roads while nearly 40% goes to transit that only a fraction of people use.

“A clear NO vote,” the post said.

A MAG spokeswoman said the group supports the basic deal outlines but declined to comment further because discussions on final bill language were ongoing. And gubernatorial press aide Christian Slater said he would not discuss details.

The Legislature is expected to adjourn for the year after Monday’s session.

The fight over the tax extension is now in its second year.

Lawmakers approved MAG’s plan on how to split the tax revenue between freeways, major roadways, transit and programs like air quality last year, but then-Gov. Doug Ducey vetoed it. That move surprised its backers and came after a low-tax group called the Arizona Free Enterprise Club urged the Republican governor to reject MAG’s plan.

This year, Toma, Petersen and Freedom Caucus members demanded major changes to the plan MAG had worked out with its members. Despite a host of tweaks agreed to by the regional planning group and Hobbs coming in at the last minute to negotiate on MAG’s behalf, Republican lawmakers ended up passing their own plan without Democratic backing.

It shifted more of the money to freeways and highways, cut transit spending to just 28% of the future tax revenues, and barred any sales tax cash at all from being used to expand the region’s light rail system, which the new plan also does.

Hobbs promptly vetoed it last month, leaving the fate of the tax extension plan in limbo as the GOP-led House and Senate took an unprecedented seven-week break. Some of the region’s leaders began talking about a voter initiative to repeal a law that requires only Maricopa County to get the Legislature’s approval to put a transportation tax on the ballot.

Toma, Petersen and others believe the light rail is a hugely expensive boondoggle and that taxpayers across the county should not have to pay for extensions that will not benefit them. The plan to extend the rail lines from downtown Phoenix to the state Capitol drew particular derision, and they vowed to kill that.

The major difference in the new deal is that it no longer splits the ballot question into two parts, a non-starter for Hobbs and MAG that they said endangered the whole plan. Other items were tweaked, and there is a tiny decrease in the overall tax rate needed to get support from some Republican lawmakers.

Like the vetoed plan, the agreement will force MAG to move the Capitol extension at least a short distance away from the host of state office buildings teeming with Arizona employees, cutting its utility for commuters if the extension is built. That proposed line has already been paid for by the current tax, federal funding and cash from the city of Phoenix.

A later extension is planned to run west from the Capitol and then along the Interstate 10 median to 79th Avenue, ending at the Desert Sky Mall and the Ak-Chin Pavilion.

The new deal also limits air quality programs Petersen worried could be used to curb private vehicle use, allowing money only to be used to pave dirt roads and buy street sweepers. And like the vetoed plan, it says any projects must decrease congestion and not boost travel times.

There are also new rules requiring bus lines to bring in more money, and the Legislature will get new seats on MAG’s board.

Sen. Mitzi Epstein (D-Tempe) who leads her chamber’s Democrats, said she’ll have to wait to see bill language and then determine if MAG can still implement the transportation plan unanimously adopted by the region’s cities. If they can, she said it will win Democratic support.

A wild card not addressed in the two-page summary Petersen provided is the fate of a ban on city home and apartment rental taxes that Hobbs vetoed earlier this year. A new version passed the House and Senate on June 13 but is still sitting on Petersen’s desk despite court rulings that say legislation must be “promptly” sent to the governor.

Contreras, the leader of House Democrats, said that Hobbs signing the rental tax ban “is supposedly part of an all-around package.”

Petersen did not respond when asked about that part of the deal.

For more, The Show spoke with KJZZ Politics Editor Ben Giles.

Key details of transit tax set for debate Monday

Where the money goes

  • 40.5% for highways
  • 22.5% for major arterials and intersections
  • 37% for transit including 3.5% for major light rail rehabilitation
  • 0% for light rail extensions

Restrictions

  • Intersection improvements must decrease vehicle congestion, lower travel times or improve safety
  • Funds to meet federal air quality requirement can be spent only to pave unpaved roads and purchase street sweepers
  • No funds for paths, bicycle or pedestrian infrastructure unless adjacent to streets or roadways
  • No reduction or restriction of highway lanes allowed that will increase vehicle congestion or travel times

Cost recovery

  • Mass transit must recoup at least 10% of costs from farebox revenues starting in 2027, rising eventually to 20% by 2031.
  • Cities with underperforming bus lines will have to cancel the lines, raise fares, or make up difference with own funds

Other conditions

  • Legislature gets to appoint 4 members to Maricopa Association of Governments Board; governor gets one
  • Tax lasts only 20 years
  • Preemption of state, cities and towns restricting or limiting sale or use of vehicles with internal-combustion engines

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Lauren Gilger, host of KJZZ's The Show, is an award-winning journalist whose work has impacted communities large and small, exposing injustices and giving a voice to the voiceless and marginalized.