Arizona Republicans say they’ll pass a measure to conform with both federal tax policy and the guidance issued by the state Department of Revenue, but Democratic Gov. Katie Hobbs isn’t supportive.
Last year’s federal budget bill includes hundreds of millions of dollars in tax cuts.
Hobbs wants to implement only a portion of the tax cut package and said she won’t entertain other conformity plans until GOP lawmakers agree to pass hers into law.
She has already vetoed a Republican plan that would have achieved tax conformity with some tweaks. But neither Hobbs’ plan nor the original GOP plan match up with tax filing guidance from the Arizona Department of Revenue.
Now, to avoid confusion, Republicans want to just match that guidance.
ADOR told lawmakers in a committee hearing on January 14 that the governor’s plan doesn’t match their guidance and making changes will result in some Arizonans having to file amended returns.
Republican lawmakers accuse Hobbs of not engaging with them in negotiations or calling lawmakers into a special session months ago to handle this issue before tax season.
“Governor Hobbs has declined to provide any direction, respond to a joint letter from legislative leadership, or reconcile the contradictions between her public statements, proposed budget, and the tax forms taxpayers are being asked to use,” Republican lawmakers said in a statement.
They’ve also questioned why ADOR - which is under Hobbs’ purview - is seemingly not on the same page as the governor.
“The filing season is already underway, and the lack of clarity is creating confusion and serious problems,” said Rep. Justin Olson (R-Mesa). “HB 2785 codifies what the Department of Revenue has already instructed taxpayers to file. It would be unacceptable to require taxpayers who relied on the guidance of the Hobbs Administration to file amended returns to pay more of their hard-earned resources to the state.”
Hobbs’ spokesperson Christian Slater accused Republicans of trying to ram through a costly tax cut that will benefit “special interests and billionaires,” not just middle-class and lower-income families.
“The Governor’s position is clear: put the Middle Class Tax Cuts Package on her desk. She will sign it. She will not sign other tax cuts for special interests and billionaires until Republicans show her how they’re going to pay for them,” Slater said in an emailed statement.
