AZ Supreme Court Boots Prop. 307
Yesterday, the Arizona Supreme Court ordered Proposition 307, which would have asked voters whether a 2.5% flat tax should take effect, off the November ballot.
In its brief order, the court accepted the arguments of the Arizona Free Enterprise club and other pro-tax cut interests that that measures enacting a tax cut are part of the exception to the power of referendum for laws enacted for the “support and maintenance” of state government.
This means that last year’s bill, SB1828 (Laws 2021, Ch. 412), will take effect and the state’s income tax rate will begin to phase down to 2.5% of taxable income for all taxpayers if the state collects at least $12.8 billion in revenue in the current fiscal year.
Speaking of revenue….
Legislative Budget Office: $5.2B in the Bank
The Joint Legislative Budget Committee (JLBC) reported last week the state is looking at a $5.2B budget surplus for the current fiscal year, driven largely by continuing increases in Transaction Privilege Tax (TPT), more commonly referred to as sales tax. This jump is fueled largely by retail sales and non-residential construction activity. In addition, the JLBC also published its monthly report on revenue collections for March this week. With three months left to go in FY22, the state has collected $10.9 billion in revenue toward the $12.8B needed to trigger the income tax reductions.
Altogether, the state’s revenues have exceeded the January baseline budget forecast by $522M through 9 months of the fiscal year, an increase of 11.7% over the prior year.
Of these amounts, JLBC estimates that $1.6B can be counted on in future years, while $3.7B is likely a one-time occurence.
Enjoy the ASBA Government Relations Update? Think someone else would benefit from receiving it? Let them know!
Happy Friday!
The Legislature was not in session on Thursday or Friday. They will return Monday at 1:15 p.m.