The Town of Sahuarita could lose an estimated $1.5 million in state-shared revenue if Gov. Doug Ducey s proposed flat tax rate passes, but the Town could work around the loss.
The League of Arizona Cities & Towns (the League) commissioned Rounds Consulting Group, an Arizona economic consulting firm, to analyze the impacts of a flat state income tax on local governments. The findings of the analysis confirm that failure to hold cities and towns harmless will hamstring municipalitiesâ potential for future growth, according to a statement from the League.
As lawmakers discuss and negotiate the FY 2022 state budget, communities are asking the Legislature to consider the ramifications of a $1.9 billion tax cut on cities and towns statewide. The measure could cost the Town of Fountain Hills $1 million per year, according to Mayor Ginny Dickey.
Some GOP lawmakers question flat-tax proposal
In this Dec. 2, 2020, file photo, Arizona Republican Gov. Doug Ducey answers a question during a news conference in Phoenix. (AP Photo/Ross D. Franklin, Pool, File)
The bid by Gov. Doug Ducey to permanently cut $1.5 billion a year of state revenues is based on an economic theory and a set of numbers that may not hold up under closer examination.
And all that is worrying Arizona cities who stand to lose hundreds of millions of dollars if the governor is wrong.
C.J. Karamargin, the governor’s press aide, said the way his boss figures it, enacting what he has billed as “the largest tax cut in Arizona history” will provide an economic stimulus that will keep Arizona competitive in landing new companies and getting firms to expand here. And Daniel Scarpinato, Ducey’s chief of staff, said the situation here is different than when Kansas tried this a decade ago, only to find its economy in a shambles.
Arizona can win big with property tax reform
Coming out of the Covid pandemic, Arizona has a special opportunity to position itself as a premiere choice for corporate relocations and new business attraction. Recently, we’ve celebrated several big wins with company expansions that will bring many new jobs to our state.
Specialized tax treatment, such as Foreign Trade Zones, which dramatically lower property taxes for businesses within the designated area, helped make these major investments possible. However, these benefits are not available to all businesses. They are restricted to specific geographic areas.
Opportunities exist for many more job creators, both large and small businesses, to make our state home if we can address one area of our tax system where Arizona is currently not competitive with other markets – commercial property taxes.
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