Video editing by Anne Simmons.
Invest In Arizona Now leaders Luci Messing and David Lujan called on voters to sign petitions to nullify three new state tax laws that cut hundreds of millions of dollars that fund public education.
David Lujan led the successful effort to pass Prop. 208, the Invest In Ed ballot initiative, in 2020. Lujan is the Director of the Arizona Center for Economic Progress. He is a former member of the state Senate and House of Representatives. Luci Messing is the Chair of the Education Council of the Arizona Democratic Party, serves on the Tanque Verde Democrats Board, and is the AEA Retired Political Action Coordinator.
They spoke at the meeting of Democrats of Greater Tucson on August 23, 2021.
The highly unpopular Arizona laws will replicate the disastrous flat tax law that Kansas legislators passed in 2012. “It absolutely devastated the state once they did those tax cuts. The state lost a lot of revenue and had to make huge cuts to public education and healthcare. It almost just shut them down as a state basically,” Lujan said.
“That is essentially what we are about to repeat. You would think if another state had such terrible consequences that you would learn not to do it, but Arizona went full bore and have passed something very similar,” he said.
“We have until September 28 to collect a minimum of 118,823 valid signatures for each petition to refer the referendum bills to the ballot in 2022,” Messing said.
Democrats can find petitions to circulate at the Pima County Democratic headquarters at 4639 E 1st St., Tucson, AZ 85711. Additional locations across the state can be found at https://linktr.ee/TAGGAZ.
“You guys have risen to the occasion once again, and it’s great to see, and I appreciate it,” Messing said. “But we can’t stop, and we can’t give up. We have such a great chance of getting 118,000 valid signatures. We’re going to try and come in at 50,000 more signatures than we need, and we’re going to get there. We just can’t let up.”
What the tax cuts do:
Senate Bill 1827
● Decreases Arizona’s general fund by almost $500 million, and therefore cuts K12 spending by over $250 million per year.
● Ensures the wealthy pay less than their fair share in income taxes by capping the total income tax.
Senate Bill 1828
● Reduces state revenue by $1.9 billion by introducing a “so-called” flat tax that gives the wealthiest Arizonans a $350,000 tax break.
● Benefits the wealthy. Most AZ families will not see any tax breaks or benefits.
● A 2/3 majority of the Legislature or another initiative is required to reverse the flat tax, meaning this change is all but permanent. Therefore, a referendum is the only real solution to prevent this damage to our economy.
Senate Bill 1783
● This bill is a direct attack on Prop 208 and the 1.7 million Arizona voters who passed it. It takes away around $300 million of additional funding approved by Arizona voters just last year.
● Gives wealthy individuals a new loophole to use to avoid paying taxes.
Litigation against the tax cuts
Invest In Arizona Now has also filed suit against the State Department of Revenue to overturn the most pernicious tax law, SB 1783, which is a direct attack on Prop 208. The law creates a “small business” loophole and drains $300 million of new funding for schools that voters approved in Prop. 208 in 2020.
The lawsuit is Invest In Arizona v. Arizona Department of Revenue, Case No. CV2021-012451, Maricopa Superior Court.
“SB 1783 violates the Voter Protection Act, which limits the Legislature’s power to amend, supersede, or repeal voter-approved laws. SB 1783 excludes large categories of individual income from the “taxable income” that voters intended to tax. The People of Arizona have spoken, and they chose to require the wealthy to pay their fair share to fund our schools. The Legislature may be unhappy with that choice, but our constitution doesn’t allow them to undo it,” the lawsuit states.
In a different legal case, the state Supreme Court upheld Prop. 208 on August 19. Opponents argued that the money from Prop. 208 violates an education spending cap set by spending levels in 1980. The case goes back to Maricopa County Superior Court Judge John Hannah rejected claims against Prop. 208 in June.
I think it’s pretty clear that Prop 208 funds can be used in their entirety, even if we hit the expenditure cap, as you’ll probably learn in the coming weeks,” Lujan said. “That’s why I’m feeling good about Prop 208, but we still we’ve got this bigger issue when it comes to the spending cap that we have to deal with.”
Should the referendum to cancel the tax laws go on the 2022 ballot, Lujan expects opposition to come from the Goldwater Institute, Americans for Prosperity, and the Arizona Chamber of Commerce.
“Despite all of that stuff that was thrown against us, we will withstand every challenge,” Lujan said.
“The voter polling is overwhelmingly in our favor if we can get these on the ballot,” Messing said.
Wasting a surplus
The Legislature had a once-in-a-lifetime $2 billion budget surplus, which it wasted on paying for the tax cuts. Instead, it could have invested in public schools, universities, community colleges, affordable housing, childcare for low-income families.
“It was an opportunity to invest in our future, an opportunity to make up for years and years of cutting,” Lujan said. “However, that is not what our Legislature did. They gave the entire $2 billion revenue surplus away in the form of tax cuts for the wealthy,” he said.
If the referendum fails, the tax cuts will be impossible to reverse. “It takes a two-thirds vote of both chambers and the governor to reverse those tax cuts later. Unfortunately, it has been virtually impossible to get that two-thirds majority,” he said.
But if the referenda succeed, the $2 billion surplus will be instantly restored. If Democrats elect a new governor and flip the Republican Legislature to blue, they can reverse a decade of budget cuts to public education. “You can imagine the good things that can be done for the future of our state,” Lujan said. “So that’s what’s at stake with these referendums.