PHOENIX — Senate Republicans have a message to Gov. Doug Ducey about his plan for tax cuts.
We’ll see your $200 million in proposed cuts for this coming budget year and raise you another $250 million.
Sen. David Gowan, R-Sierra Vista, told Capitol Media Services that revenues are running far ahead of anticipated expenses. In fact, legislative budget staffers anticipate what they believe will be a $2 billion surplus for the new fiscal year that begins July 1, even on top of Ducey’s $12.6 billion spending plan
So the GOP caucus figures the state can provides even more tax relief than the governor believes is appropriate.
But Gowan, who chairs the Senate Appropriations Committee, said Republicans are keenly aware of the changing nature of government finances. So unlike the plan for a permanent $200 million cut — one that Ducey wants increased over three years to $600 million — the additional tax cuts would be for one year only.
Sen. Vince Leach, R-Saddlebrooke, said who will get those dollars is yet to be decided. But he said that the nature of providing one-time relief suggests that the beneficiaries will be certain kinds of small businesses.
So far, House Republicans have not put down their own markers on what kind of tax relief they want. But House Majority Leader Ben Toma, R-Peoria, said this not just about dollars and cents.
“We’d like to see a much broader discussion around economic development, period, when it comes to tax cuts,’’ he said. And Toma said he’d actually like to see even more tax cuts over a three-year stretch.
Gowan said that conforms with the GOP philosophy.
“As the economy gets a little stronger and stronger, we’re seeing the dollars come back,’’ he said. “We just thought it would be prudent to give back to the people who pay the taxes a portion of what they keep giving in,’’ he said.
Leach put his own spin on it, quoting President Calvin Coolidge.
“If you collect one more dollar than is necessary to run government it’s robbery,’’ he said.
Any move to cut revenues will get a fight from Democrats. They contend the state is not now providing sufficient dollars to fund needs, particularly with the financial hit that some people have taken due to the pandemic.
Then there’s the larger question of whether it’s prudent to make permanent cuts in state taxes given the up-and-down cycles in the economy. Reversing course is not a realistic option as it takes a two-thirds vote to raise taxes or even to cancel an already scheduled future tax cut.
Gowan, however, said state collections have been healthy for several years, even with the downturn in revenues linked to COVID-19 as some businesses have been shuttered or are operating at reduced capacity.
At the same time, however, there have been offsets.
One is $32 billion in relief through the federal Coronavirus Aid, Relief and Economic Security Act. That provided $13 billion in business aid, $10 billion in additional unemployment benefits, $6 billion through the one-time $1,200 per person stimulus checks and another $2 billion for hospitals.
And that doesn’t include a new package approved by Congress last month, the one with the $600 individual checks.
But Senate Minority Leader Rebecca Rios, D-Phoenix, said there’s another side to that.
She noted that Ducey gave $400 million of the $1.9 billion in discretionary funding he got directly to state agencies. And they, in turn, returned $300 million they had received in state dollars.
Rios said those federal dollars should have gone to helping those affected by the pandemic rather than beefing up the state’s bottom line to then use for tax cuts.
Gowan said nothing is being shorted.
”We’ve been collecting dollars a lot,’’ he said.
”The economy is doing well in our state,’’ Gowan continued. “You can chalk that up to a lot of good Republican issues like deregulation and tax readjustment in the past that’s helped our economy grow with jobs.
And the needs?
”We still have a lot of other dollars out there that we’re still trying to heal the state with,’’ Gowan said. “So we are doing that, we are being prudent I believe.’’
Leach acknowledged the pitfalls of putting too much into place in permanent tax cuts. He said that’s why some of the relief being considered would just be a one-time hit to revenues.
One issue of particular focus is based on changes in federal law. It allows companies to essentially carry back current losses against prior profits to get a tax break.
Leach said Arizona already allows major corporations to do that. But smaller companies with different organizational structures don’t have that option under state law.
As to the form of other tax cuts, Leach said there is sentiment among Republicans to alter the state’s individual income tax structure to “flatten’’ the rates.
Right now the state has four tax brackets, with rates ranging from 2.59% for the first $26,000 of income for individuals to 4.5% for adjusted earnings about $159,000. That is down from five brackets just three years ago.
Leach said one option is to go to three brackets, a move that, depending on how it is crafted, could lower the tax bills overall, particularly for those near the top of the earning curve. And there is added push for that among many legislators who are hoping to at least partly offset Proposition 208 and its 3.5% surcharge on the incomes of individuals about $250,000 a year to add money for education funding.
Others, however, have different ideas.
Senate President Karen Fann, R-Prescott, said a good use of the funds might be to pay off the debt incurred by the state’s Public Safety Personnel Retirement System. That, she said, will save the state millions in interest payments.
Then there’s the fact that business property is assessed for tax purposes at 18% of what’s considered its full cash value versus a 10% assessment ration for residential property. Sen. J.D. Mesnard, R-Chandler, said the idea would be to lower that business assessment ratio to 15%, making the state more competitive.
Only thing is, that would cause a shift in the burden of local and school taxes — the entities that depend on property tax — to homeowners, meaning voters. And that would make it politically unacceptable.
The plan would be to have the state use some of its revenues to backfill the difference to ensure that homeowners do not end up paying more.
CASA GRANDE — A Casa Grande Union High School student is on track to be part of the Harvard University 2025 graduating class.
Merlin D’souza, a senior who plans to major in pre-med and become a neonatologist, said she was nervous when she applied to the school and even more nervous when she received a response to her application.
“I was really nervous and scared when I saw I had a notification in my student application portal,” D’souza said. “My brother was home from college at the time and my family was all together when I opened it. When I saw the ‘congratulations’ at the top of the message, I couldn’t believe it.”
D’souza had applied to Harvard University through its early action application program in which aspiring students receive an early response to their application rather than waiting until spring. D’souza received a response to her application in December.
“I’ve been dreaming of going to Harvard my whole life,” she said. “I decided to do the early action application to see what my options would be.”
Harvard received a record 10,086 early action applications for the class of 2025 and this year accepted a record low of 7.4%, according to the school’s online news source, The Crimson.
D’souza is one of only 747 students accepted through early action for her graduating class.
Last year, 895 of the school’s 6,424 early acceptance applications were accepted, the news source said.
“My whole family is excited for me,” D’souza said. “My parents are great resources and at that moment when we found out I was accepted, I felt like all their hard work paid off.”
D’souza is the daughter of Moses and Teodolina D’souza, immigrants from India who have lived in Casa Grande for more than 16 years. Her older brother is a student in the robotics program at Arizona State University.
While in high school D’souza has kept busy and says her school activities helped prepare her for the Harvard application process and post-high school success.
“I picked CGUHS for its STEM program and for the clubs and opportunity to do independent research,” she said. “I’ve had amazing teachers and mentors and had the chance to take some of what I learned in the classroom and put it to work in the STEM lab or robotics program.”
She served as the president of Key Club and Students for the Exploration and Development of Space, vice president of Link Crew, treasurer of National Honor Society, founder of Debate Club, organizer of the Sci-Tech Festival and founder and organizer of the annual Casa Grande STEAM Week, chief science officer serving on the Arizona Leadership Council and captain of the tennis team.
She was in the CGUHS drama production “The Track Home” and served as the student council secretary, Health Occupations Students of America officer, STEM Advisory Committee chair, administrative lead for the Lemelson-MIT InvenTeam, SADD secretary, chief science officer for Project Flower Child and a member of the CGUHS Robotics Team.
She has won numerous awards in high school. She serves her church as an altar server, Junior Catholic Daughter of America, lector and served in her youth group. She received the St. John Paul II 2019 Youth Leadership Award as an Outstanding Missionary Disciple and first place in the Catholic Daughters local and state writing contests.
But despite her accomplishments, she said she was nervous and uncertain when she applied to Harvard.
“Uncertainty was one of those things I had to overcome before I applied,” she said.
Acceptance into the school of her dreams is the first step in her long-term goal of becoming a doctor, she said.
“I’ve watched the ‘Dr. Oz’ show since I was a little kid and have always dreamed of becoming a doctor. Being in the medical field, especially now, just seems like a selfless way to make a big impact on people’s lives,” she said. “I want to help people.”
She hopes her story of being accepted into a top school inspires others to pursue their dreams, even when they feel the odds are against them.
“If you work hard you can make anything happen. God will find a way to make your hard work pay off,” she said.