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Arizona Voters to Consider Sales Tax Increase on May 18

1 min readBy: Joseph Bishop-Henchman

Overly optimistic revenue projections have led to a $1.5 billion gap opening in the current Arizona state budget. Legislators just wrapped up a session focused on closing that gap:

Arizona lawmakers ended their latest special session on the budget crisis Thursday in time to hold a May 18 special election on Gov. Jan Brewer’s proposed one-cent, temporary sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. increase to help balance future budgets.

Besides approval of the election, legislators also agreed to $750 million of borrowing to close roughly half of the projected $1.5 billion shortfall in the current budget on spending of $8.4 billion.

However, a bill to close more of the current shortfall by delaying $450 million of education funding into the next fiscal year died with adjournment of the special session. The Senate had balked at the House’s attempt to try to force senators to approve a House-passed bill on taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. cuts and job-creation incentives.[…]

Lawmakers all along planned to leave $250 million of the shortfall to be closed later, possibly through midyear spending cuts that would add to ones approved in December.

So to recap, $750 million in borrowing, $450 million kicked into next year’s budget, and $250 million in question marks.

The sales tax election will occur on May 18. The proposal to refer the tax to voters passed 34-25 in the House. The Arizona Republic is already editorializing its support, while opponents say a rejection will provide the mandate to address state overspending.