Budget Stalemate‏

Fits and Starts

The Senate took another stab at passing a package of budget bills on Wednesday afternoon. First up was HB 2015 -- a bill containing the controversial temporary sales tax ballot referral, an income tax reduction, and other tax items -- which was defeated by a vote of 14 – 11, two votes shy of the required 16 votes needed for passage. Interestingly, before the vote HB 2015 was amended to remove the ballot question that would ask voters to suspend previously-voter-approved spending mandates for education, health care and other popular items. Legislative leaders expected that the change would attract the needed 16th vote. Failing that, soon after, the Senate voted on SB 1029 --a bill containing a the same tax items, but this time including the ballot measure to suspend voter-approved spending requirements, with the hope that this approach would be more acceptable to members. That bill fell one vote shy of passage (15 – 10), killing all hope for the Governor and others for a November 3 election on the temporary sales tax question. The Senate proceeded to adopt the rest of the budget bills, effectively adopting a budget package that closely resembles the one passed by the Legislature on June 30 and vetoed by the Governor on July 1.

While the Senate was considering the budget bills, President Bob Burns (R - Glendale) called for suspension of the Senate Rules in order to call the Senate into "Sit COW" which is Capitol slang for "sitting as in Committee of the Whole," to consider and amend SB1025 on a controversial property tax issue. A process that doesn't happen very often, the Arizona Legislative Manual defines Sit COW as "a proceeding by which a house may conduct business as if it were in Committee of the Whole. Typically used to adopt minor technical corrections to bills that have already passed out of Committee of the Whole."

On Thursday, Sen. Jim Waring (R -Phoenix) made a motion to reconsider HB 2015, the sales tax referral, which failed on Wednesday. This motion passed on an 11-6 voice vote, which allows the bill to be reconsidered on a future Third Read calendar. Both chambers are adjourned until Monday, August 17 at 1:00 p.m.

Concerns for Cities and Towns

The budget bills still contain items of concern to the City, including: a $22 million shift of vehicle license tax (VLT) revenues to school districts (Phoenix impact between $5 and 6 million); 2-year freeze on impact fees, building codes and construction sales taxes; identification checks for public services, and reduction of the assessment ratio for commercial property tax (impacting Phoenix's secondary property tax levy by approximately $14 million/year). The package does include a permanent repeal of the state equalization property tax, but unless HB 2015 is resurrected does not include the corporate and individual income tax cuts proposed in the last two weeks. As presented, those income tax cuts could have reduced revenue sharing for Phoenix by approximately $18 million/year as of FY 2014.

Source: P.L.A.N.