Arizona tax changes, loosening voter mandates on agenda prepared for possible special session

Ariz. lawmakers work up agenda for special session

PHOENIX — A tentative agenda Republican leaders are developing for a possible legislative session next week includes asking Arizona voters to temporarily raise the sales tax and give lawmakers more power to change voter-approved laws.

Other items at least some GOP legislative leaders are pushing include a relatively small package of spending cuts and future income tax cuts, legislative aides told The Associated Press on Wednesday.

All are efforts to help close Arizona’s current and future budget deficits.

The aides spoke to the AP on condition of anonymity because of the sensitivity of proposals being floated to lawmakers before the possible special session.

The tax and voter-protection proposals have proved controversial in the past, either failing to win approval by one chamber or not even getting that far.

After about $450 million of budget cuts and other changes made during a November special session, Arizona now faces a projected $1.6 billion revenue shortfall in the current fiscal year, which is nearly half over. The next fiscal year’s shortfall is estimated at $3 billion, with a similar one expected the year after that.

Republican Gov. Jan Brewer proposed a penny increase in the sales tax for three years to help close several years of budget gaps, but that faced strong resistance from lawmakers. Though many legislators said they were willing to put the issue to voters, it never won enough votes. Some majority Republicans opposed any increase at all, and minority Democrats opposed past GOP attempts to link the referral to the elimination of a state property tax.

The voter-protection measure would loosen constitutional restrictions on lawmakers’ ability to change voter-approved laws for three years. Some legislators have been eying money from an early childhood program created by state voters as a possible source of cash.

Having voters decide the sales tax and voter-protection issues during a March special election would mean lawmakers would have time to make budget decisions before the current fiscal year ends June 30.

The aides said the proposed tax cuts would be a repeat of House Republicans’ failed attempt to win approval of individual and corporate income tax cuts totaling $400 million, with the reductions not taking effect until 2011. Democrats have said it would be foolhardy to cut state revenue, but Republicans argue that the state needs to commit to business-friendly steps to help the state’s economy in the long term.

The $100 million or so of spending cuts being considered could include a small across-the-board reduction for most programs, and that would be augmented by new sweeps of money from special-purpose funds, the aides said.