The House and Senate finalized policy committee assignments for the January legislative session (
click here for a list of House committees and
click here for a list of Senate committees). The Senate has 12 committees, up from 11 committees this year, and the House has 20 committees – an increase over the 15 committees that currently exist. Not everyone is happy about the committee memberships: House Democrats are concerned that the heavy Republican majority on key committees (like the Committee on Education) do not reflect the
narrow majority Republicans will hold in the House.
Despite these frustrations, at least one new member of the House is eager to pursue bipartisan cooperation in the upcoming session.
Arizona Mourns Passing of Former Congressman Ed Pastor
Ed Pastor, an Arizona native and longtime member of Congress, passed away this week. He leaves behind a legacy that inspired many to follow his footsteps into public service.
Legislators Call for Special Session on Tax Conformity
Last year, legislative leaders sidestepped a controversial discussion about tax policy. Now, some are calling for a special session to focus on the issue, which has significant implications for Arizona’s budget and Arizonans’ tax forms.
Every year, Arizona policymakers decide on whether – or how much – to conform to changes the federal government has made to income tax policy. Usually, this is a decision that does not get much attention – the Arizona Department of Revenue receives the guidance it needs for tax forms, and the legislature moves on to other issues. Arizona law often aligns with federal individual income tax law.
Last year, however, the question of tax conformity became more significant when the federal government enacted the Tax Cuts and Jobs Act. The federal tax law cut income tax rates, raised the standard deduction, and removed some itemized deductions.
Because of those significant federal changes, Arizona policymakers must now decide whether to eliminate those itemized deductions for state income taxes. If they do follow Congress’ changes and cut the deduction, the state will receive more individual income tax. It is difficult to estimate the total revenue that will come to the state if state tax deductions are removed; legislative budget staff believes it could bring in $133.5 million more in individual income taxes next year, and the Arizona Department of Revenue estimates that amount could be as high as $236.2 million.
Some legislators believe the state should adopt the federal cuts to deductions in order to use that revenue for other priorities – like education or infrastructure. Others, including Republican leaders in the House and Senate, want to change the state law to avoid a loss of deductions for Arizona taxpayers.
Timing matters on this decision for practical reasons, since Arizona tax forms need to be finalized to avoid changes next year that could require Arizonans to file amended tax returns. Political factors also impact legislators’ call for a special legislative session, since Republicans are more likely to achieve their desired outcome before next year, when the House has a smaller Republican majority.
Governor Ducey has not yet shared his thoughts on how Arizona should address the question of tax conformity, and he has remained skeptical about calls for a special session on the issue.
For additional details and analysis on Arizona’s tax conformity options, click here.
Governor Declares Drought Plan A Priority for 2019
As legislators prepare the bills they plan to introduce in the 2019 legislative session, Governor Ducey has made it clear he wants Arizona’s water leaders to agree on a Drought Contingency Plan – and that he is willing to prioritize new resources to make the agreement possible. A former governor and the Senate Minority Co-Whip share his focus on the issue.
On the Bright Side…
Economists are optimistic about Arizona’s future employment and economic growth, and the National Institute on Aging gave $3.7 million to the Arizona Alzheimer’s Disease Center’s research on ways to stop Alzheimer’s disease.
