PHOENIX (AP) — Governor Doug Ducey proposed a tax credit for Arizona low-income workers on Friday, the first time in eight years of tax cuts that he has proposed a targeted benefit at the bottom of the income scale.
In his final budget proposal before leaving office, Ducey proposed a $14.3 billion spending plan that includes more corporate tax cuts as well as a new corporate income tax credit. work for people who work but earn low wages.
Ducey predicts the state will start the fiscal year July 1 with $2 billion in the bank, as revenues far exceeded expectations when the previous budget was approved last summer. It targets much of its proposed new spending on infrastructure, such as building repairs in prisons and water supply projects.
The Republican governor pledged when he took office in 2015 to cut taxes every year he is governor, and he has kept his word so far. But his past tax cut proposals have either been narrowly targeted at a specific group – such as ending taxation of veterans’ pensions – or have primarily benefited corporations and wealthy taxpayers.
His earned income tax credit proposal would benefit 572,000 taxpayers with an average benefit of $128 a year, according to Ducey’s aides. It would be open to taxpayers earning less than $50,000 a year, who would get 5% of the federal earned income tax credit for which they are eligible.
Anti-poverty advocates have credited the federal earned income tax credit as a boon for low-wage workers, providing a lump sum cash payment at tax time. It generally enjoys bipartisan support, with Democrats touting its benefits for the poor and Republicans promoting it as a reward for hard work.
Ducey set aside $58 million for a corporate tax cut, but did not provide details. His aides said the exact plan would be worked out with lawmakers.
Ducey’s proposal, up 11% from the current budget, is his keynote address to lawmakers. He will negotiate a final spending plan with Republican legislative leaders in the coming months.
Senate Minority Leader Rebecca Rios of Phoenix, the top Democrat in the chamber, praised Ducey’s working income tax credit proposal and her plan to increase payments to grandparents or other parents raising children who would otherwise be in foster care. But she said the governor shouldn’t give more corporate tax cuts.
“This windfall will dry up and we will at some point, unfortunately, find ourselves in a recession like we were in 2008,” Rios said.
The governor’s proposed education spending is welcome, but falls far short of moving Arizona from the bottom of the states in per-student funding, she said.
Ducey also offered to give raises to thousands of state workers, including soldiers and corrections officers. He wants to cover the higher cost of transferring inmates to a private prison from a public facility in Florence, which he wants to close.
He proposed $50 million in new border spending, including an undetermined portion to pay for a prison-style fence on private property on the border.
He also wants to spend $26 million to provide free tuition to graduates of a one-year accelerated training program for nurses at Creighton University’s new campus near downtown Phoenix.
Ducey’s proposed new education spending includes nearly $120 million for two programs based on a school’s performance as measured by an AF grade. In general, the best performing schools – which tend to serve wealthier families – would be eligible for larger grants. He would also spend $20 million on transportation programs for parents who don’t send their child to their neighborhood school, a major boon to the school choice movement that Ducey has enthusiastically supported.
For higher education, it would continue indefinitely $46 million in one-time funding approved last year for the state’s three universities. That money boosted engineering at Arizona State University, health, mining, space and defense at the University of Arizona, and health care at Northern Arizona University.
Among his other proposals, Ducey would deposit $425 million into the rainy day fund and make the first of three deposits to a $1 billion water infrastructure fund, a major proposal from his speech on the state of the state Monday. While he suggested in this speech to build a plant to turn seawater into drinking water, his actual proposal is much more generic.