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Gov. Ducey Willing to Work With Democrats on Arizona Budget

Capitol Media Services photo by Howard Fischer
Gov. Doug Ducey, third from left, helps cut a ribbon Wednesday for the formal opening of the new U.S. headquarters of CP Technologies in Prescott.

By Howard Fischer
Capitol Media Services
PRESCOTT -- With Republicans at a stalemate, Gov. Doug Ducey said Wednesday he's willing to work with Democrats to cobble together the votes for a new state budget and tax cut.

"What's important to me is that we get the budget that I presented -- or as close to it as we can -- over the finish line,'' he told Capitol Media Services. And the governor said his door is "always open.''

That potentially paves the way for Democrats, who have been kept in the dark while the governor and GOP leaders crafted their spending and tax cut plan, a chance to have some input in exchange for needed votes.
And there may be room for a deal.

House Minority Leader Reginald Bolding, D-Laveen, told Capitol Media Services said there may be some wiggle room, even on the idea of cutting taxes. It all comes down to details.

"I couldn't tell you specifically whether or not we would support a tax cut in addition to additional revenues until we look at the plan,'' he said.

"We won't negotiate in isolation,'' Bolding said of reducing tax rates. "We'll look at the entire plan and what the trajectory looks like.''

Even Ducey, who is championing a $1.9 billion tax cut and creating a flat tax rate, said even that could be negotiable.

"That's part of the deliberation process,'' he said. "And, typically, as we begin moving forward, the debate happens, the deliberation happens.''

But Ducey won't say how much he is willing to give to line up the votes.''

"I do not like to have those deliberations in the press,'' Ducey said. "I like to do them with people rather than with the press.

What's working in favor of the Democrats is that there is at least one GOP holdout in both the House and Senate unwilling to support the $12.8 billion spending plan and and $1.9 billion in permanent tax cuts the governor is pushing.

In fact, neither the House nor Senate have any plans to try to vote on any part of the plan when lawmakers reconvene Thursday morning. About the only thing the Senate intends to do is start the process of seeking an override of the 22 bills Ducey vetoed two weeks ago after he got miffed when lawmakers decided to recess for two weeks when a budget deal first fell apart.

Senate President Karen Fann, R-Prescott, said that's the nature of Republicans having a bare majority in both chambers: Leadership needs every one of them to line up in support for the party plan.

"It's challenge when you have 31 and 16,'' Fann said Wednesday, referring, respectively, to the GOP membership in the 60-member House and 30-member Senate.

"Everybody knows they're number 31 or 16,'' she said, giving each of them leverage. "It creates a very tough working situation.''

Ducey, for his part, said he's going to engage with Rep. David Cook, R-Globe, and Sen. Paul Boyer, R-Glendale, whose votes he needs -- but does not have -- for the plan.

"We have some very thoughtful legislators that care about certain things,'' he said when asked about the two GOP holdouts. "And I want to understand what's important to them and make sure they understand what's important to me and make sure we have a successful budget.''
But it isn't as simple as getting Cook and Boyer on board. Fann said if they get some of what they want, that could result in the loss of other Republican votes. And that is what could give Democrats a seat at the negotiating table.
Bolding insisted he is not trying to play political games.

"For us, it's not about leverage or what puts us in the best position,'' Bolding said. "It's about putting together a plan that works for Arizona.''
And that plan clearly differs from what the Republicans are proposing.

Much of that is on the spending side of the ledger. Bolding said there are "critical gaps with our infrastructure,'' seeking more money for housing for the needy, COVID relief and education.

"As long as we can do those things and create a plan that works for everybody, we are willing to engage,'' he said. "At this point, everything is on the table.''
Well, not quite.

Bolding said the proposal to create a single 2.5% individual income tax rate for all Arizonans regardless of income is a non-starter. That would scrap the current system of four brackets, ranging from 2.59% for couples with taxable income up to $53,000 a year to 4.5% on taxable earnings above $318,000.
Also non-negotiable, Bolding said, is the plan he said undermines Proposition 208, the measure approved by voters in November to put a 3.5%  income tax surcharge on the most wealthy -- meaning income above $500,000 for married couples -- to raise upwards of $800 million a year for K-12 education.
Strictly speaking, nothing in the budget plan repeals that levy as lawmakers are powerless to overturn the initiative. But it puts a provision in law creating an absolute cap of 4.5% on all income taxes, including that surcharge.
The proposal does require the state to "backfill'' any lost revenues for schools. But Bolding said using other state revenues to do that effectively undermines the initiative.
"Proposition 208 clearly stated that these additional dollars were not to supplant (state revenues),'' he said.
"They were supposed to be additional, supplemental resources,'' Bolding said. "If we are shrinking our state budget, we are going to provide less funding into education, with education being the largest portion of our budget.''

But the minority leader said the claim by Ducey of being willing to work with Democrats rings hollow, at least right now.
"We obviously have reached out as we know that the state is facing a fiscal cliff in the next few weeks,'' Bolding said.

That's because the new budget year begins July 1. And, unlike Congress, there is no option in state law to enact a "continuing resolution'' to keep the government operating in the absence of an adopted spending plan.
"But we have not been engaged up until this point,'' Bolding said, saying Democrats have contacted "the highest staff member in Gov. Ducey's office,'' meaning Chief of Staff Daniel Scarpinato.
Ducey, for his part, acknowledged he has been distracted from what's happening -- or not -- with the budget.

"My top priority right now is the Telegraph Fire and the Mescal Fire,'' Ducey said, having issued a declaration of emergency earlier Wednesday. "We've got to do all the things that are appropriate to that and make sure they have the resources and appropriations as well.''
As to actually enacting a budget and tax-cut plan, the governor said he remains "optimistic.''
"We're just not there yet,'' Ducey said.

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