Tax Reform

State of the State: Arizona

It’s the people’s money, not the government’s

As the states begin their 2016 legislative sessions, governors are beginning to outline their agendas with their state of the state addresses. These addresses provide a preview of the legislative priorities governors will be working on in the coming year and are valuable to anyone interested in state policy. If last year is any indication, we can expect almost every governor to discuss economic issues in their state and for many of them to announce new tax and fiscal policy proposals.

In the foreword of the 8th edition of Rich States, Poor States, Arizona Governor Doug Ducey wrote that he and the policymakers in his state were “reducing government spending, lowering taxes and adopting pro-growth policies to unleash [his] state’s economic potential and create opportunity for more Arizonans.”

Today, in his state of the state address, Ducey doubled down.

Following a legislative session that saw substantial tax cuts, spending reform and an economic outlook ranking of fifth according to the ALEC-Laffer State Economic Competitiveness Index, Ducey took a brief victory lap:

Today, because of our decisions, there’s money in the bank, we can pay our bills, and our credit rating upgrades will save taxpayers millions. We’ve added more than 56,000 new jobs, and 100,000 new citizens, and Forbes says we are the best state in the country for future job growth. We’ve unleashed innovation. Our free enterprise system is flowing…The state of the state isn’t just strong; it is on the rise.

While thanking leadership in the state legislature, Ducey highlighted Arizona’s accomplishment in balancing its budget without raising taxes. Conjuring up parallels between big government spenders and wasteful partiers destined for a hangover, Ducey said, “someone needs to be the voice of sobriety.”

Of his budget, which will be released Friday, Ducey said, “It eliminates waste. It’s balanced. And more importantly, it does not raise taxes.” Building on that, he went on to make a promise: taxes will be lower for Arizonans this year, next year, and the year after.

Ducey made several proposals and requests of his legislature, many of which would likely continue Arizona’s pro-growth trajectory. Regarding the creeping regulation that too often strangles enterprise and put a chilling effect on growth, Ducey made a simple request: “send me legislation to allow agencies to wipe them out, easier and faster, and I’ll sign it.”

Ducey also wants Arizona to take steps toward reforming occupational licensing, as Texas recently did. Too often, occupational licensing represents a barrier of entry for would-be entrepreneurs, contributing to unemployment and hindering the kind of competition that creates wealth and benefits consumers.

The Governor wants to be a friend to the sharing economy, specifically naming companies like Uber and Lyft. By unshackling innovation, as Ducey suggested, Arizona’s economy can continue to grow. There is evidence to suggest that when companies like Uber and Lyft enter a market, demand for the type of services they provide increases, despite a decrease in demand for established and traditional non-sharing services. If Arizona embraces the sharing economy, there is room to grow.

The most important quote of the address, however, was when Ducey articulated a fundamental truth about government finances: “it’s the people’s money, not the government’s.”

Given this perspective, and the work Arizona has recently done to control spending and return money to its taxpayers, look for continued reform and solid economic performance in the Grand Canyon State.

This is the first article in the ALEC Center for State Fiscal Reform series, “State of the States 2016,” which will perform analysis of tax and budget issues raised in every state of the state address delivered by America’s governors. Check back frequently over the coming weeks to see the results for your state.

In Depth: Tax Reform

Mainstream economists, small business owners and taxpayers across the country understand that growth-oriented reforms mean increased opportunity for all. As demonstrated by the annual Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, sound tax and fiscal policies are critical to economic health, allowing businesses and households to flourish. A…

+ Tax Reform In Depth