AZ Legislative Update 3-26-2021

It was a dramatic week in Arizona policymaking. State and county leaders broadened access to the COVID- 19 vaccine, welcoming anyone who is at least 16 years old at many vaccination sites. Citing the growing number of Arizonans who have received the COVID-19 vaccine, Governor Ducey lifted restrictions on large gatherings and business operations. He also removed the ability for local governments to enforce their own mitigation rules like mask mandates, which he authorized them to adopt last summer. The state’s mask requirement is still in place for schools.

Legislative Republicans celebrated the end of the Governor’s public health restrictions and pledged to fight for legislation that would prevent government mask mandates in the future. Legislative Democrats said the Governor is being too quick to ignore science and public health because of politics.

This debate also played out inside the Capitol, where Republican leaders announced they’ll revise some of their own COVID-19 mitigation measures now that the state’s regulations had been lifted.

The disagreements were not limited to COVID-19. Policy discussions got unusually confrontational as legislators spent long hours in committee hearings. This was the last week to hear bills in most committees – it’s one of the biggest milestones in the session, and a high-pressure deadline. More than 160 bills did not receive the committee approval they need in order to advance for final votes in the House and Senate.

Almost 200 proposals did pass committees this week, though – including controversial bills to change early voting processes and ballot recounts, prevent local governments from banning conversion therapy, create an alternate income tax for small businesses, allow businesses to ignore governments’ mask mandates, and criminalize protesting outside someone’s home.

The Senate Education Committee failed to pass a bill that would require members of the clergy to report child abuse or neglect.

Not everything sparked disagreement, however, and less controversial bills passed House and Senate committees with bipartisan support – including changes designed to help fix the Department of Child Safety’s bumpy rollout of its new case management system, delay the state income tax deadline, prevent schools from suspending or expelling young students, ask voters to change requirements for English language learning programs in schools, and allocate funding for DPS body cameras and scholarship assistance for community college students.

Legislators Advance Bills Toward Governor’s Desk

While most of the week was spent in committee hearings, the House and Senate convened daily floor sessions to debate and vote on bills moving to the final steps of the legislative process.

Some were controversial – including proposals to create a special license plate for realtors, give a tax break to motor vehicles shipped within Arizona, and change standards for incarcerating individuals that have been convicted of a DUI. There weren’t enough votes for the House to advance new limits and penalties for abortion.

However, most bills passed with bipartisan or even unanimous support – including proposals to authorize college athletes to get endorsement deals, temporarily reduce the number of jurors for civil case trials, and designate every August 14 as National Navajo Code Talkers Day.
 

Priority Bills

This week, the House Ways & Means Committee:
 

• Voted 6-4 in favor of SB 1280 (schools; transportation support; programs; appropriation), which dedicates $10 million and creates new programs to diversify methods of transporting students to school.
• Voted 6-4 in favor of SB 1783 (small businesses; alternate income tax), which creates an alternate income tax for small businesses that would minimize their individual income tax liability under Proposition 208 and result in reduced revenues for education.
   

The Senate Education Committee:

• Voted 7-1 in favor of HB 2123 (pupil suspensions and expulsions; schools), which limits when students up to 4th grade can be expelled or suspended.
• Amended and unanimously approved HB 2863 (ASDB; local education agencies), which designates the ASDB as local education agencies in order to restore ASDB’s ability to receive IDEA, Title and Medicaid funding.

The Senate Finance Committee voted 5-4 in favor of HB 2427 (schools; attendance boundaries; open enrollment), which requires schools to accept pupils throughout the year as capacity allows and outlines enrollment preferences for specific students.

What’s Next?

House and Senate Appropriations Committees will meet this week to hear 54 bills. Many of those proposals are controversial and stalled earlier in the legislative process - including limits to the Arizona Corporation Commission’s energy policymaking authority and changes to Arizona’s unemployment benefits and gaming options.

Governor Ducey Signs New Laws

When the pandemic interrupted the legislative session last year, it prevented many bills from becoming law – just 90 were signed into law. This year, the legislature is making up for lost time. Governor Ducey has already signed 126 new laws that made it through the legislative process, and another 31 await his signature. More than 300 bills are still making their way to his desk.

So far, the Governor has not vetoed any bills this year.
 

Budget Update: Legislators Aren’t in A Hurry

As the 2021 legislative session moves into its 12th week, there’s a question that is becoming more urgent: Where’s the state budget?

Senate Republicans released their budget framework early this year to jump-start negotiations with their House counterparts; House Republicans said they had their own idea for budget priorities worked out and were ready to talk. Yet there’s no sign of serious negotiations, and disagreement on other policy issues has generated ill will between key members of the House and Senate leadership teams.
 

Budget talks were further complicated by a provision in the federal American Rescue Plan that could limit states’ ability to cut taxes this year. Tax cuts are the one thing all legislative Republicans openly agree on, and Governor Ducey has said the provision will not stop the state from enacting new tax cuts.

Arizona Attorney General Mark Brnovitch agrees, and this week he asked the U.S. Secretary of the Treasury to confirm that states can still enact tax policy as they believe it’s appropriate regardless of the federal law. He also filed a lawsuit against the federal government to prevent its policy from impacting state authority over taxation.

It could take weeks for the state to get a clear answer about how the federal aid funding could impact their tax cut plans, though, and legislators will have a difficult time finalizing their budget proposals without that answer. It’s not clear how budget negotiators will move forward while they wait for answers.

Budget Update: Revenues are Strong

New information from the legislative budget staff shows that state revenues continued to climb last month, strengthening projections for a surplus of up to $2 billion. Much of that funding, however, would be designated for one-time spending rather than ongoing priorities.

The increase comes from high corporate and individual income tax revenues and continued growth in sales tax from Arizonans’ purchases. Corporate income taxes last month were the highest they have been for the month of February since 2009.

Arizonans continue to purchase things like home and gardening supplies, but sales taxes on construction are growing as well. Sales taxes are also bolstered by the sale of recreational marijuana, which generated more than $600,000 in taxes so far this year. The hotel industry and restaurant and bar sales are the outliers: They continue to see declines in their sales, though there was slight growth in the number of hotel rooms rented last month and a little uptick in the number of restaurant reservations.

Several key factors measure the challenges to Arizona’s economy that exist despite the strong revenue growth:
 

• Unemployment

There’s good and bad news in the latest unemployment numbers from the state. Some areas of the economy added jobs and some lost them; the overall unemployment rate went up slightly to 6.9%.

• AHCCCS Enrollment

There are 2.13 million Arizonans enrolled in the Arizona Health Care Cost Containment System (AHCCCS), and enrollment increased 0.8% this month. It’s 16.8% higher than it was a year ago. The number of people enrolled in KidsCare and other targeted AHCCCS programs increased 1.3% this month. AHCCCS programs for individuals with developmental disabilities or those in long- term care saw enrollment decrease by 0.4% – it’s down by 2.7% compared to last year.

• Consumer Trends

Legislative economists will continue to watch Arizonans’ spending habits through sales tax data – especially related to restaurant and bar operations. This survey says people are increasingly comfortable getting out of their houses to buy things.
 

In the Elections

More legislators jumped into the race for Congressional seats in northern and southern Arizona. Census data – and political redistricting – won’t be as delayed as expected this year. Governor Ducey’s not interfering with Senate Republicans’ plans to audit Maricopa County election results; longtime Maricopa County Recorder Helen Purcell doesn’t think the Senate-led hand recount is necessary.

In the Courts

The Arizona Supreme Court ruled that Governor Ducey’s executive order earlier this month did lift limits on bar operations, so their lawsuit to overturn his restrictions on their businesses is moot. The Democratic National Committee wants an appeals court to change the way Arizona lists candidates on the ballot. Former Arizona Supreme Court Chief Justice Ruth McGregor reflected on her career.

In the News

House Republicans declared a crisis at the Arizona-Mexico border. Forest experts are concerned about the upcoming wildfire season. Some physicians want the legislature to stop opposing mask mandates. State and local leaders celebrated Intel’s plans for growth in Arizona. Governor Ducey recently said he’s willing to change state laws to prevent the income tax rate from increasing because of Proposition 208. Pima County isn’t happy with the state’s decision to turn down a federally run COVID-19 vaccine facility. Governing magazine has its eye on Governor Ducey. Sen. Sean Bowie (D-Phoenix) shared his thoughts about students’ mental health.

On the Bright Side…

This family reunited.