Tax issue might be tying up money for schools

As Republican lawmakers push legislation to offset possible higher taxes caused by federal tax changes, education advocates want to consider another option: Why not keep the increase and let the extra money flow to schools?

The idea has been pushed by a few different state education organizations, including the Arizona Education Association, the state’s teacher union.

Republicans in the Legislature have advanced two bills to ensure Arizona taxpayers don’t face higher state taxes due to changes made at the federal level, part of President Donald Trump’s Tax Cuts and Jobs Act of 2017.

The bills are barreling through the Legislature at warp speed as some Arizonans wait to file their taxes to see how lawmakers will act.

Education leaders say the extra money could help fund everything from new textbooks to fixes for broken school buildings, while a Republican behind one of the bills argued that more dollars may not fix Arizona’s education crisis.

How much are we talking?

Estimates of how much more Arizona taxpayer money could come in from the tax changes have varied, from more than $100 million to more than $200 million, according to information from the Joint Legislative Budget Committee.

“Arizona stands to gain anywhere from $150 million to $230 million,” David Lujan, director of the Arizona Center for Economic Progress, said. “We should be investing those dollars in our underfunded education system or using them for the next recession.”

His organization estimates that the Republican legislation would mostly result in tax cuts for the state’s highest earners, the top 20 percent of incomes.

State Sen. J.D. Mesnard, R-Chandler, said the bill he’s sponsoring to offset the tax changes is “revenueneutral,” meaning it wouldn’t hurt the state’s coffers.

The measure he’s sponsoring would only be in effect for a year, so next year, lawmakers would have to tackle tax conformity again, he said. His hope is for a complete “income-tax overhaul” next year.

“I’m going to emphasize, this is not a tax cut,” he said. “I don’t know how a revenue-neutral bill turns into a tax cut.”

Mesnard also wondered if increasing funding for schools is the answer to the state’s education woes. He warned that the state might soon bump up against education constitutional spending limits.