Arizona Lawmakers To Evaluate Cost-Effectiveness Of Tax Credits After Years Of Inaction

Published: Monday, December 9, 2019 - 5:05am
Updated: Monday, December 9, 2019 - 9:33am
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Arizona gives out dozens of types of tax credits to individuals and businesses. Each year, a state legislative committee is supposed to review those tax credits to make sure they’re worth the cost to the state budget. But that hasn’t been happening.

The last time Arizona’s Joint Legislative Income Tax Credit Review Committee met was in 2015. The committee is supposed to submit a report each year to the House and Senate by mid-December.

Republican state Sen. J.D. Mesnard, chair of the Senate Finance Committee, said it’s been difficult to get House and Senate members to agree on whether and when to meet but said after years of inaction, the committee does plan to meet this month. He did not provide a specific date for the meeting.

“I intend for this to happen and I’ve spoken with the House to make sure they’re on board and they are, so we’re going to press forward and hopefully have a meeting soon,” Mesnard said.

David Lujan, with the Arizona Center for Economic Progress, said that’s good news since the state misses out on hundreds of millions in revenue a year from tax credits. Tax breaks are generally intended to stimulate job growth or bring other benefits to the state. But without oversight, there’s no way to know if the incentives actually work, Lujan said.

“Essentially what happens is, once a tax credit gets on the books, it never goes away whether it’s a good tax credit or not and the people of Arizona are left paying the bill year after year,” Lujan said.

The state Senate last year passed a bill with bipartisan support that would have made the annual Joint Legislative Income Tax Credit Review Committee meetings mandatory. But the bill stalled in the House so was not signed into law.

The Pew Charitable Trusts keep a state-by-state rating of how effectively state lawmakers manage and evaluate tax incentives. Arizona receives the lowest-possible grade.

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