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Legislative Committee Needs to Take a Hard Look at Failed Tax Credits

(PHOENIX, AZ) – As Arizona’s public schools, community colleges, and universities continue to be underfunded, Arizonans deserve to know whether the millions of dollars which are being diverted from our state General Fund in the form of tax credits are effective enough to remain in place.

A state legislative committee, the Joint Legislative Income Tax Credit Review Committee, is required by law to annually review tax credits, yet members have not held a meeting since December 2015.

There are currently 54 state tax credits on the books. State statute requires the Committee to review each of them on a rotating schedule so that each credit is reviewed once every five years. Members are supposed to evaluate the credits to determine whether they are delivering on the promised benefit to the state. The Committee is supposed to submit a report to the full legislature by December 15 with recommended actions on each credit reviewed, whether they should be kept, repealed or amended.

“Tax credits continue to cost the state more and more each year, yet we haven’t had an accounting of whether they are actually working,” said David Lujan, director of the Arizona Center for Economic Progress.  “There is no accountability whatsoever, and taxpayers have no idea whether they are getting their money’s worth from all of these tax credits. The Committee owes it to hardworking Arizonans to do its duty and take a hard look at whether we are actually getting the return on investment we were promised when these were enacted.”

Senator Tony Navarrete introduced legislation last year which would require the committee to meet annually and would place sunset dates on any new tax credits passed by the legislature.  That legislation (SB1382) passed the Senate last year but was never considered in the House. Senator Navarrete intends to introduce the legislation again in the next legislative session, which begins in January.

Even when the committee does meet, the legislature has shown little interest in repealing tax credits that are not meeting expectations.  Between 2002 and 2015, the committee recommended 16 tax credits be repealed, but only one of those credits was actually repealed, according to the Joint Legislative Budget Committee.


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