Some cities and towns have been hit harder by the pandemic, resulting in business closures, high unemployment, and financial insecurity for families and individuals. Under the proposed 2.5 percent flat tax rate and 4.5 percent cap on any income taxes, cities and towns are expected to lose 31 percent of their urban revenue sharing dollars, or $285 million.Īrizona’s cities and towns are critical to the health and economic well-being of the state. In Fiscal Year 2021, cities and towns will receive $828 million in urban revenue sharing. ![]() In exchange, cities and towns are prevented from adopting local income taxes. In 1972, voters established the urban revenue sharing structure that provides 15 percent of state income tax revenues to cities and towns based on population. Alan Maguire, Economist, Arizona Finance Advisory Committee, April 15, 2021 When we start cutting, for example, income taxes we cut revenue not only for the state of Arizona but we cut revenue for local governments as well.” In Arizona it is much much easier to cut taxes than to raise taxes. ![]() I have said this before and I believe there is a lot of momentary money in our revenues right now that will be gone in three or four years. “I am very concerned about all of the talk about substantial income tax cuts. These cuts would result in a loss of critical services that our communities depend on to thrive like public safety, transportation, parks, libraries, and infrastructure. The proposed 2.5% flat tax rate and the 4.5% total cap on any income taxes would not only mean a $1.9 billion cut to state revenues, it would also mean a cut to the urban revenue sharing dollars Arizona’s cities and towns receive that are based on individual and corporate state income tax revenues.
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