A newly proposed budget shaves $800M off the initial plan proposed by Gov. Katie Hobbs.
One of the largest targets of the cuts is the City of Tucson’s Rio Nuevo economic development program. The program currently receives $19M in diverted state sales taxes to incentivize business and residential growth in Tucson.
In total, the cuts are expected to remove nearly $100M in state economic development projects. The Republican lawmakers pushing the budget said it will save $4M in the future and divert $63M currently in the fund’s account to balance the state budget.
The legislators, who argue the funding is “crony capitalism,” are also planning to remove $7M in aid for the Office of Tourism. Opponents of the cuts fear the effects could limit business growth.
Hobbs’ initial plan offered less steep tax cuts in favor of keeping the economic development programs afloat. Her plan also included new taxes and fees, which were opposed by Republican lawmakers.
Of the $19M the Rio Nuevo district receives each year, $9M goes toward paying off the $80M in bonds for projects in the region. This ranges from hotels to grocery stores. If the district stops receiving the funding, many projects could stall or completely stop.
Supporters of Rio Nuevo say every $1 spent by the district nets $10 in private capital. Rio Nuevo is estimated to have created more than $2B in economic impact and more than $1.2B in private investment over the last half decade.
Rio Nuevo supporters also said projects funded by the program create $60M annually in new sales taxes, a third of which benefits the State.
Republican lawmakers are also targeting so-called “green new deal” renewable energy policies. To do so, they are planning to eliminate tax credits for solar energy devices and pollution reduction equipment. Lawmakers say this will save $32M annually.
They also argued repealing an exemption from state sales taxes on energy-saving devices will save an additional $44M.
Republican lawmakers plan to introduce tax breaks for businesses to benefit high-earners. The plan estimates its tax savings will cut $1.45B in State revenue over the next four years, while Hobbs’ will cut only $1B. (Source)