Arizona’s budget shortfall is not being caused by its 2.5% flat tax but rather by its overspending, a new report from The Common Sense Institute says.
The state is facing a $1.6 billion budget deficit through Fiscal Year 2025.
The deficit exists despite revenues growing by $3.3 billion in Arizona since the Legislature passed the flat tax in 2021, according to the CSI report.
The shortfall over the last couple of years is due to the state increasing its budget, said Glen Farley, the CSI’s director of policy and research.
Between fiscal years 2023 and 2024, the Arizona budget grew almost 40%, Farley told The Center Square.
He said a significant amount of money was allocated to K-12 education spending during these two fiscal years. In Fiscal Year 2023, Arizona increased its education spending by $1 billion, and in the following fiscal year, it rose by an additional $500 million.
Farley explained that the state has increased its spending on education, particularly since the COVID-19 pandemic. CSI said spending on K-12 education has increased by $6.3 billion over the last nine years.
