Monthly Archives: April 2018

Four months have passed since the enactment of federal tax reform, and Arizona workers and taxpayers continue to be rewarded with new raises, bonuses and expanded benefits. As of April 30th, over $215 Million dollars has now been put back into the pockets of Arizona workers and ratepayers as a result of federal tax reform.

Here is a list of Arizona companies that have rewarded employees with additional pay and benefits:

  • American and Southwest Airlines announced $1,000 bonuses for their nearly 15,000 employees in celebration of the GOP tax plan.
  • CEO Bob Parsons handed out $1.3 million in bonuses to his 725 employees at YAM Worlwide.
  • AT&T and Comcast provided $1,000 bonuses to hundreds in their Arizona workforce.
  • Bank of America will be giving $1,000 bonuses to their 10,000 Arizona employees that make up to $150,000 in total compensation.
  • Boeing has committed to $300 million to charitable investments, workforce training and infrastructure improvements benefiting their 3,600 Arizona employees.
  • Nationwide announced $1,000 bonuses and an increase of their 401(k)-matching contribution for their 1,900 Arizona employees.
  • Wells Fargo, with over 15,000 Arizona employees, announced the establishment of a $15 minimum wage, $400 million in charitable donations and $100 million in additional capital investment.
  • Wal-Mart has committed to providing their 35,000 Arizona employees a guaranteed minimum wage of $11/hour and bonuses up to $1,000.
  • APS announced that they intent to slash $119 Million from their utility rates, which would save the average homeowner $56 each year.
  • Verizon will provide 50 shares of restricted stock (valued at $53/share) to their 2,800 Arizona employees, a total value exceeding $7 Million dollars.
  • JP Morgan Chase will be giving a $750 bonus to their 10,000 Arizona employees and raise starting wages from $15 to $18 an hour.
  • Waste Management, Inc. is providing $2,000 bonuses to nearly 2,000 Arizona Employees that do not participate in a sales incentive or bonus plan.
  • Meridian Bank increased their base wage to $15/hour, increased charitable contributions and capital spending and added 20% to existing bonuses.
  • Comerica Bank will provide $1,000 bonuses to their 100+ Arizona non-officer employees and raised their base wage to $15/hour.
  • Home Depot announced bonuses up to $1,000 for its 10,000 Arizona employees
  • Western Alliance provided bonuses, pay raises and an increase in their 401(k)-matching contribution for their 700 Arizona employees.
  • Washington Federal, which has nearly 200 Arizona employees, has committed to 5% merit increases for employees making less than $100k and an substantial increase of training programs for their workers.
  • Starbucks announced pay raises, expanded benefits and company stock (valued at $500 for shop workers, $2,000 for managers) to their 4,000 Arizona employees.
  • FedEx, with 3,700 Arizona employees, will be giving bonuses, pay raises and a voluntary $1.5 Billion contribution to their company pension plan.
  • Honeywell has committed to boosting their 401(k)-match for its 8,000 Arizona employees.
  • U-Haul will be providing bonuses ranging from $500 to $1,200 for their 3,800 employees.
  • Lowe’s has committed to providing their 4,000 Arizona employees bonuses up to $1,000, expanded benefits and maternity leave and $5,000 in adoption assistance.
  • Chipotle is providing bonuses ranging from $250 to $1,000 for their Arizona employees
  • McDonald’s announced a tuition assistance program for their 16,000 Arizona Employees ranging from $2,500 to $3,000.
  • Cox Communications, with over 3,200 Arizona Employees, will be receiving bonuses ranging from $1,000 to $2,000.

In total, over 125,000 Arizona workers are on the receiving end of bonuses, pay raises and other benefits thanks to the business tax cuts. Combined with the individual income tax reductions that will show up on paychecks next month, the direct financial benefit for Arizona taxpayers as a result of tax reform will be over $1 Billion dollars in 2018.

The Club will continue to expand the list of AZ companies rewarding their employees with bonuses, pay raises and benefits. If you know of a company not on the list, please email info@azfree.org so that the Club can include the good news on our tax cut victory tally.

It has been a week since Governor Ducey announced his “20 by 20” plan for Arizona teachers, and suffice to say there are more questions than answers on the long-term financial sustainability of the proposal. According to the latest JLBC estimates, if the Governor’s plan was implemented to increase teacher pay (which likely won’t happen, since local districts determine teacher pay) and fully fund Additional Assistance, Arizona would be running a structural deficit of $200 Million dollars by 2021.

The Governor’s solution to this problem has been to increase the economic revenue projections for the State above the JLBC estimate and bank on continued caseload reductions at AHCCCS (Arizona Health Care Cost Containment System.) Governor Ducey could be right, but this is the same exact mistake that was made 10 years ago that led to billion-dollar deficits and a decade of budget turmoil. Additionally, this doesn’t take into account another recession that is likely to occur in the next couple of years.

Rather than rely on a rosy economic outlook, policymakers should evaluate funding alternatives, budget cuts and modifications to the Governor’s education plan that would avoid putting Arizona in another fiscal crisis. Additionally, lawmakers would be remiss to pass on another opportunity to tie education policy reforms with new increases in K-12 funding.

Some possible funding options and reforms include:

  • Eliminate the Arizona Competes Fund (Budget Savings–$11.5 Million)—The Arizona Commerce Authority Currently receives $21.8 Million in total funding from the state general fund, with $11.5 Million earmarked for the Competes Fund. As one of the most unnecessary and useless expenditures in the state budget, the Competes Fund would only be missed by political insiders and special interests that have access to the grants and subsidies handed out by the Commerce Authority. This is a spending cut that most taxpayers would support.
  • Cut University Bonding package by 50% (Budget Savings–$13.5 Million)—Last year the legislature approved a measure to allow Universities to bond for as much as $1 Billion for new capital facilities and other projects. It was always questionable whether our three state Universities needed a billion dollars for new buildings, especially since they have secretly been in the property tax abatement business for several years without notifying lawmakers. Modestly reducing their bonding capacity to $500 Million isn’t unreasonable and wouldn’t impact their current level of operational funding.
  • Reduce Urban Revenue Sharing with Cities by 10 percent (Budget Savings–$120 Million.)—Currently Arizona tax revenue from income and sales is shared with local municipalities, with approximately $1.2 Billion being diverted from the state general fund. It is one of the most generous revenue sharing models in the country, and is questionable policy as it removes accountability at the local level. And as long as cities believe that it makes sense to throw away over $100 Million a year on utterly wasteful projects such as light rail, it is clear that this is a cut that wouldn’t be missed.
  • Reduce the K-12 teacher funding increase to 10 percent by 2019 (Cost Savings–$225 Million)—Though the Governor seems stuck on the 20 by 20 plan, lawmakers would be wise to instead approve a 10 percent increase and wait to see if the revenues materialize to justify a larger amount. A 10 percent increase is doable under the JLBC budget projections and would provide the capacity to substantially increase teacher pay at the local level. According to the Tax Research Association, Arizona is currently 40th in teacher pay in the US when adjusted for cost of living. If school boards decide to use the additional funding to solely pay for teacher pay raises, Arizona would move up to 22nd in the nation. This would be a major step in the right direction while keeping Arizona on a sound fiscal trajectory.
  • Continue moving toward backpack funding and other school finance reforms—If parents and students are to see a more fair and equitable funding structure in Arizona, then reforms are needed to fix Arizona’s broken funding structure and do a better job of tying K-12 funding to students. Though advocates, unions and the media are more than happy to point all the fingers at the legislature and Governor for low teacher pay, local school boards and administrators continue to escape all accountability. It isn’t right that mismanaged and poor performing districts will be equally rewarded as the responsible schools that have done a good job getting money in the classroom. Lawmakers must look at every proposal to increase funding as an opportunity to empower high-performing schools and districts and stop protecting the bad actors in the school finance formula.

Late last week the simmering dispute over teacher pay finally boiled over, and now the legislature and Governor Ducey are racing to meet the demands of angry educators. On Thursday, the Governor held a press conference announcing his commitment to fund a 20 percent pay raise for all teachers, to be implemented over two years.

The good news is that the Governor remains committed to raising teacher pay without raising taxes. The downside is that his administration may be relying on unrealistic revenue projections over the next couple of years, which if overstated could lead to a new budget deficit for Arizona. After fixing the structural deficit in his first year, it would be a major disappointment if his new proposal puts Arizona back in the same hole that Ducey inherited in 2015.

The Governor’s plan isn’t the only proposal circling the halls at the capitol. A small group of Republican lawmakers were pitching their own teacher pay plan, with one big difference—the 20 percent raise would be paid for primarily through middle-class income tax increases and an “undisclosed” tax hike in 2020.

Notwithstanding the fact that any spending plan that relies on mystery tax increases in the future isn’t a real plan, it is startling that some lawmakers support the idea to use tax conformity dollars generated through federal tax reform to pay for higher teacher salaries. Make no mistake, any revenue kept by the legislature as a result of tax conformity is an income tax increase.

Earlier this session a coalition of organizations sent a letter to the legislature and the Governor urging our elected leaders to return to the taxpayers any additional revenue generated by the State as a result of Federal tax reform.  Currently the Department of Revenue and JLBC have estimated that individual taxpayers will pay between $175 to $235 Million more in individual income taxes if action is not taken by lawmakers.

Despite the wishes of politicians, this is not new revenue generated by Jack’s magic beans. This is a looming tax hike that could undo the benefits of federal tax reform if not properly addressed.

If policy makers want to implement a 20 percent teacher pay raise, they should do it through other spending cuts and reasonable projections in future revenue. And if lawmakers do want to raise taxes to increase teacher pay, then they should at least be transparent in their actions and not hide their tax increase proposals in the shadows of income tax conformity.



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The Arizona Free Enterprise Club is a free market policy and advocacy group dedicated to promoting a strong and vibrant Arizona economy.