Arizona faces full federal tax conformity and a moratorium on data center tax cuts
Arizona's bipartisan $18.3 billion budget package, expected to be signed by Gov. Katie Hobbs, includes a three-year moratorium on state tax subsidies for new data centers. This policy change aims to save an estimated $38 million annually. The budget also features full federal tax conformity and other financial adjustments for Arizonans.
Arizona Governor Katie Hobbs is poised to sign a bipartisan $18.3 billion budget package following its passage by the Joint Appropriations Committee and anticipated votes in both legislative chambers. The deal, a compromise with legislative Republicans, includes full conformity to federal tax policy and a significant three-year moratorium on state tax subsidies for new data centers. This pause on data center incentives is expected to save Arizona $38 million annually and is highlighted by Democrats, including House Minority Leader Oscar De Los Santos, D-Laveen, as the longest state moratorium of its kind.
While Republicans, led by House Appropriations Committee Chairman Rep. David Livingston, R-Peoria, championed the $1.4 billion tax cut aspect of federal conformity, Democrats secured funding for food assistance and public education, including free school meals for two years. Republicans also achieved reforms to Medicaid and the Supplemental Nutrition Assistance Program (SNAP) to tighten eligibility requirements. Despite the bipartisan agreement, some lawmakers, including Rep. Justin Olson, R-Mesa, and Sens. Mitzi Epstein D-Tempe and Lauren Kuby, D-Tempe, voted against the package due to concerns over state spending or tax conformity provisions.