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The voter-approved Proposition 301 six-tenths of a cent sales tax benefits various education programs. It is set to expire in 2021.

The Senate Education Committee unanimously approved legislation Thursday morning that would extend for 20 years the education sales tax rate that brings in about $667 million a year to Arizona schools. 

The Senate panel’s vote is the first step in what is expected to be a fast-track effort Thursday by Arizona lawmakers to extend the tax rate, after more than a month of legislative inaction.

The issue needs two votes of the full House and two of the full Senate before going to Gov. Doug Ducey. All of these could happen Thursday afternoon.

Voters in 2000 passed the tax as Proposition 301. The 0.6-cent sales tax is set to expire in mid-2021 if voters or the Legislature don’t act.

Finding some breathing room

Two state lawmakers — Rep. Doug Coleman, R-Apache Junction, and Sen. Kate Brophy-McGee, R-Paradise Valley,  — introduced a pair of bills early this session to extend the tax rate. 

Their reasoning has been that the bills, House Bill 2158 and Senate Bill 1390, would essentially remove the fiscal cliff and financial uncertainty schools are approaching as they near the tax measure’s expiration date. That would give state and education leaders some breathing room to decide whether the tax allocation formula should be adjusted and whether the tax rate should be increased to bring in more money for schools.

The legislation doesn’t give the state’s public schools and universities any extra funding than what they are already receiving, or increase the tax rate in any way.

The latest version of the legislation included amendments that would extend the rate through 2041 and shuffle around how some of the money would be distributed to schools. 

About $64 million that currently goes to the state’s School Facilities Board would be redirected to the Classroom Site Fund, which can go toward teacher salaries, said Sen. Sylvia Allen, R-Snowflake.

Extending the tax rate is “absolutely the right thing to do,” Brophy-McGee said.

“If we can eliminate the cliff, which is all this does, we can set the stage for a very extensive discussion on what the new Prop. 301 looks like, and every education interest will be at the table,” she said.

Further discussion

The future of the education sales tax has been a point of contention and concern among education and business advocates and state leaders. The money funds teacher salaries, classroom expenses, dropout prevention, building maintenance, universities and community colleges.  

Greg Wyman, superintendent of the Payson Unified School District, told Senate lawmakers Thursday that an extension of the tax rate “would send a very powerful message to our teachers that they do matter.”

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There appears to be enough support for HB 2158 and SB 1390 in both chambers.

SB 1390 has 56 other lawmakers — both Democrats and Republicans — signed on in support.

But despite the support among legislators, the bills had been motionless for more than a month.

A House panel cleared HB 2158 in early February, though it had not advanced further prior to Thursday.

Push to increase the tax rate

There has been wide support among education and business advocates for extending and even increasing the sales tax rate from Prop. 301 — viewed by many as a crucial step toward restoring hundreds of millions of dollars of education-funding cuts following the recession.

State schools Superintendent Diane Douglas and a coalition of business CEOs have recently proposed separate plans to expand the sales tax rate to as high as 1.5 cents.

Coleman has said his intent for introducing the bill is to make sure the existing funding is protected. He, too, believes that the measure should be expanded to include more funding for schools, but said an extension will give state leaders some breathing room to then consider increasing the tax.

Gov. Doug Ducey has in the past said he supports extending the tax rate, although he has said it may need to be modernized. He hasn’t publicly said how he’d like to see Prop. 301 changed and he’s refused to say whether he’d support increasing the tax rate.

He and other state Republican leaders have indicated they did not want the matter on the 2018 ballot. Ducey is up for re-election on that ballot. 

Ducey has not indicated whether he supports this legislative effort.

How Prop. 301 dollars were distributed in 2017

School Facilities Board Debt Service: $64.1 million.

Public universities: $72.4 million.

Community colleges: $18.1 million.

Tribal colleges: $800,000.

ADE – Added School Days: $86.3 million.

ADE – School Safety and Character Education: $8.0 million.

ADE – Accountability: $7.0 million.

ADE – Failing Schools: $1.5 million.

Income Tax Credit: $25 million.

Classroom Site Fund: $384.3 million.

TOTAL: $667.5 million.

Source: Arizona Senate fact sheet

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