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That added cost is due to more students with special needs, who receive larger voucher amounts, using the program than lawmakers budgeted for. There are currently 68,455 students in the program and the cost is over budget at around $665 million. The 2024 budget was based on an assumption that 68,380 students would take part in Arizona’s expanded ESA program that allows any K-12 student to receive a voucher to attend private school or to fund homeschooling, at a total cost of $625 million.īut the program is already exceeding both of those figures. On a more positive note, corporate sales taxes are expected to bring in around $146 million more than anticipated this fiscal year. JLBC Chief Economist Hans Olofsson explained that Arizona should expect to collect around $500 million less in income taxes this year than it originally predicted and around $240 million less than projected in sales tax income. Budget analysts at the time estimated the cuts would cost the state about $1 billion in revenue from 2021 levels when they were fully implemented. The tax cut was the result of a package approved by legislative Republicans and Ducey in 2021, which changed Arizona law from a graduated income tax rate to a flat tax. So far, that means $243 million less has been collected than was expected. In January, the individual income tax rate was lowered to 2% from 2.7%, resulting in a 27% drop in income tax collections from the prior fiscal year. JLBC predicts that revenues will improve, but will still decline by a total of 0.6%.Ī major contributing factor to the decline is the full implementation of a flat income tax that GOP lawmakers and then-Gov. While the 2024 budget was based on a projection of 1.9% revenue growth, so far this fiscal year - which began in July - revenues have declined by a whopping 6.2%.