Ducey the accidental reformer

Ducey never actually proposed or budgeted for the reforms for which he is being lionized.

Doug Ducey is being lionized in national conservative circles as a highly successful conservative reformer during his two terms as Arizona governor. In some respects, this is deserved. In other respects, the credit he is being given isn’t fully justified by how events unfolded.

Any fair assessment would deem Ducey’s two terms as highly successful. The state and state government both prospered. Arizona regained its position as having one of the best performing state economies in the country. State government went from being broke to swimming in cash, with a topped off rainy day fund.

Ducey’s propaganda machine has gilded the lily on this somewhat. Arizona had one of the best performing state economies from the time of the Symington tax cuts to the recession induced by the bursting of the housing bubble. The housing bubble recession hit the state’s economy and state government finances particularly hard. 

The recovery, however, began in 2010, four years before Ducey was first elected governor. What was experienced during his tenure is most accurately seen as a return of the status quo ante – not a transformation of the state’s economy, as some of Ducey’s propagandists would have it. 

Nevertheless, Ducey was unquestionably a pro-business governor pursuing a pro-growth agenda. He is properly credited with helping to create the conditions in which the state could regain its position as an economic high-performer and with improving and accelerating the trajectory of the recovery. Which in turn has generated the tax revenue that replenished state government coffers.  

However, Ducey was also a very cautious politician. He wasn’t really the bold reformer currently being lionized. In fact, on the two policy measures forming the heart of the national acclaim – a 2.5% flat tax and universal private school vouchers – Ducey was mostly an accidental reformer. He never actually proposed or budgeted for either one. Instead, the impetus and energy came from Republican state legislators.

The odyssey of the flat tax begins with an initiative on the 2020 ballot, Proposition 208. At the time, Arizona's top individual income tax rate was 4.5%. Prop. 208 would have imposed an additional 3.5% on high earners, for an aggregate of 8%. The surcharge money would have been earmarked for K-12 education.

After an ineffectual opposition campaign conducted principally by Ducey’s political team, voters approved Prop. 208, giving the state one of the highest marginal income tax rates in the country.  

In his 2021 State of the State message, Ducey never actually mentioned Prop. 208 nor did he propose anything specific to counteract it. Instead, he talked generically about taxes and economic growth and made this unspecific appeal:

So I propose, in this session, we work together to reform and lower taxes and preserve Arizona’s good name as a responsible, competitive state. On tax reform, let’s think big.

In his proposed budget for that year, there was a line-item for what was deemed an “Executive Tax Placeholder” for an unspecified modest tax reduction that wouldn’t come close to offsetting Prop. 208’s tax increase.

The leadership on fully counteracting Prop. 208’s tax hike came from Sen. J.D. Mesnard and Rep. Ben Toma. But what they crafted, and the legislature approved, wasn’t really a 2.5% flat tax. Instead, it was an attempt to restore the status quo ante of a 4.5% maximum rate. High earners subject to Prop. 208’s 3.5% surcharge would owe just 1% to the state’s general fund, for a total of the previous 4.5%. Everyone else would pay the 2.5% rate. This only became a 2.5% flat tax when the Arizona Supreme Court struck down Prop. 208’s surcharge. 

So, Ducey never actually proposed a 2.5% flat tax and that wasn’t even what the legislature intended to enact. The tax relief actually enacted was triple what Ducey had proposed in his budget. 

The universal private school voucher was enacted this last legislative session. Again, it wasn’t anything Ducey proposed in his 2022 State of the State message or included in his proposed budget. Instead, there was again a general ode to school choice and a call to think big:

This session, let’s expand school choice any way we can – greater open enrollment, new transportation models, more charter schools and more educational freedom for families, especially those in failing schools or who can’t afford to pick up and move to a new neighborhood. Let’s think big and find more ways to get kids into the school of their parents’ choice. Send me the bills, and I’ll sign them. 

The universal voucher bill is already costing the state north of $300 million a year, as parents with students already enrolled in private schools are signing up in droves for the free money. Ducey’s proposed budget included more money for transportation grants, of particular importance for charter schools. But nary a cent in additional funding for private school vouchers, called Empowerment Scholarships in Arizona.

The legislative drive to enact universal vouchers was led by Toma again in the House and Paul Boyer in the Senate. It wasn’t an initiative emanating from the governor’s office.

Now, it was known that lowering income tax rates and expanding private school vouchers would find a friendly reception if they got out of the legislature and made it to the governor’s desk. Ducey had always endorsed the concepts in theory even if he hadn’t made much in the way of concrete proposals to advance them.

The reforms occurred on Ducey’s watch. He signed them into law. They were in keeping with the general direction of public policy he had always advocated. 

But urging the legislature to “think big” isn’t the same thing as explicitly advocating and budgeting for a 2.5% flat tax or universal private school vouchers. 

This is not to depreciate Ducey’s performance as governor. In general, I think he competently managed state affairs.

Nor is it to depreciate the accomplishment of a 2.5% flat tax or universal vouchers. I strongly support both reforms. 

But the national conservative assessment of Ducey as a bold reformer misses the mark. He was a highly cautious politician, not a risk taker. To the extent he ended up being a reformer, it was as much accidental as purposeful. 

Reach Robb at robtrobb@gmail.com.