FILE Ducey State of the State 2021

Arizona Gov. Doug Ducey gives his annual state of the state speech on Jan. 1.

(The Center Square) – Arizona Gov. Doug Ducey is one of America's top governors, a free-market think tank report contends.

The CATO Institute released its 2022 fiscal policy report card for governors across the United States this week.

The think tank praised Ducey, giving him an "A" for his grade. He was one of five governors who received an "A" in the report.

CATO began by praising him for being pro-market, citing his efforts at occupational licensing reform and his opposition to minimum wage increases. 

The report noted that Ducey fought back against Proposition 208, a measure that Arizona voters narrowly approved in 2020 to impose a 3.5% surtax on high earners to increase education spending. This would have set the state income tax on top earners at 8%. CATO praised Ducey for nullifying the results of this election by signing SB 1827 into law in June 2021; it capped the state's top income tax rate at 4.5%.

After this, the Arizona Supreme Court blocked Prop 208's implementation in August 2021, and in March 2022, the Maricopa County Superior Court ruled that Proposition 208's spending was unconstitutional. 

"Gov. Ducey has transformed Arizona's economy over the past eight years and the Cato Institute's report is a testament to the success of that effort," said Ducey spokesman CJ Karamargin. "Arizona is a shining example of how smart policies, thoughtful leadership and fiscal responsibility pays off. Families, businesses and young professionals are flocking to Arizona for a reason: we're a great place to live, work and play."

Ducey also cut other taxes in 2021, the report notes. He signed SB 1828 into law in 2021. It cut the number of income tax brackets in Arizona from four to two. He also cut the top rate from 4.5% down to 2.98%. And if the state meets certain revenue targets, it will end up having a flat 2.5% state income tax as a result of this law.

In response to these tax cuts, progressives attempted to get a repeal question on the November 2022 ballot (Proposition 307). However, in April 2022 the Arizona Supreme Court ruled that the repeal measure cannot appear on the ballot, CATO notes in its report.

Additionally, CATO notes that the Arizona legislature passed a bill to put a constitutional amendment on the November 2022 ballot impacting tax policy. Proposition 132 would require a 60% supermajority vote from the public to approve tax measures; Governor Ducey supports the measure

The supporters of the measure argue that since the state legislature requires supermajorities to increase taxes, the state should require the same from voters.

Plus, the report notes that Ducey cut property taxes. He approved a repeal of the state equalization property tax, which will save taxpayers more than $330 million per year, CATO notes. Revenue from this tax funded public schools, but will be replaced with money from the state's surpluses in recent years.

While the report praised Ducey for his commitment to lower taxes, it noted spending increases in Arizona. For example, Arizona general fund spending increased by 20% in 2021. Although it decreased in 2022, the report says this spending will rise by 18% in 2023.