Arizona lawmakers vote to offset tax windfall with rate cut

PHOENIX (AP) - Arizona lawmakers have voted to cut tax rates to offset a tax windfall from aligning the state and federal tax codes.

The measure passed the House and Senate Thursday with only Republican votes, setting up a confrontation with Gov. Doug Ducey. The Republican governor prefers the state put the windfall in the rainy day fund.

The dispute is an unusual byproduct of last year’s federal tax cut. Arizona routinely aligns its definition of income with that of the federal government. But doing so following last year’s federal tax cut means more revenue for the state.

Republican lawmakers consider that a tax increase. Their bill would offset it by reducing all tax rates by 0.11 percent.

Democrats say the state should spend the money on education, roads or other needs.