A from the Common Sense Institute Arizona (CSI) and the Arizona 番茄社区 Foundation warns that dozens of bills introduced in the 2025 Arizona legislative session could have placed the state鈥檚 decade of economic growth at risk, threatening jobs, incomes, and overall competitiveness.

The 2025 Arizona Job Killers report identified 88 bills that, if enacted, would have imposed more than $45.9 billion in new annual costs on businesses, reduced employment by 660,000 jobs (a 20% decline), cut per-capita income by $4,600, and shrunk Arizona鈥檚 economy by $64 billion.

Bad bills could cost Arizona jobs

The report underscores that Arizona鈥檚 pro-growth policies since 2016鈥攊ncluding lower taxes, smaller government, and fewer regulations鈥攈elped drive some of the nation鈥檚 strongest gains in jobs and GDP. Recent slowdowns in hiring and housing, however, coupled with the volume of 鈥渏ob killer鈥� legislation considered in 2025, highlight the risks of policy missteps.

鈥淎rizona has shown the nation what happens when states embrace policies that encourage growth,鈥� said Courtney Coolidge, executive vice president of the Arizona 番茄社区 of Commerce & Industry. 鈥淏ut this report makes clear that the progress we鈥檝e made is not guaranteed. The sheer number of costly bills considered in the 2025 session should serve as a warning. We must remain vigilant in protecting Arizona鈥檚 competitiveness and preserving the policies that have made us an economic leader.鈥�

The costliest proposals

Among the most significant measures flagged in the report:

• Repeal of Arizona鈥檚 right-to-work law 鈥� projected to impose $18.6 billion in new costs and reduce employment by nearly 4% by 2033.
• New or increased taxes 鈥� totaling $3.7 billion, including a proposed 1% payroll tax on employers with more than 50 workers and a $1,000 minimum corporate income tax.
• Energy and environmental mandates 鈥� including adopting California-style vehicle emissions standards and requiring 50% renewable electricity generation by 2035, which CSI estimated would raise energy costs by billions and reduce job growth.
• Housing market interventions 鈥� such as rent control, which CSI cited as a policy with a 鈥渨ell-documented鈥� record of reducing supply and harming affordability.

Lessons from Colorado

The report draws sharp contrasts with Colorado, where CSI has tracked the enactment of more than 20 鈥渏ob killer鈥� laws since 2019. Once a peer economy, Colorado has since fallen behind Arizona in both GDP and job growth. CSI estimates that if Arizona had followed Colorado鈥檚 trajectory, the state would have 113,000 fewer workers and $18.6 billion less in annual economic output today.

Katie Ratlief, executive director of CSI Arizona, said the findings illustrate the direct connection between public policy and economic performance.

鈥淕ood policy choices have helped Arizona outpace much of the country in growth over the last decade,鈥� Ratlief said. 鈥淏ut as this report shows, just a handful of costly mandates could reverse those gains. The lesson from states like Colorado is clear: when lawmakers pursue policies that burden job creators, the entire economy suffers.鈥�

While none of the 88 bills analyzed were enacted this year, the report cautions that the annual introduction of such legislation reflects a continuing risk.

CSI and the 番茄社区 argue that sustaining Arizona鈥檚 economic momentum will require policymakers to reject measures that add costs, restrict growth, or erode the state鈥檚 business-friendly climate.

鈥淎rizona stands at a crossroads,鈥� the report says. 鈥淎fter a decade that brought generational change, job growth has stalled and the economy has slowed. The lessons are clear: there are pro-growth policies, and policies that hurt growth. Too often, the search for villains 鈥� developers or data centers being blamed for water shortages, or investors and short-term-rentals for housing market woes 鈥� deflects from real problems and leads to harmful policies.鈥�

Image courtesy Pixabay and was published prior to July 2017 under the Creative Commons CC0 1.0 Universal Public Domain Dedication license

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A new policy brief by the Common Sense Institute (CSI) challenges the narrative coming from some corners that Arizona鈥檚 flat personal income tax is to blame for the state鈥檚 projected $1.6 billion budget shortfall. The report, titled Flat Tax & State Budget Myths and Facts, finds that robust revenue growth has continued since implementation of the 2.5% flat tax鈥攁nd that spending, not tax policy, is the real driver behind the state鈥檚 fiscal strain.

鈥淭he data simply don鈥檛 support the claim that the flat tax has gutted Arizona鈥檚 budget,鈥� said Glenn Farley, CSI鈥檚 director of policy and co-author of the brief. 鈥淭he state has a spending problem, not a revenue problem.鈥�

Key findings:

• Revenues remain strong: Since the flat tax was enacted in 2022, General Fund revenues have grown at an average rate of 4.5% annually, exceeding post-Great Recession averages. Arizona is bringing in $1.9 billion more today than before the tax went into effect.
  
• Spending outpaced growth: From 2022 to 2024, state spending surged by nearly 40%鈥攎ore than four times the long-term trend. Had spending been held to historical averages, Arizona would be facing a $4.3 billion surplus instead of a shortfall.
  
• Cities benefited: The flat tax law also increased the share of income tax revenues distributed to cities and towns, yielding an additional $250 million in shared revenue last year alone. Local governments are currently running historic surpluses, CSI reports.
  
• Education funding increased: Despite flat or declining enrollment, per-pupil spending in Arizona public schools has climbed to a record $15,100鈥攗p 30% since FY2016 when adjusted for inflation.
  
• Economic growth is strong: Since 2015, per-capita personal income in Arizona has increased by 68%. CSI attributes this growth in part to pro-growth policies like the flat tax and tax code modernization efforts such as HB 2822.

Farley and co-author Thomas Young caution against reactionary calls to repeal the flat tax or impose new income tax surcharges. Their research estimates that reversing recent tax reforms would cost the state nearly 59,000 jobs and reduce GDP by $11.9 billion over the next decade.

鈥淧olicymakers must resist the temptation to view tax increases as a quick fix,鈥� Farley said. 鈥淩aising taxes now would ultimately leave Arizona with fewer resources for priorities like education, infrastructure, and public safety.鈥�

Arizona 番茄社区 of Commerce & Industry President and CEO Danny Seiden said the findings affirm what the state鈥檚 job creators have long known.

鈥淎rizona鈥檚 flat tax is doing exactly what it was designed to do鈥攕trengthen our economy, attract new investment, and put more money in the pockets of working families,鈥� Seiden said. 鈥淭his report makes clear that it鈥檚 not tax policy causing budget stress, it鈥檚 unchecked spending. We should stay the course on pro-growth policies that have made Arizona a national leader.鈥�

As lawmakers and stakeholders debate the state鈥檚 fiscal future, the CSI report underscores the importance of disciplined budgeting and long-term economic planning. 鈥淎rizona鈥檚 flat tax was never the problem,鈥� the authors conclude. 鈥淯nchecked spending was.鈥� The full report is available at .

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