PHOENIX - Republicans who control the Arizona Legislature are looking to enact more tax cuts four years after the largest tax cut in state history.

Democratic Gov. Katie Hobbs says she's willing to negotiate on tax relief measures, but she is not interested in signing off on one big cut passed by the Senate last week that would automatically cut income tax rates anytime the state has a “structural surplus.” Those cuts would essentially be locked in because while cutting taxes takes only a majority vote, lawmakers must approve increases by a two-thirds vote.

"I'm not interested in tying our hands like that. No,'' she said Friday of the proposal that is similar to a Colorado system known as TABOR. "Not like TABOR. No. That's not tax relief. That is tying the hands of future administrations.''

TABOR, or Colorado's Taxpayer's Bill of Rights, was enacted by that state's voters in 1992. It limits growth in spending by state and local governments, including schools, and requires voters to OK any tax increases.

The current Arizona proposal only affects state income taxes, 18% of which is shared with cities and towns.

Under the plan, the Legislature's budget analysts would do an annual calculation. And if there's a "structural surplus'' - meaning more money than needed for ongoing programs – it would trigger the automatic cut in income tax rates for the next year.

Hobbs may not have a say in the matter, though.

That's because the proposal by Sen. J.D. Mesnard is accompanied by a companion piece of legislation that would go to the voters for approval if the House goes along with the Senate and approves it.

That increases the pressure on Hobbs to accept something or have voters do it on their own.

The proposal from Mesnard, R-Chandler, involves some math.

It starts with the 2.5% flat personal income tax rate enacted under former Gov. Doug Ducey in 2021.

Then there would be the calculation each year when the state collects more money than it is set to spend. Into that would be factored annual adjustments for inflation and population growth.

All that would lead to a figure of how many millions of dollars of extra money is being generated. Then half of that would be used to cut the tax rate from that current 2.5%.

What alarms some is that this would be a one-way ratchet: Once the rate went down, it would not go back up, even in lean years, unless lawmakers gathered the necessary two-thirds vote.

Democratic senators said during hearings on SB1318 and the accompanying ballot referral, SCR 1014, that automatic income tax cuts would tie the hands of future legislatures and governors when they negotiate on future budgets.

"What we're trying to do here is handcuff us so we can't make decisions during a budget (negotiation),'' Sen. Brian Fernandez, D-Yuma, said during a Feb. 10 committee hearing on the measures.

"So, 'handcuff'; is an interesting choice of words,'' Mesnard responded.

"We can put parameters on ourselves,'' he said. "The voters put parameters on increasing taxes back in the ’90s and also, more recently, when they're on the ballot.''

That refers to the need for a two-thirds margin for legislative tax hikes. An initiative to increase taxes would have to pass by a 60% margin to take effect under a measure voters approved in 2022.

"This is a proposal to essentially strike a balance,'' Mesnard said. "When you have a surplus, let's split it between giving money to taxpayers and the other half allocating towards whatever you want.''

Fernandez said it is more than just a proposal - it's a limit on the ability of the legislature and governor to have the money needed to address important issues.

"It's putting parameters on the future of our state, on what we can do in the next 30, 40, 50 years as a state in terms of being able to invest in education, invest in breaks for companies that come here,'' Fernandez said.

"There's a whole host of things that we could be doing as a state that would actually move us as a state further that I think restricting this kind of revenue could stop us from doing.''

If the House approves the tax law changes in Mesnard's HB1318, it would take effect in the 2026 tax year. The Legislature's budget analysts expect it to reduce the current 2.5% flat tax rate to 2.42%, cutting $175 million in tax revenue, half the expected $350 million structural surplus in the 2027 fiscal year.

If Hobbs rejects that and the companion ballot referral, SCR1014, is approved by voters next year, it would lead to a tax rate cut to 2.39% based on half of the expected 2029 budget year surplus, leading to $291 million in tax cuts.