A teacher union-backed ballot initiative to strike a state law protecting small business owners from a new 3.5% income tax increase failed to get the voter support needed to make the ballot.

An attorney for Arizona Secretary of State Katie Hobbs disclosed the update Friday in a court hearing challenging tax-related citizen ballot initiatives brought by the Arizona Free Enterprise Club, a nonprofit group that fights for taxpayer interests.

“We are relieved that their effort to purchase a referendum with paid circulators to stop tax relief for small businesses has failed,” club President Scot Mussi said. “With SB 1783 going into effect, small business owners that were hammered during the pandemic can now benefit from a tax cut that will create jobs and bring investment to our state.”

Signed by Gov. Doug Ducey on July 9, Senate Bill 1783 allows a small business filing as a pass-through entity to limit its tax liability to the state to 4.5% of its income. This lowers the state-imposed portion of a business’ tax bill to effectively cancel out the additional 3.5% tax hike for single filers that starts at $250,000.

In concert with Invest in Arizona and the Arizona Education Association, circulators and volunteers collected 123,531 signatures for the ballot initiative to make the ballot.

The measure widely was seen as doomed since that amount is not far above the requisite 118,823 to make the ballot. The verification process often nullifies thousands of signatures.

The lawyer for the initiative said little more than 100,000 were valid, according to those at the hearing.

The initiative was submitted in tandem with a challenge to Senate Bill 1828, which garnered 215,787 signatures and has yet to be certified or nullified by the secretary of state’s office. The disparity in signatures, according to Mussi, is from the education groups hiring professional circulators in September that only carried the referendum on the 2.5% tax.

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This article was published on November 9, 2021, and reproduced with permission from The Center Square.