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AS OUR ECONOMIC MELTDOWN CONTINUES ...

State Treasurer Dean Martin, who may or may not be challenging troubled Gov. Jan Brewer in next year's Republican primary, shouted out a warning last week: The state has blown through its $700 million dollar credit line and had to dig into some internal accounts for another $73 million.

By the way, Martin has already tapped $1.6 billion in other state funds, so we're running out of options as the state continues spending more than it takes in.

Martin was blunt in his assessment: "Government spending in Arizona is out of control."

Indeed, these numbers are plainly nuts: It only took a week for the state to exhaust that $700 million credit line.

More bad news: We still have not hit the bottom. The latest sorry numbers showed a drop of nearly 24 percent in the state's overall tax collections compared to October 2008. That's 15 straight months of double-digit declines in revenues compared to the previous year.

The total take from sales, income and corporate income taxes in October was $142 million below the forecast. For the fiscal year that began in July, we're $376 million shy of expectations, and even though lawmakers trimmed $400 million in state spending during last month's special session, the current year's shortfall could still be rising back toward $2 billion.

The biggest drop continues to be in sales taxes by homebuilders, with contracting taxes slipping by 40 percent compared to last year. Retail sales are down by roughly 12 percent, but people are still going out to eat: Restaurant and bar taxes have dropped by only 5 percent.

Income taxes are down by roughly 19 percent compared to last year, which suggests that our job picture is dismal. Still, there was a bit of good news in the report, as the private sector added jobs for the first time since February 2008.

People are driving less and registering fewer cars, so gas and car taxes are down about 9 percent compared to last year, which is pinching the budget of the Arizona Department of Transportation.

The state is even managing to lose in the gambling business. Although more people are buying lottery tickets, the state's beneficiaries are still seeing diminished returns—because the state is giving away so much in prize money.

The bottom line: Our state is nearing a financial breaking point.

Yet prospects for a special session of the Legislature next week look dim, at least as of press time. Negotiations are all hush-hush, but in broad strokes, we hear Brewer wants to make a few more cuts, refer a sales-tax hike to the ballot in March and ask voters to break open the piggy bank to get at some tobacco taxes that have been stashed away to help fund early-childhood education. That's running into opposition in the Legislature, which wants the chance to reduce voter-mandated spending on education and health, and make more spending cuts.

The clock is ticking if the lawmakers want to get the big one—a temporary one-cent sales-tax question—on a March ballot so they can start bringing in revenue. The next chance after that is the May primary, unless they want to set some special date.

You can be sure of one thing: Nobody wants to do a sales-tax referral during the August primary or the November general, because then it will overshadow the legislative races, poisoning the effort completely.

Read the Joint Legislative Budget Committee report here.


TROUBLE BREWING FOR BREWER

Speaking of poisoning the sales-tax effort: Paradise Valley Mayor Vernon Parker, who wants to take out Gov. Jan Brewer in a GOP primary next year, filed the paperwork for a political committee to oppose a sales-tax hike.

As Capitol Media Services' Howie Fischer notes, that lets Parker gather private funds for a campaign that raises his name ID at the same time as he takes public Clean Elections dollars to support his potential gubernatorial campaign.

Parker's move here strikes us as little more than a political stunt, since Brewer hasn't even been able to persuade lawmakers to put the question of a temporary sales-tax hike on the ballot. But it does nicely illustrate the political dynamics that will emerge if voters are asked to approve a sales-tax increase at the ballot in November: Every candidate will have to be for it or against it, and it will cast a heavy shadow over many of the races.

Meanwhile, Tucson attorney John Munger, who also wants to take out Brewer in the GOP primary, blasted her because she didn't speak out against the payday-loan sharks who have now hired some of her best friends to come up with a plan to keep the industry alive in Arizona.

Munger said the voters had spoken when they overwhelmingly rejected an initiative that would have kept the industry alive last year.

"These mostly out-of-state companies prey on our most vulnerable citizens with tempting offers of fast cash barbed with crippling triple-digit interest rates," Munger thundered in a press release. "Apparently, these legalized loan sharks didn't get the message. This is not a partisan issue. It's a moral issue. I call on the governor to show real leadership and reject this underhanded attempt to subvert the will of the people from last election and to stand up against government-condoned loan-sharking in Arizona."


CASH FLOW

A final bit of bookkeeping from last month's Tucson City Council election: The campaign-finance reports from a few campaign committees have been filed.

The Public Safety First Initiative, which would have forced the city to hire more cops and firefighters over the next five years, takes the award for Biggest Waste of Money.

Supporters—primarily the Tucson Association of Realtors, with help from Jim Click, the Southern Arizona Home Builders Association and the police and fire unions—spent a whopping $380,551 on the ballot effort, which was rejected by 70 percent of voters on Nov. 3.

Opponents of the initiative spent a lot less. Don't Handcuff Tucson, a political committee that got funding from the Pima County Democratic Party, the Tucson Chamber of Commerce and the Arizona Multihousing Association, spent $72,632.

The defeat of the Public Safety First Initiative is even more impressive when you consider that a September poll by the Pima County Democratic Party showed it was supported by nearly three out of every five voters.

Meanwhile, the Tucson Vision Committee, the independent campaign that targeted Democrats with attack ads on TV and radio, spent a total of $71,873. Major contributors to the campaign included Republican National Committeeman Bruce Ash, mini-dorm developer Michael Goodman and the Realtors of Arizona Political Action Committee, which kicked in just less than $20,000 in the final weeks of the campaign.


COMEBACK KIDS?

Is Tom Prezelski looking to make a political comeback? Prezelski, a Democrat who lost his state House seat last year when he was defeated in a primary by Matt Heinz and Daniel Patterson in southside District 29, is exploring another run for the House in 2010.

Prezelski's brother, local blogger Ted Prezelski, is running for a House seat in midtown District 28. Ted Prezelski lost a bid for that House seat in 2006.

Find early and late-breaking Skinny at The Range.

More by Jim Nintzel

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