Wednesday, December 15, 2010
In last week's Skinny column, I make the modest suggestion that state lawmakers spend less time trying to reduce future revenues via tax cuts, seeing as there are giant deficits in Arizona's budget future.
Bob Robb of the Arizona Republic makes a similar point:
Now, despite all the perpetual hand-wringing, there’s nothing fundamentally flawed about the Arizona economy, or at least nothing fundamentally flawed about the Phoenix metro area economy. And, while improvements could be made, Arizona already has a tax structure quite compatible with robust economic growth, as the experience since the early 1990s amply demonstrates.
In fact, right now, the instability and uncertainty of government finance in Arizona is a greater threat to economic growth than the lack of a grab bag of goodies to throw at politically favored companies or industries, or Arizona’s slightly excessive income and property taxation of business.
Arizona has not had a truly balanced state general fund budget since 2007. Since then, deficits have been papered over with borrowing, sweeping other funds, postponing payments and federal funds.
State general fund spending this year is around $9.5 billion. State revenues for next year are projected at only $8.2 billion.
The Legislature should consider no bill that increases spending or cuts taxes supposedly to stimulate the economy until it first passes a truly balanced budget that doesn’t rely on borrowing, fund sweeps, payment postponements or stealing money from local governments.
If Brewer and Republican legislators really want to improve economic conditions in Arizona, that’s job 1.