Thursday, February 17, 2011
The “jobs bill” Gov. Jan Brewer and Republican legislators hustled through a hastily called special session this week is grossly irresponsible.
The only truly indispensible duty the Arizona Legislature has is to enact an honestly balanced budget each year. The last time the Legislature did that was 2007. Since then, the Legislature has employed constitutionally suspect borrowing and fundamentally dishonest accounting to get from year to year.
There is not any proposed or even plausible scenario in which it gets back to an honestly balanced budget at any time in the future. Not in one year, not in three years, not in five years, not in ten years.
The state currently has a structural deficit — the difference between ongoing revenues and spending — of $3 billion. Yet the “jobs bill” would cost the state more than $500 million annually when fully implemented.
The argument is made that this is necessary to get the state’s economy going. In some cases, cutting taxes even when government revenues are hurting is responsible and appropriate. This is not one of those cases.
Moreover, in this environment, the “jobs bill” won’t work.
Uncertainty is the enemy of investment. No one is going to be enticed by the promise of future tax cuts when state finances are in such disarray. There are other shoes inevitably to be dropped, in terms of other tax increases or program cuts. Until those shoes drop, the investment climate in Arizona is fraught with uncertainty.
The state’s economy would perform better with the lower corporate income tax rate and lower business property taxes the “jobs bill” phase in. But the existing state tax structure is already compatible with robust economic growth. That’s been the case. And the Bureau of Labor Statistics reports that the Phoenix metro area ranked fourth in the nation for job creation in 2010. So, it appears to still be the case.
There is nothing in Arizona’s competitive position, properly analyzed, that justifies, in these extreme circumstances, making stabilizing state finances tougher rather than easier.
And there is plenty in the “jobs bill” to worry about beyond its effect on state finances.