Tuesday, February 3, 2015

No, Raising Taxes to Pay the Bills Won't Bring About Doomsday

Posted By on Tue, Feb 3, 2015 at 1:00 PM

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Correct me if I'm wrong here, but I don't remember "Raising Taxes" being one of the Four Horsemen of the Apocalypse. War, Famine, Pestilence and Death are more traditionally mentioned. But an AZ Capitol Times article warns in its headline, K-12 funding suit could bring fiscal doomsday scenario. So, maybe the prospect of raising taxes in Arizona to pay the state's bills really is that dire.

The topic is the deadbeat dads and moms Republican legislators who just don't want to pay the child support education funding they owe, by law. It's $337 million a year, plus $1.3 billion to make up for their short-changing our children since 2009. Admittedly, they have a legitimate problem right now. The state is having a hell of a time figuring out how to cover its current shortfall even if it doesn't make its legally mandated education payment. And Governor Ducey ran on a No New Taxes Cut Taxes Even More pledge. What's a conservative gonna do?

Ducey wants the legislature to make a deal with the plaintiffs who are demanding the full $337 million, hoping the lege can get away with paying pennies on the dollar. At this point, the plaintiffs aren't interested, though that may change. But Republican Rep. David Livingston doesn't like the idea of compromise. He says the Republican legislators should just refuse to pay up.
“The real question is does a court system want to have a constitutional battle over this? They can tell us we are required to pay that. But I don’t believe legally they can force us to do that."
Don Peters, the lawyer representing the school districts, doesn't agree.
The courts have ways of enforcing such decisions, [Peters] said, including holding state officials in contempt, imposing fines or even putting parts of state government into receivership. He said he doubted that the Legislature would actually take such an action.
There's an easy, or at least an obvious, solution. Raise taxes. Tim Steller made the case for a tax hike in a recent column in The Star, showing the state budget is at the lowest percentage of state residents' income it's been in 35 years. Raise that percentage a bit by getting rid of some of the more ridiculous tax exemptions and raising the income tax rate on those who can best afford it—yes, tax the rich, who are doing very well in these days of growing income inequality—and the state can pay its bills, with maybe a little left over to, say, fix a pothole or two.

But Republicans won't have it—or not enough of them, anyway. If it only took a simple majority to raise taxes, it's possible that a few renegade Republicans could join with Democrats and pass a tax hike. But in Arizona, it takes a two-thirds majority in the legislature to pass a tax increase, meaning that one-third-plus-one representatives or senators can block any tax bill that comes their way. Arizona voters passed the supermajority referendum a few decades ago. If we want the state to regain its fiscal sanity, voters need to pass a new referendum to get rid of it. Then getting legislators to pass a tax hike would be only very difficult, not impossible.

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