In an effort to avoid raising taxes in the face of a budget deficit of more than $2 billion, Republicans in the Arizona Legislature cut more than a billion dollars in state spending last week.
Allowing only one day for testimony regarding the budget bills in both the House and the Senate appropriation committees, GOP lawmakers eliminated state support for all-day kindergarten, took away health insurance from more than 300,000 Arizonans below the federal poverty level and eliminated the KidsCare program that provided health-care coverage for children.
State support for people with developmental disabilities and mental illnesses has been cut back, with an estimated 14,600 seriously mentally ill adults and 4,200 children losing their assistance.
The state’s GED and adult-education programs have been eliminated, as have dropout-prevention programs and AIMS intervention tutoring.
The State Parks Department, which has already had so much money swept from its gate fees and other funding sources that it is in the process of closing at least 13 parks, is losing $10 million in Heritage Fund dollars that come from the Arizona Lottery. Nearly $10 million that was in an Arizona Commission on the Arts endowment has been snatched away, and general-fund support for the Department of Tourism has been zeroed out.
The budget was negotiated between Republican lawmakers and Republican Gov. Jan Brewer, who is expected to sign it.
“It’s a bloodbath,” says Rep. Steve Farley, a Democrat who represents midtown Tucson.
But Brewer spokesman Paul Senseman says the Democrats failed to offer a viable alternative to the cuts.
“For those elected officials who criticize (others), at least have the courage, like the governor, to offer a complete and realistic proposal,” Senseman says.
Many of the programs that have been zeroed out will cost the state economy billions of dollars in federal matching funds and grants.
Take the health-care cuts. Arizona is now the only state in the country that doesn’t have a KidsCare program. Although the program, which provided health-care coverage to roughly 63,000 kids in households up to 200 percent of the federal poverty level, cost the state $23 million, but it was accompanied by a 3-to-1 match that brought $96.5 million in federal dollars, according to an Arizona State University study commissioned by the Arizona Hospital and Healthcare Association.
Rather than simply suspend the KidsCare program, GOP lawmakers eliminated it completely, making it that much more difficult to bring back if Arizona’s economy improves.
However, Senate President Bob Burns says that there’s not much of a difference between eliminating the program and suspending it.
“It’s six of one, a half-dozen of another,” Burns says. “It’s a message of how critical the situation is. … The economy is going to have to make a tremendous comeback before we start reinstituting programs.”
Lawmakers also cut $385 million in funding that provided health insurance for households below the federal poverty line, which is $18,310 for a family of three. The cuts are expected to leave roughly 310,000 without insurance after Jan. 1, 2011; lawmakers were unable to cut off the insurance coverage sooner, because the state accepted stimulus funds that required that the program be continued through the end of the year.
The ASU study notes that AHCCCS cuts may save the state $767 million, but Arizona stands to lose as much as $1.5 billion in federal matching funds.
The combined health-care cuts could cost Arizona as nearly 20,000 health-care jobs and an additional 22,400 jobs in industries that rely on health-care spending, according to the study.
The Arizona Chamber of Commerce and Industry opposed the cuts, saying that they would increase financial pressures on hospitals, which would force them to raise prices on private insurance companies. That, in turn, will mean higher health-insurance rates for private businesses and their employees.
But Burns, who believes that raising any taxes would have more of a negative effect on the economy than losing out on more than $1.5 billion in federal health-care dollars, says the state simply couldn’t afford to provide funding for AHCCCS.
“We can’t spend what we don’t have,” says Burns. “The choices were education and health care, because to even get us close to being balanced, we had to go where the money was, and the money is in education and health care.”
The cuts were made even though last week, the U.S. Senate passed a bill that would provide federal dollars to pay for most of the insurance coverage through July 1, 2012. Burns says the coverage may be restored in the future if President Barack Obama signs the legislation.
“Nothing is ever sure about Washington (D.C.),” Burns says. “We could not wait.”
It remains to be seen if AHCCCS cuts are even legal, because the coverage was expanded by voters, and lawmakers are prohibited from tampering with voter-approved measures.
Fountain Hills Republican John Kavanagh, who heads up the House Appropriations Committee, says that the initiative only insisted that coverage would be extended using “available funds.”
“There are no available funds,” Kavanagh says.
That’s not the only shaky part of the budget. Lawmakers are also counting on voters to agree to zero out two voter-approved initiatives and divert those funds into the general fund.
One fund is First Things First, established by voters in 2006. First Things First, which is funded by an 80-cent tax on every pack of cigarettes, has about $325 million in the bank right now.
First Things First was created with the idea that Arizona lawmakers weren’t likely to spend general-fund dollars on programs for early-childhood education and other programs for young children. So supporters of those programs funded a campaign to raise the tobacco tax, with the money going to regional councils across the state to provide programs for early-childhood programs. (See “First Things First?” Currents, March 11.)
While some grants have been handed out, the general idea was to allow the funds to build up for future disbursements.
But GOP lawmakers say that letting the money build for future programs doesn’t make sense when the state has pressing needs—and they turned down offers from First Things First officials to accept a loan from the fund rather than raiding it outright.
Instead, lawmakers want voters to crack it open in November and give them control of the tobacco-tax dollars forever into the future. If voters refuse to give them the funds, then lawmakers are promising to make deeper cuts elsewhere.
It’s a similar story with Growing Smarter fund, which was set aside by a vote in 1998. That money—about $123.5 million—was supposed to match local contributions so that state trust land could be set aside for conservation and recreation. The program has been beset by legal troubles that made using the funds a challenge, but Pima County recently tapped the funds to purchase Tumamoc Hill west of downtown.
If voters don’t accept the sweep of those funds, additional cuts of $450 million will be necessary.
All the above cuts assume that the sales tax that voters will decide on May 18 will pass.
If it does not, the budget will have another $918 million hole that lawmakers are already promising to fill with even deeper cuts.
The bad news doesn’t end there. Burns warns that even after all of these cuts to government, the state will still have a billion-dollar structural deficit, even if voters approve the sales tax in May.
In addition, the state has run up an alarming amount of debt in recent years.
“The debt service is now becoming a major component of the budget,” Burns says.
Despite all that, some Republican lawmakers are still pushing for yet more tax cuts, which would make the structural deficit even worse.
The Arizona Economic and Job Recovery Act, which passed the House of Representatives last month, contains a number of tax cuts, including a 10 percent income-tax cut whose benefits would go overwhelmingly to Arizona’s wealthiest residents, even as its poorest citizens are losing health insurance and other services.
The tax-cut package would also reduce corporate taxes and slash business property taxes, while hiking property taxes on homeowners.
The Joint Legislative Budget Committee estimates that the tax cuts would cost the state $171 million in fiscal year 2012, and $941 million when fully implemented in 2017. Although Republican supporters of the plan, such as state Sen. Frank Antenori, argue that the cuts would spur the economy, JLBC staffers estimate that, at best, any new economic boost would return 18 cents of new revenue for every dollar that the state cuts.
Burns says the Senate will begin work on the tax-cut package now that the budget work is done, but he says it probably won’t pass without some changes.
“We haven’t had an opportunity in the Senate to review that legislation at this point,” says Burns.
This article appears in Mar 18-24, 2010.
Excellent synopsis Jim,
Senate President Bob Burns doesn’t believe any of what he himself is saying, and he is quite willing to discuss anything you wish, for as long as you wish; while he and his cohorts finish destroying our state.
Very soon these fascists will literally have blood on their hands because of the policies we are allowing them to enact in our names.
What do you suggest we do?
Robert Alexander Dumas
It’s about time someone tried to balance the state budget. To bad we can’t put the $150 million for the four mile trolly towards our state budget. I wonder how much money we can save in medical expenses if we stop paying medical bills for those who are here illegally? I bet we would have money for a KidsCare Program then too!!!
The solution is not the oppressive choices the legislature made.
The solution could have included what Oregon voters did: raise income taxes on corporations and individuals with high incomes. As a result, Oregon will continue funding programs similar to the ones destroyed by Arizona’s legislative debacle.
Why would any group make cuts that eliminated millions in participatory funds from Washington DC?
Why not close tax loopholes and stop tax credits, as Senator Paula Aboud suggested? Apparently, these two actions would have balanced the budget.
The Arizona Legislature’s oppression makes me very, very happy that I moved to Oregon. There’s even talk up here about a 7% sales tax to fund health care for all Oregonians. There is no sales tax now. The proposed 7% would not apply to food, clothing or shelter, and it would only be spent on health care.
While any type of tax at first sounds abhorrent, consider how wonderful it would be to have medical care paid for with coverage for everyone. The net influence would benefit millions of people.
The recently increased Oregon income taxes are to be paid by people who will have plenty left over to still live high on the hog. Any downside from the increases are vastly outweighed by the benefits to children and people with limited finances.
The dominant politics of Arizona suck. The dominant politics of Oregon rock.
“I wonder how much money we can save in medical expenses if we stop paying medical bills for those who are here illegally?” Well, it would solve ALL of our problems-crime, health care costs, education costs, transportation-if we could just get rid of those damned illegals!!!! I get so sick of hearing this I could scream. Health care costs have been escalating at over double digit inflation since the ’70’s but now its those damned brown skinned people from the south’s fault. What an amazingly uninformed argument.
Did the legislators cut pay, benefits and perks of all elected and appointed
officials by 50%???
Thanks and Good Luck
Cutting 23 million in kidscare and then losing 3X that amount in federal monies is:
(a) a knucklehead idea
(b) a bonehead idea
(c) an Arizona Legislature idea
(d) all of the above
It’s not too much of a stretch to guess that much of this denied healthcare will now be seen in hospital emergency rooms. I’m somewhat surprised the hospitals don’t have a large lobby to stop things like this, as how are they supposed to survive ?
Oregon has comdemned themselves to a bleak economic future. By not having a sales tax, they have a unique economic edge over the rest of the nation. But, increasing income taxes is just deadly to your economy.
Fellow Tucsonans,
The facts are that we have elected officials not only in our city government, but our state government that are not acting in the interests of the people, and therefore, not doing their jobs. This is being substantiated and proven every day by their own words and actions.
The problem isn’t with illegal immigrants, homosexuals, buffelgrass, or any other scapegoat that one may choose to blame the budget’s woes on.
Who are the people making the decisions?
Who do these people answer to?
Is it not true that one of our own initiatives, a voter passed initiative, was overridden based on an interpretation from one of these people, and therefore, in defiance of our will? Regardless of your position on the vote for or against Arizona Health Care Cost Containment System, recognize that this very same method can and will be used on an initiative you may have voted in favor of in the past, now, or in the near future.
So, speaking as a citizen myself, I’m wondering what we can do to get these unqualified and disrespectful criminals out of office and get qualified citizens representing citizens into the office. Our current elected criminals have done quite enough.
As Mr. Dumas asked…
“What do you suggest we do?”
“Why would any group make cuts that eliminated millions in participatory funds from Washington DC?”
– Federal matching funds are irrelevant if the state can’t afford the program.
“The recently increased Oregon income taxes are to be paid by people who will have plenty left over to still live high on the hog.”
– I’m sure your fellow Oregonians will be pleased that you’ve passed judgment on how much after-tax income is sufficient for them
“The dominant politics of Arizona suck. The dominant politics of Oregon rock.”
– Bull. Oregon is one of the most socialist states in the country with oppressive income and real estate tax. Enjoy your new 7% sales tax
Well…. cah,
“Bull”, and “Socialist”, as points in an argument, don’t quite persuade me.
I don’t recall Oregon humiliating themselves nationally by having to sell their own capitol building.
Must be doing something right, doncha think? Yeah, you betcha.
Robert Alexander Dumas
Well…..Robert Alexander Dumas,
Whether or not Oregon is doing something right is a matter of perspective. Their state income tax rate is double that of Arizona and they have disproportionately high property tax rates. Taxing the working class to death to support public spending is called socialism (oh, sorry for the inflammatory phrase…)
Cah,
What does double the Arizona income-tax rate mean? Arizona has a progressive income tax with higher brackets paying more and somewhere around half of all Arizonans paying next to nothing. (Or those were the figures the last time I looked at them.) Unless you talk about how an income tax is distributed, your comparison isn’t very useful for the purposes of discussion.
RAD,
By double, I mean greater by a factor of 2x when measured by dividing the aggregate tax collected by the aggregate gross income of the tax-paying population (around 4.4% vs 9%).
The tax system in Oregon is progressive as well, if I’m not mistaken. I don’t see the relevance of discussing tax revenue distribution. The original thesis I took issue with was how brilliant the state government in Oregon is compared to Arizona to avoid deep budget cuts and deficits. My point is that it is not brilliance to impose exorbitant tax loads on the working population to subsidize lots of social services – it’s (brace yourself..)
socialism.
By the way, I forgot to comment last time about the irony of you taking issue with my use of the word socialism when you originally weighed in on the topic by calling the state legislators fascists…
Apologies to Robert Alexander Dumas. My last tirade should have been addressed to Nintz.
Cah,
I have to disagree with you on the question of relevance. You said that Oregon was taxing the working class to death with its income tax. If it’s a sharply progressive tax like Arizona, then much of the working class probably isn’t being taxed to death, unless you define “working class” as everyone, including the top earners. But at that point, “working class” becomes a meaningless distinction.
Dividing the number in the fashion you have done does nothing to tell us about the relative burdens borne by the “working class” if the Oregon tax is truly progressive. (Frankly, I don’t have time to look it up. Any of our readers care to do the research?)
Cah,
After two major tax cuts totalling 1.8 trillion by “Prince George the appointed”, and decades of cuts by our state legislature; we should be tripping over good jobs, and drowning in prosperity.
It doesn’t work. Doing more of it will bring us even less of what we don’t have now. Your philosophy is empty, vacant, dessicated. I actually heard a Republican candidate state during a radio interview the other day, that he would like to see the banks further deregulated. Assuming that is even a
possibility at this point, to say the least I was incredulous.
If you are not at the least a millionaire, and are still espousing these talking points on behalf of the Republican’s corporate masters, then you lack common sense.
Lastly, I have to say that I am extremely dissapointed that you failed to rise to the bait of my meager attempt at a written Sarah Palin parody, I had sincerely hoped that to be the deepest cut.
Robert Alexander Dumas
Nintz,
I agree that “working class” is a meaningless distinction, yet the phrase is invariably used by Obama, Pelosi, et al when selling tax increases and nationalized health care programs. The use of the term is intended to conjure up images of the huddled blue collar masses living in subservient misery at the hands of their fat, white, conservative, wealthy Republican task masters.
I believe it is valid to do the simple arithmetic I presented. The average tax rate is a pretty good indicator of how much comes out of most people’s paycheck every week. This assumes similar marginal tax rates and similar demographics between the two states.
I maintain that Oregon is a tax-and-spend state and they will soon be forced to stop bragging about the absence of state sales tax (no baby steps there – they will go from the lowest to one of the highest rates in the country). The original point I took issue with is that tax increases, as opposed to budget cuts, demonstrates sound leadership and always produces positive results. You make the call…
Robert Alexander Dumas,
I know I’m getting old, but dessicated???
Let’s get in the way-back machine. The year is 1978 and Jimmy Carter is hot on the throttle with wage-and-price controls. Inflation is rocketing up through the mid-teens, unemployment is over 10% and he has his Democratic congress conjuring up more tax increases to offset plummeting government revenue. Very bad times.
Now ahead a little to 1984. At the end of Reagan’s first term, much of the previous damage has been eliminated, due in large part to TAX CUTS. At the end of his second term, unemployment was down around 5% due to the creation of over 30 million jobs. Inflation was under control and the deficit was plunging.
Back to the future. Why aren’t we tripping over good jobs and drowning in prosperity after the Bush years? I’ll be the first to admit that his second term was an absolute fiasco and that the Republicans allowed their fat cat friends in the financial services industry to grow rich beyond the dreams of avarice at the expense of the financial security of millions of Americans. I don’t believe it’s valid to condemn the basic economic policy that was in place during his administration. That was clearly not the cause of the financial collapse – it was malfeasance by the Congressional banking committee, the Federal Reserve Board, and many others.
As long as we continue this us-vs-them mentality about economics, this country will never recover. When the Republicans are in power, it’s party time on Wall Street and in the corporate board rooms. When the Democrats take over, it’s time to demonize corporations, capitalism and all those under-taxed rich fat conservative Republicans. I guess the worm will continue to turn as long as we allow it to…
Cah: How is the average income-tax rate a “pretty good indicator” of how much the average person pays in income taxes if most of the taxes are paid by people at the highest income levels?
Simple example: If you have five people, four of whom pay $3 a year in income taxes, and a fifth who pays $88 dollars in income taxes, the average comes out to $20 per person. But that average is clearly not a good indicator of their relative tax burden.
Cah,
I concede your point about President Reagan’s legacy of jobs creation, most of it anyway, the actual number was 16 million.
But none of it was due to tax or spending cuts. In aggregate he raised taxes.
The three major tax increases were 1.) the 1982 Tax Equity and Fiscal Resposibility Act (the largest tax increase in American history{214 billion against the context of a 1 trillion dollar budget and a 4 trillion dollar GDP}); 2.) the 1983 social security tax increase of 165 billion and 3.) the 1984 Deficit Reduction Act increasing Federal income taxes by 50 billion.
President Reagan never once balanced the budget, and he averaged annual deficits of about 200 billion.
President Reagan managed to triple the national debt in only 8 years. A feat that I don’t think even Bush 43 accomplished.
None the less, huge growth of government and all, President Reagan did create jobs, and economically, led us all to good times.
President Clinton managed to develope a balanced budget and then finally a surplus by 1998. If he hadn’t sold us out with NAFTA, GATT, WTO, and continuing most favored nation trading status for China, and then followed all that by gutting financial industries regulation……… we might still be OK now; Bush 43 notwithstanding.
From an economic purview I would love to have President Reagan back for another 8 years right about now. But the “real” President Reagan, who would do what he had done before. Not some rallying point fallacy of an icon who never existed, the real man cut the rate by which taxes were increasing, but he didn’t actually cut taxes. He protected jobs with trade policy, because protecting your own citizens is the right thing to do.
Robert Alexander Dumas
Nintz,
Apparently you missed the caveat:
“This assumes similar marginal tax rates and similar demographics between the two states.”
If the populations are roughly similar, then the average is a “pretty good indicator” (look up kurtosis).
Cah,
It would be helpful if you actually posted what Oregon residents at various income levels pay in income taxes rather than just saying that they pay double what they would pay in Arizona. (Frankly, I’m a bit too busy to do the research.) It may well be that they suffer under a terrible burden, but even if it’s indeed double that most Arizonans pay, it’s still peanuts and hardly qualifies, IMHO, as being “taxed to death.” YMMV.
Robert Alexander Dumas,
You obviously do your research but I don’t completely agree with some of the facts that you quote about Reaganomics. The marginal federal tax rate fell steadily during his administration, beginning with the Economic Recovery Tax Act of 1981. Tax Equity and Fiscal Responsibility Act of 1982 reversed some of those gains but was intended to index government spending to revenue. He did grow the deficit (more like 2x) but reigned in federal spending while fostering an economic recovery.
My father was fond of saying “If you’re in your 20s and don’t vote Democratic, you have no heart. If you’re in your 40’s and don’t vote Republican, you have no brain”. Hopefully that’s not true and there is some common ground for all of us to get back to.
Thanks for pointing out the inaccurate number on job creation.
Nintz,
I don’t have time to do exhaustive research on the Oregon tax code either. In fact, if I keep pursuing this thread instead of working, I’ll be out of a job. In My Humble Opinion, I think your comment about tax burden being “peanuts” isn’t so humble – it’s pretty presumptuous about the individual’s right to retain the income he’s earned. Regarding being taxed-to-death, you won’t know that it happened until after the fact…
Cah,
I sincerely appreciate the opportunity to have a civil conversation about this stuff with you, and I do think we’ve pretty well exhausted the topic. One final point on the issue of peanuts: I did do some research on Arizona’s income tax numbers and can tell you that households with a federal adjusted gross income of $20K or less pay, on average, $87 a year. From $20K to $25K, it’s an average of $201. From $25K to $30K, it’s an average of $303. From $30K to $40K, it’s an average of $456. From $40K to $50K, it’s an average of $643, or less than $54 a month and less than $2 a day.
That easily accounts for more than half of Arizona’s filers. Whether that amounts to peanuts depends on your POV, but I am pretty sure that most folks will pay much more in sales taxes and property taxes than they’re paying in income taxes to the state.
Nintz,
I have to admit that’s a valid point and good summary. Thanks for the research.
Cah,
In my twenties I was a Republican. I was a voter registrar and a precinct captain in Pinal county, “working” for Senator Barry Goldwater. I can’t claim the great man as a friend, but I did sit down and talk over drinks with him a couple times at the Arizona Biltmore.
I now register as a Democrat and identify as a Progressive. The point being, I don’t believe I’ve moved much to the left but the country sure has swung to the right.
Taxes are not in and of themselves inherently bad. I’m sure you’ll agree them to be necessary. Our current state legislature is not conducting itself as if its primary concern is the best interests of Arizonans.
Attempting to shift tax burdens by enacting new sales taxes while simultaneously cutting further taxes to the wealthy and corporations is wrong. Not only will it not create jobs, but it will hurt people.
Denying health care to 38 thousand kids to save 27 million out of a 30 billion dollar budget, while forfeiting 6.9 billion in federal aid because of that action, is so far beyond wrong it is hard to fathom.
What must our legislature be trying to accomplish for these actions to make sense to them?
And Cah and Nintz, I don’t have a job to get back to, and I’m very angry about that fact.
Thanks for the discussion guys.
Robert Alexander Dumas
Robert Alexander Dumas,
Again, very strong points and a good summation of the situation. Thank you as well for the exchange.
Wow, talk about straw man.
The point was made rather clearly. Oregon has not had to embarrass itself by selling off its own assets to balance the budget.
Regardless of your point of view on any of these things, you must look at the results.
Is the way of thinking that’s being pushed, the fear mongering, the trolling, the way our government is being run, is any of that working?
What DID work?
When failing to find good examples in our country, one must look at other countries that are doing well for themselves as an example, some of which may practice the “socialist” policies that certain people are in such an uproar over.
Is socialist even the right term to describe these policies, what’s being done and proposed in our own government, much less elsewhere?
Remind me again why Andrew Jackson even bothered to wipe out the national debt and outlaw the “federal reserve” from coming back into the country? Remind me again where the money is coming from to pay “interest rates” when there is only a finite amount of money in our system. Remind me again where money added to the system draws its value from.
The current way people are thinking and acting is like me saying I’m going to quit my job, bring in less money, and I’ll actually have MORE money to pay my bills… I hope !
Then I hear that the main problem is the expansion of government, government power, etc. , so it becomes a suspicion of mine that the ulterior motive is to cripple and shut down the government by making it go bankrupt.
SOCIALISM SOCIALISM SOCIALISM
COMMUNISM COMMUNISM COMMUNISM
TERRORISM TERRORISM TERRORISM
AUGHHH ! AUGHHH ! AUGGHHH !
)0) (0( )0) (0( run around and panic ! Pray to God that Palin saves us !
What the HELL are your priorities when you’re for funding a war with no discernible end that is sucking the majority of the nation’s budget to fund and putting the nation on the point that it has to borrow funds in order to keep it going…
but you’re in an uproar over taking care of and providing for our own citizens and maintaining the country?!!
Lawmakers want voters to zero out two programs and give them the bootle? Fat chance you jerks, we’ll zero you “Zeros” out. What a bunch of worthless creeps running the state. Any vote for a Republican is a vote to rob yourself. These people are flat unbelievable and should be thrown out in November. Education and Health care are the future you morons! Our state’s problems are rooted in the fact that most of these fools barely made it through high school if the even got that far. They truly do not understand the economic value attached to education.