Gov. Jan Brewer finally got what she wanted last week: A sales-tax ballot question without any strings attached.
It took 10 months of intense political battles, but a group of Republicans and Democrats finally joined forces to ask voters on May 18 to approve a temporary, one-cent-per-dollar increase.
Arizona, which will face an estimated shortfall of as much as $3.5 billion in the fiscal year that begins in July, is in desperate need of additional revenue if the state is going to continue to adequately fund schools, provide health-care programs, keep parks open and continue other state programs.
A budget that Brewer recommended last month would eliminate all-day kindergarten, kick hundreds of thousands of people off state-subsidized health insurance, sharply curtail services for the mentally ill, eliminate GED and adult-education programs for people who don’t make it through the school system, dump state support for gifted students in public schools, and force a wide range of cuts in other areas. (See “Slashing the State,” Jan. 21.)
Those cuts would be required even if voters approve the sales tax, according to Brewer. If voters reject the plan, the cuts will be even deeper.
State lawmakers had been reluctant to ask voters to approve the sales tax unless certain strings were attached. Republicans have been advocating for a package of future income and corporate tax cuts to go along with the sales-tax hike. GOP lawmakers argue that these tax cuts, which will overwhelmingly benefit Arizona’s wealthiest residents, will spur the economy.
A version of that proposal has already passed the House of Representatives this year, but Senate President Bob Burns says it’s “on hold” in the Senate until the state’s current budget problems are resolved.
Democrats have opposed that plan, because they say it will only shift the tax burden from wealthy Arizonans to poor and middle-class residents. Plus, they point out that the sales tax would be a temporary measure, while the income and business tax cuts would be permanent, unless two-thirds of state lawmakers vote to reverse the cuts—which has never happened since Arizona established a super-majority requirement for raising taxes.
Democrats have been advocating a major overhaul of the state’s tax system to spread the tax burden over a wider base so it is less dependent on construction activity and consumer spending. They’ve suggested lowering the sales-tax rate while extending it to services, from legal bills to haircuts. They’ve also pitched other tax increases, such as a tax on nonrenewable energy generation that would partially be paid by out-of-state customers of power companies that export electricity.
But Republicans, who remain in control of the Legislature, have been cool to any talk of new taxes.
Last week, lawmakers on both sides of the aisle decided that the time for debate had passed, and it was time to let voters have a say on the sales-tax hike, although some Republicans who voted for it said they hoped it would be defeated at the polls.
Whether voters will support it remains to be seen, but at least one pollster has told the Weekly that the sales tax had more support than alternatives such as raising income taxes on wealthy Arizonans or extending the sales tax to services.
Resistance to the sales tax on the right end of the political spectrum will be fierce. After lawmakers finally agreed to put the question to voters, attorney John Munger, who is seeking to unseat Jan Brewer in the GOP gubernatorial primary, called the idea of raising taxes “madness.”
“Raising taxes will kill thousands of jobs at a time when we need them most,” Munger said in a statement. “Another tax increase will also help ensure that Arizona remains one of the least competitive states to do business.”
But Brewer may find a boost from the business community.
Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry, says his organization supports the idea of raising the sales tax temporarily to help Arizona through the current economic crisis—but he wants some kind of business tax cuts, too.
“Some sort of tax increase would be necessary to help Arizona through the most difficult budget period in its history, so long as it is coupled with longer-term, job-creating measures,” Hamer says.
Meanwhile, political activists on the left will probably support the tax, but some warn that it will not provide enough revenue to get Arizona through the next few years.
“A one-cent sales tax is too little, too late,” says Penelope Jacks of the Children’s Action Alliance. “We would support it, but it’s not going to fix the problems.”
This article appears in Feb 11-17, 2010.
I think the thing to think about is, with slightly over 5 million people in the state, and a 5 to 8 billion dollar budget, are you getting your money’s worth? Are you paying your share?
That amounts to $1600 per person, or if the sales tax doesn’t pass, $1000. For a family of four, multiply those numbers by four. Include schools (you benefit even if you DON’T have kids in school), roads, state police – everything.
And, are you paying between $1000 and $1600 in taxes? Again, include sales, income, and corporate when you buy goods from corporations – everything.
If you get more than you pay, you are cheating someone. If you pay more than you get, you are being cheated. That’s what I think.
Corvi, that’s a ridiculous equation. How do you figure the value of having educated people so that they can get jobs and not turn to crime and rob you and then end up in prison? Or having an emergency room that’s not overcrowded so that a doctor is available if you end up needing help? Or the value of having a highway, whether you use it or not, to have goods delivered to your store and to allow commerce to thrive?
Jim, that is my whole POINT! I think you CAN put at least an estimate of the value. Otherwise, one might conclude that what the state does for us is worth an INFINITE amount. And I urged people to think about EVERYTHING, like you say. Though, I seriously doubt the state provides emergency room medical service.
Raising an inherently regressive tax (the sales tax) so that a progressive tax (a graduated income tax) can be lowered for the benefit of those most able to pay to the detriment of those less able to pay makes no sense. The right and the left should both oppose an increase in the sales tax. A broadening of the sales tax base would make more sense, after all if the purchase of books and newspapers is taxed why shouldn’t legal services be taxed.
If a family of four is paying $4,000-$6,000 in state and local taxes, I think they can legitimately ask why are the schools so poor and the roads unrepaired, or why does it take the sheriff so long to respond. Its hard to sell poor quality government. Look at Tucson’s management of downtown as am example of poor quality government. Why should I buy more of the same.
Even thou the Federal bankruptcy code does not provide for the bankruptcy of a state, maybe an equity type receivership would be possible.
What we are seeing is the triumph of belief over reason, that is the GOP’s belief is some kind of Rosseau-vian like desert existence.
Hey Corvi,
The state doesn’t provide emergency room service–but it does pay for health insurance for low-income people to have health insurance so they don’t end up in the emergency room. (AHCCCS, as I understand it, also gets stuck with some of the bills for people without health insurance that end up in emergency rooms–perhaps someone with better understanding of how that works can weigh in?)
And that’s my point–some services that are provided help make the community as a whole a better place, which adds to our quality of life. Police, for example, may deter people from robbing your house, but it’s hard to place a “value” on that. Likewise, a social-service program may prevent a parent from abusing a child, which will later cost court time, police time, etc. There are intangibles involved in that equation that make it very difficult to work out a direct benefit from having a civil society, and how much we should pay to ensure that we have a civil society, and what are the best government programs and services to maintain a civil society.
I’m not saying there isn’t waste in government–there certainly is. But I am saying that many programs and services provide an indirect benefit to people that’s difficult to measure. If you own a business and we have an educated workforce that can spend money in your business, are you benefiting from government?
Scarpia, I agree with you–trading an temporary increase in the sales tax for a permanent decrease in the income tax is a lousy deal for most Arizonans. (Especially now that we have an actual estimate of the cost of the Adams tax package:
http://www.tucsonweekly.com/TheRange/archi…
Unfortunately, so few people understand how taxes work that the majority of voters polled tend to like the sales-tax increase more than the income-tax increase. Go figure.