The Skinny

AS OUR ECONOMIC MELTDOWN CONTINUES …

State Treasurer Dean Martin, who may or may not be
challenging troubled Gov. Jan Brewer in next year’s Republican
primary, shouted out a warning last week: The state has blown through
its $700 million dollar credit line and had to dig into some internal
accounts for another $73 million.

By the way, Martin has already tapped $1.6 billion in other state
funds, so we’re running out of options as the state continues spending
more than it takes in.

Martin was blunt in his assessment: “Government spending in Arizona
is out of control.”

Indeed, these numbers are plainly nuts: It only took a week for the
state to exhaust that $700 million credit line.

More bad news: We still have not hit the bottom. The latest sorry
numbers showed a drop of nearly 24 percent in the state’s overall tax
collections compared to October 2008. That’s 15 straight months of
double-digit declines in revenues compared to the previous year.

The total take from sales, income and corporate income taxes in
October was $142 million below the forecast. For the fiscal year that
began in July, we’re $376 million shy of expectations, and even though
lawmakers trimmed $400 million in state spending during last month’s
special session, the current year’s shortfall could still be rising
back toward $2 billion.

The biggest drop continues to be in sales taxes by homebuilders,
with contracting taxes slipping by 40 percent compared to last year.
Retail sales are down by roughly 12 percent, but people are still going
out to eat: Restaurant and bar taxes have dropped by only 5
percent.

Income taxes are down by roughly 19 percent compared to last year,
which suggests that our job picture is dismal. Still, there was a bit
of good news in the report, as the private sector added jobs for the
first time since February 2008.

People are driving less and registering fewer cars, so gas and car
taxes are down about 9 percent compared to last year, which is pinching
the budget of the Arizona Department of Transportation.

The state is even managing to lose in the gambling business.
Although more people are buying lottery tickets, the state’s
beneficiaries are still seeing diminished returns—because the
state is giving away so much in prize money.

The bottom line: Our state is nearing a financial breaking
point.

Yet prospects for a special session of the Legislature next week
look dim, at least as of press time. Negotiations are all hush-hush,
but in broad strokes, we hear Brewer wants to make a few more cuts,
refer a sales-tax hike to the ballot in March and ask voters to break
open the piggy bank to get at some tobacco taxes that have been stashed
away to help fund early-childhood education. That’s running into
opposition in the Legislature, which wants the chance to reduce
voter-mandated spending on education and health, and make more spending
cuts.

The clock is ticking if the lawmakers want to get the big
one—a temporary one-cent sales-tax question—on a March
ballot so they can start bringing in revenue. The next chance after
that is the May primary, unless they want to set some special date.

You can be sure of one thing: Nobody wants to do a sales-tax
referral during the August primary or the November general, because
then it will overshadow the legislative races, poisoning the effort
completely.

Read the Joint Legislative Budget Committee report here.

TROUBLE BREWING FOR BREWER

Speaking of poisoning the sales-tax effort: Paradise Valley Mayor
Vernon Parker, who wants to take out Gov. Jan Brewer in a
GOP primary next year, filed the paperwork for a political committee to
oppose a sales-tax hike.

As Capitol Media Services’ Howie Fischer notes, that lets
Parker gather private funds for a campaign that raises his name ID at
the same time as he takes public Clean Elections dollars to support his
potential gubernatorial campaign.

Parker’s move here strikes us as little more than a political stunt,
since Brewer hasn’t even been able to persuade lawmakers to put the
question of a temporary sales-tax hike on the ballot. But it does
nicely illustrate the political dynamics that will emerge if voters are
asked to approve a sales-tax increase at the ballot in November: Every
candidate will have to be for it or against it, and it will cast a
heavy shadow over many of the races.

Meanwhile, Tucson attorney John Munger, who also wants to
take out Brewer in the GOP primary, blasted her because she didn’t
speak out against the payday-loan sharks who have now hired some of her
best friends to come up with a plan to keep the industry alive in
Arizona.

Munger said the voters had spoken when they overwhelmingly rejected
an initiative that would have kept the industry alive last year.

“These mostly out-of-state companies prey on our most vulnerable
citizens with tempting offers of fast cash barbed with crippling
triple-digit interest rates,” Munger thundered in a press release.
“Apparently, these legalized loan sharks didn’t get the message. This
is not a partisan issue. It’s a moral issue. I call on the governor to
show real leadership and reject this underhanded attempt to subvert the
will of the people from last election and to stand up against
government-condoned loan-sharking in Arizona.”

CASH FLOW

A final bit of bookkeeping from last month’s Tucson City Council
election: The campaign-finance reports from a few campaign committees
have been filed.

The Public Safety First Initiative, which would have forced the city
to hire more cops and firefighters over the next five years, takes the
award for Biggest Waste of Money.

Supporters—primarily the Tucson Association of Realtors, with
help from Jim Click, the Southern Arizona Home Builders Association and
the police and fire unions—spent a whopping $380,551 on the
ballot effort, which was rejected by 70 percent of voters on Nov.
3.

Opponents of the initiative spent a lot less. Don’t Handcuff Tucson,
a political committee that got funding from the Pima County Democratic
Party, the Tucson Chamber of Commerce and the Arizona Multihousing
Association, spent $72,632.

The defeat of the Public Safety First Initiative is even more
impressive when you consider that a September poll by the Pima County
Democratic Party showed it was supported by nearly three out of every
five voters.

Meanwhile, the Tucson Vision Committee, the independent campaign
that targeted Democrats with attack ads on TV and radio, spent a total
of $71,873. Major contributors to the campaign included Republican
National Committeeman Bruce Ash, mini-dorm developer Michael
Goodman and the Realtors of Arizona Political Action Committee,
which kicked in just less than $20,000 in the final weeks of the
campaign.

COMEBACK KIDS?

Is Tom Prezelski looking to make a political comeback?
Prezelski, a Democrat who lost his state House seat last year when he
was defeated in a primary by Matt Heinz and Daniel
Patterson in southside District 29, is exploring another run for
the House in 2010.

Prezelski’s brother, local blogger Ted Prezelski, is running
for a House seat in midtown District 28. Ted Prezelski lost a bid for
that House seat in 2006.

Find early and late-breaking Skinny at The Range.

This article appears in Dec 10-16, 2009.