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Gov. Jan Brewer calls for a billion-dollar tax hike, but details remain sketchy

Gov. Jan Brewer drew the proverbial line in the sand with her address to lawmakers last week.

"I will not sign a budget that relies primarily on debt and federal stimulus dollars," she said. "And I will not sign a budget that relies primarily on unrealistic spending cuts."

With that, Brewer broke with conservative dogma--including her own 27 years of crusading against taxes--and called for a "temporary tax increase" of a billion dollars a year for three years, to accompany a billion dollars in spending cuts, and a billion dollars in federal stimulus money to bridge Arizona's estimated $3 billion budget shortfall.

Brewer has now acknowledged a political reality: State government cannot cut its way out of this problem without crippling the state's education, welfare and health programs--at a time when these programs are needed more than ever.

"We cannot place all of the burden on our children and their schools," Brewer said. "We cannot place all of the burden on the parents that need day care so they can go to work and stay off welfare. We cannot leave the sick on the streets alone to fend for themselves, only to overload our hospitals and our jails."

Overall, Brewer did a decent job of laying out the problem facing the state: A crashing economy has collided with a series of bad decisions on the part of elected officials and voters, bringing the state to the edge of financial catastrophe.

Unfortunately, Brewer didn't do such a good job of providing a solution: She has provided no details about what kind of temporary tax hike she'd like to see.

Brewer did correctly identify the fundamental problem of the state's outdated tax code.

"We have an antiquated, backward-looking tax structure that penalizes success, hamstrings entrepreneurs in creating new jobs or re-locating to our state, and collects revenues in a fashion more suited to the 1960s and 1970s," Brewer said.

But, again, she gave no idea of how'd she would reform the tax code, other than to announce that "we need a tax structure that promotes job growth, job sustainability, investment in Arizona and revenue stability."

Who can argue with that?

Brewer's lack of details may be strategic. After all, if she hasn't laid out a specific plan, her critics can't start picking it apart.

Even so, the critics were grumbling on both sides of the aisle. Most Republicans are still rejecting any notion of a tax increase, despite Brewer's estimate that without structural changes, the state is facing a $13 billion shortfall in revenues between now and 2014.

Republican Sen. Ron Gould of Lake Havasu walked out on the speech when the governor called for the tax hike; before the speech even began, he had issued a pre-emptive statement opposing any tax increase.

Other Republicans are taking a second look at some of the smoke-and-mirror gimmicks they rejected earlier this year (such as borrowing against future lottery proceeds or tobacco-company payments), while Senate President Bob Burns is signaling that he doesn't even want to ask voters to approve a tax increase at the polls.

Given the opposition on the right, it's likely that a special election would be the only way to enact a tax increase, because the state's Constitution requires a two-thirds majority in both chambers to hike any tax or fee. Since voters approved that provision in 1992, no taxes have been raised by the Legislature.

But if Republicans won't help Brewer advance a tax increase to the ballot, she'll have to turn to Democrats.

Rep. Kyrsten Sinema of Phoenix, the House assistant Democratic leader, said last week that the Democrats are open to dealing with Brewer, but the governor hadn't yet approached them for serious talks.

Until that happens, Sinema says, Democrats are focused on pushing the Legislature to accept as much stimulus money as possible. The state now has less than three weeks to take the necessary steps to receive federal funds for a variety of programs.

Rep. Steve Farley of Tucson, the House Democratic policy leader, said that given how dismissive Republicans were of the ideas they brought forward when lawmakers made cuts in January to balance the current budget, Democrats didn't see much value in taking the lead now.

"We're not going to roll out ideas just to have potshots taken at us, and then have the ideas stolen later," Farley says. "Why would we see any value in being out in front on this one? We see a value in fixing the problem, and we'll be happy to get out in front of it as soon as the governor says she's going to work with us. We haven't seen that yet."

But Democrats don't have enough votes to put the question to voters without help from Republicans--and it remains to be seen if enough members of the GOP caucus will be willing to cross party lines and put a tax increase on the ballot.

Only one thing appears certain: The clock is ticking--and no easy solution appears in sight.

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