Sales tax question finally going to state’s voters

By Howard Fischer
Capitol Media Services
Published/Last Modified on Wednesday, February 10, 2010 10:38 AM MST


PHOENIX  State lawmakers gave final approval Thursday to asking voters to help balance the state budget for the next three years with a temporary sales tax hike.


The 3425 vote in the House sends the issue to the May 18 ballot as it already was approved by the Senate. It does not require the signature of Gov. Jan Brewer.

Objections came from both side of the political aisle.

Rep. John Kavanagh, RFountain Hills, called it a “recipe for disaster’’ to hike taxes during a recession.

“This bill will take money from families and consumers and businesses and create more job losses,’’ he said. The result, Kavanagh said, will put more people into public assistance programs “causing a spiral of more economic harm.’’

And Rep. Daniel Patterson, DTucson, said sales taxes are the worst way to raise money, saying the burden falls largely on the middle class.

The ultimate decision will be up to voters.

Brewer had hoped to get lawmakers to enact the tax hike themselves so it would take effect March 1 to help fix the $1.4 billion deficit this year. But the governor said she was pleased legislators were at least willing to send the issue to the ballot.

“At long last, the voters get a voice,’’ Brewer said in a prepared statement. The governor said the revenues — more than $950 million the first year alone — will reduce the need to cut spending beyond what already has been enacted.

But Rep. Nancy Young Wright, DTucson, who refused to support the tax referral, said even if voters approve the tax hike there is no assurance Brewer will not propose  and the Republicancontrolled Legislature will not enact  further cuts to education, health care and other priority services.

Supporters of the referral had their own reasons.

Rep. Tom Chabin, D-Flagstaff, said there is no better option with Arizona facing a $3.4 billion deficit next year. He said even if Arizona laid off every worker the state’s books still would be in the red.

And Rep. Michele Reagan, R-Scottsdale, said the voters deserve the last word. But she said there’s a risk to that.

“If this fails on the ballot — and I personally, my own opinion, believe it will fail on the ballot — then they’re telling us they want to see smaller government,’’ she said.

While approving the tax hike referral, House leaders postponed until Monday action the provisions that actually are more important on a short-term basis.

The tax hike, even if approved, won’t generate cash before this budget year ends, doing nothing to solve the $1.4 billion deficit.

One element of the Senate-approved plan awaiting House action would borrow $450 million, paying it off over the next 20 years with proceeds from the Arizona Lottery.

Another would sell $300 million of state buildings to investors, with the state leasing them back for 20 years, at which time it would again have title. That is on top of $735 million worth of buildings sold in a similar deal last month.

And the state would defer $350 million owed to public schools this fiscal year into next budget year, with a $100 million deferral of funds for public universities.

Rep. Andy Biggs, RGilbert, noted the state constitution limits total debt to just $350,000.

“I think what we’re doing here today is we are further reducing the papers upon which our constitutional rights and laws are written upon ... to tatters and rags and shreds,’’ he said

Legislative leaders who crafted the plan contend there is no constitutional violation. The $450 million loan is secured solely by lottery proceeds. And the state can walk away from the buildings they are leasing at any time, though they would lose the right to reclaim them.

About the only provision to which all lawmakers appear to agree is changing the income tax laws that affect parttime Arizona residents. The maneuver, which would generate about $22 million a year, limits the ability of these partyear residents to take the standard deduction offered to fulltime Arizonans.

But those funds won’t flow into the treasury until tax returns for this year are filed next year.

 

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