Yesterday Governor Napolitano vetoed a bill passed by the legislature which would have made permanent a temporary property tax cut that was passed in 2006 and is due to expire in 2009.
As the Governor noted, economic conditions have deteriorated in Arizona sharply since 2006. Arizona's economy is much more tied to the housing industry than most, so the mortgage meltdown has had severe repercussions here. We face a combined $3 billion state budget deficit over the next two years, so adding another quarter billion to that next year by extending the property tax cut would be, as she noted, "the height of fiscal irresponsibility." Over-reliance on the sales tax has compounded the problem-- in a recession people spend less so sales tax revenues are down (whereas, for example, a property tax tends to be a much more reliable and stable source of revenue.)
Advocates for the Republicans in the legislature and some in the business community (who were the beneficiaries of the tax cut) have howled that she is 'raising taxes.'
That is a competely stupid argument.
If a supermarket sells a bottle of pop for $1.39, but runs a managers special in which they announce, "THIS WEEK ONLY-- $.99" for the bottle of pop, then they are doing their customers a favor for a week. If the sale ends on schedule and the price returns to $1.39 (the normal price of the pop) it would be ridiculous to storm up to the store manager and claim that by ending the sale on the day they said they would, they are raising prices. Yet that is what advocates of extending the tax cut are doing. Instead of being grateful for the three years they don't have to pay their property tax, they are instead complaining that when it expires on schedule, they will see a 'tax increase.' Maybe they would be happier if it hadn't ever been passed at all, I suppose.
This argument, of equating the scheduled end of a temporary reduction in taxes with a 'tax increase' is breathtaking in its stupidity. But we will hear exactly the same argument nationally over the next couple of years as the Bush tax cuts (you know, the ones that were supposed to give us such a great economic success story this decade) expire.