Monday, March 02, 2009

Skeptical about the Governor's tax plan

It appears that Governor Jan Brewer, realizing the deep, deep hole that we've gotten into here in Arizona is asking for a special election to hike taxes.

Ignoring that the problem is as bad as it is largely because of many years of consecutive tax cuts (which she voted for, as a member of the legislature in the 1990s) and the effective disabling of the control mechanism for raising them in an emergency by the passage of the 'supermajority bill' for tax hikes (mostly by people who have since been term-limited out and now don't have to deal with the consequences of their foolishness,) there are a number of problems with her current proposal.

Obviously with a three billion dollar hole in the budget blasted by a combination of the present severe national recession and Arizona's overdependence on the sales tax which has dropped precipitously in the recession, something major needs to be done. If it isn't we are likely to see more teacher layoffs and larger class sizes, closures or restrictions on state services and universities closing campuses (which ironically will probably fit their decreased enrollment as a result of the doubling or near doubling of tuition within a few years.)

Brewer's proposal would do two things. The first would be a temporary sales tax hike. In other words, the most regressive type of tax in order to fix the budget hole. Even more ironically, they are still talking about a permanent repeal of the statewide business property tax. This tax has funded education for years but in 2006, when the economy was only at the point of developing a mild sniffle, the legislature and the then-Governor agreed to give the businesses a three year tax holiday. It is due to end this year. But the claim that the business owners are making that its return would be a tax increase is absurd. If they put an item on sale for two weeks and then two weeks later after the sale ends and the price returns to what it was before the sale they would laugh in the face of anyone who came in and accused them of raising their prices. But that is precisely what they are claiming about the fact that the tax cut they got is due to end on schedule. But it is downright insulting for them to push for this tax cut when we the consumers are being asked to raise our own taxes because the state doesn't have any money.

The second thing that Governor's proposal would do would be to allow the legislature to get their hands on dedicated taxes. Those are taxes which have been allocated by voter initiatives.

It is the second of those which disturbs me the most. As a voter I voted to tax myself to fund children's healthcare precisely because I didn't expect this legislature to fund it adequately themselves. I don't want them to take the money I chose to contribute to this and other dedicated taxes and use it to plug holes in the state budget so they can simultaneously give their friends another tax cut.

I'm willing to wait and see exactly what this proposal says but I'm certainly not ready to endorse this as a means to fix the state budget. Whether I do back it eventually or not will largely depend on what they do with the statewide property tax. If they make the tax cut for businesses permament, then it will probably be too much for me to swallow when they turn around and tell me they need to raid children's health care to pay for education.

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