AZ House: Left & Right Converge on Funding Issues (Sometimes) (video)

HB2492

A bipartisan vote stopped HB2492, a corporate welfare bill for Arizona’s largest, most successful employers.

Everyone keeps telling me “things are different this year” in the Arizona House of Representatives.

From my perspective, there are many possible reasons why things are different, but the three most obvious are: 1) Speaker of the House J.D. Mesnard has chosen to run the House efficiently and fairly; 2) 23 House members (including 13 Democrats and 10 Republicans) were elected for the first time in 2016; and 3) the Democratic Caucus is highly diverse, with half of the members being women, more than half Latino, and several Progressive.

The result has been some interesting votes on funding issues. On several spending votes, fiscally conservatives (who don’t like to spend money) and fiscally conservative Progressives (who don’t want to spend money on non-essentials until the schools are made whole) are voting together for different reasons. (This phenomenon is being reported at the Congressional level also— with both far-right Republicans and Progressive Democrats voicing extreme dislike for TrumpCare.)

As the Arizona House moves from hearing bills in committee and voting on the floor to debating and voting on the budget, it will be interesting to watch the Conservative/Progressive budget hawks.  A hint of things to come can be found in a recent article from the Capitol Times: Ducey determined to pass university bond plan lawmakers dislike.

As outlined in his address to the Arizona Legislature on Inauguration Day, Governor Doug Ducey wants to increase funding for building construction and repairs at the three universities by giving them back the tax they paid on the purchases they made. (The proposal is to refund their Transaction Privilege Tax or TPT– essentially sales tax.)

The universities would split the roughly $30 million per year proportionally and use those funds to pay interest on roughly $1 billion in bonds.

There are multiple reasons I don’t like this idea…

  • This is an open-ended tax giveaway deal. If we allow the universities to get back the taxes they paid, that ~$30 million dollar hit to the general fund will be felt somewhere else in the budget. Who will lose? Also, there is no end date on this deal and no sunset review.
  • These funds will be used to take on more debt. Why give back taxes and go into debt, when we could just fund the universities adequately? We could appropriate the funds to the universities to pay for at least the building repairs and perhaps a percentage of a designated number of research facilities.
  • This is a slippery slope. If we refund the universities TPT funds, who’s next? The House Conservative/Progressive voting block stopped HB2492, which would have offered multiple tax breaks to Arizona’s major employers (2000 or more employees), including refunding their TPT to build new buildings. (See the pattern?)
  • There are better ways to fund research. The big assumption with this proposal is that building buildings is the way to fund research. Yes, wet labs cost a lot of money. Yes, the scientists need places to work. BUT this proposal is lopsided in that it provides funds only for construction and repairs. There is no money for seed grants to scientists, no tuition support, and no salary support for grad students and lab personnel. You need more than a building to foster research. Seed money for research would help scientists gather pilot data which can be used to obtain larger grants. University-based research could be the jewel in our economic development crown. The universities have a proven track record of return on investment from awarding seed grants to scientists. (The Legislature used to do this. It’s time to bring back the practice.)
  • What is the impact on tuition in the future? I don’t want to do anything that could raise university tuition in the future. I see giving away tax money (with no fiscal cap or future end point) and taking on more debt as risky.
  • What is the impact on neighborhoods? University of Arizona building projects are a HOT topic these days in Tucson. The proposed six-story, 1000-bed Honors College complex will occupy an entire city block north of Speedway, and neighbors are not happy. Tucsonans, who value historic architecture, are fighting to protect downtown neighborhoods.

When I read the Capitol Times article referenced, I realized that there are many Republicans who share at least some of my views on bonding, debt, and appropriations.

“There is is something for everyone not to like., House Speaker J.D. Mesnard is quoted as saying. According to the article,  “Many conservative Republicans don’t like the bonding portion of the bill because it will allow the universities to take on more debt. Other lawmakers don’t like the policy of allowing the universities to recapture sales tax. And Democrats don’t like the fact that some of the money would come from cities’ state-shared revenues.”

From the Capitol Times

House Speaker J.D. Mesnard, R-Chandler, said there is little to no support for increasing university funding with the mechanism proposed by the governor. Mesnard acknowledged that Ducey’s university plan is one of the major sticking points in the budget process, and the proposal in its current form “probably has three or four supporters in the Legislature.”

“I applaud the idea of getting resources to the universities. I do think there’s strong support for that. And I appreciate outside-the-box thinking as a general rule. However, at this point, this proposal is a real challenge,” Mesnard said.

Tensions are already simmering at the Capitol, where the Governor’s Office has signaled it would like to pass a budget, while the House is guided by Mesnard’s vow to have a deliberative, bottom-up budget process that has, for now, delayed budget negotiations between leadership in the House, Senate and Ninth Floor…

Yarbrough said the concerns of lawmakers are two-fold. First, the idea that one special interest — in this case, state universities — would get to keep the sales taxes they would otherwise pay the state, cities and towns would open the door for a “multiplicity of other interests that would like special treatment,” Yarbrough said.

Second, lawmakers are wary about putting a major expenditure on auto pilot.

This convergence of fiscal opinion — even at a basic level — is great news in my opinion. Keeping my fingers crossed for potential increased university funding through appropriation and not increased debt.

Cross-posted from PowersForThePeople.net.

7 Responses to AZ House: Left & Right Converge on Funding Issues (Sometimes) (video)

  1. Senator John Kavanagh

    I found your statement that there are only “several” progressives in the Democrat caucus to be surprising. How do you define progressive and what are the other 9 or 10 Dems?

  2. One other thing, since I was looking at this particular line:

    “There are better ways to fund research. The big assumption with this proposal is that building buildings is the way to fund research. Yes, wet labs cost a lot of money. Yes, the scientists need places to work. BUT this proposal is lopsided in that it provides funds only for construction and repairs. There is no money for seed grants to scientists, no tuition support, and no salary support for grad students and lab personnel. You need more than a building to foster research.”

    Same big issue we have with TEP and APS gold-plating and overinvesting in capital to boost their profits. It’s formally called the Averch-Johnson Effect, and is a distortion (read: inefficiency) with regard to how these entities are funded and where their incentives lie. Your intuition is exactly correct; Universities will build nice labs and fancy buildings to get their rebates, but skimp on salaries and other critical components of research & teaching.

  3. I’m glad to see that progressives and conservatives can find common ground, if for different reasons, on curtailing the power of the corporate state.

    In fact, I plan to go down to County Administration tomorrow to rail about wasteful corporate giveaways that Pima County keeps giving to Raytheon, Worldview, and other companies, while not getting good returns on our (as in we the taxpayers) money.

    I can think of a lot of people who need $50,000,000 more than Raytheon’s shareholders. Like our teachers. And single parents working three jobs to make ends meet because there’s no other way to pay for childcare, healthcare, and put food on the table.

  4. arpaio and purcell were voted out. changing demographics has something to do with it. that more then half of house democrats are latino. who does that scare more republicans or rich old white democrats who want to run for state wide off for their ego trips?

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