AZ Budget Solution: Grow the Economy, Don’t Starve It (video)

Arizona Senate

Arizona Senate Chambers

Governor Doug Ducey and Republican leadership in the Legislature made headlines and sparked street protests this week when they tried to ram through a starvation budget that was negotiated in secret.

The wrong-headed budget starved universities with $104 million-dollar in cuts;  it stole even more money from K-12 education with a $98 million hit this year and another $157 million hit in the next year; just for fun, it cut an additional $8-15 from TUSD; it crippled job training with $30 million in cuts; it completely defunded community colleges in Pima, Pinal, and Maricopa Counties; it cut provider rates for people who provide medical care to Medicaid/AHCCCS patients by $127 million (which would result in the loss of $588 million of federal funds). And these are just the highlights.

This severe austerity budget will do nothing to grow the economy. It will starve the economy by taking more than a billion dollars out. This means more lay-offs, more bankruptcies, more business failures, more home foreclosures, more poverty, people on on public assistance, more homelessness, more crime, more incarceration, and more people and businesses leaving our state.

When Republicans talk about budgeting, they often give folksy example of a family sitting around the kitchen table to work out the budget and decide together how they are going to tighten their belts and make ends meet. Didn’t anyone at the kitchen table ever say, “Paw, I could get another job to bring in more money”?

Earlier this year, the media speculated how Ducey could possibly keep his campaign promise of balancing the budget without raising taxes and at the same time allow hundreds of millions of dollars in unaffordable planned corporate tax cuts (passed during the Brewer era) to go forward. (Besides all that, there is the court order that said the Legislature unlawfully cut Arizona school funding and should pay back $317 million in this budget and $1.6 billion in the future.)

Earlier this year, Ducey famously said, just because we don’t have enough money, doesn’t mean we need to raise revenue. Why not? Putting money into the economy grows it; taking money out, starves it. Arizona has options besides austerity. We can raise revenue and pay for the services we want: 1) legalize marijuana; 2) establish a public bank; 3) stop implementation of unaffordable tax cuts for out-of-state corporations; 4) invest in innovation.

1- Legalize Marijuana

In 2014, Arizona’s 55,000 medical marijuana cardholders bought 10 tons of pot, for a gross revenue of $110 million. The average MJ patient made 26 purchases and bought 166 grams (5.8 ounces*) during the year, according to the Arizona Department of Health Services. (*Very modest, since they are allowed to possess 2.5 ounces at a time.)

Arizona has 6.7 million people. It is estimated that 7% of American adults use marijuana monthly. Using that figure, there could be another 400,000+ Arizonans who are buying marijuana on the black market; in other words, seven times the number of MJ cardholders could be buying pot illegally. If 55,000 people spent $110 million on pot and paid $6 million is sales tax, legalization could increase sales by seven fold to $770 million and increase sales tax revenue to $42 million. (These calculations are based upon Arizona’s 5.6% sales tax rate; cities and counties add there sales taxes on top, so the revenue figure is actually higher.)

Besides the benefit from millions of dollars churning through our economy and the increased sales tax revenue, legalization would reduce policing and incarceration costs dramatically and save millions statewide. 

Are we not capitalists? This is a business opportunity! Why is our Nanny State government suppressing the marijuana industry and incarcerating users?

2- Establish a Public Bank

Public banks– unlike too-big-to-fail Wall Street banks– invest funds locally for the good of people– instead of gambling on the stock market for the benefit of shareholders. Arizona’s money is held by the Bank of America and invested on Wall Street for the benefit of Bank of America. YES! They are making money on our tax dollars– not us.

Forty percent of the world’s banks are public banks, but there is only one public bank in the US– the Bank of North Dakota— because our country is being held hostage by Wall Street. During the 2008-09 crash, the only state that didn’t collapse with Wall Street was North Dakota because they invested locally.

Arizonans for a New Economy, the local non-profit promoting establishment of public banks at the state and local levels in Arizona, is part of a nationwide movement to bring taxpayer dollars home to be invested for the public good.

Arizona has $360 million in it’s rainy day fund, which is held by Bank of America and invested in derivatives and other risky deals on Wall Street. Banks make money by lending money. During the crash, Wall Street banks got into trouble by lending as much as $30 for every $1 on deposit. When people wanted their money back, it wasn’t there.

Let’s say the State Bank of Arizona lent it’s $360 million at $10 for every $1 on deposit; that would result in $3.6 billion in investment in infrastructure, low-cost business and student loans, innovation, and more.

Arizonans are losing their jobs and their homes, thanks to years of budget cuts and austerity. Ducey’s budget is more of the same: starve the people and local investment with ill-conceived budget cuts, while giving  away an additional $883 million in corporate welfare to out-of-state businesses and allowing $12.6 billion in special interest tax loopholes.

This is government against the people.

Ducey’s cuts (listed above) plus the loss of federal matching funds plus the planned corporate tax cuts would remove more than $2 billion from the Arizona economy. A public bank could invest as much as $3.6 billion in Arizona businesses and families.

Which do you choose? Austerity or prosperity?

And there’s more!

Remember the projected pot sales of $770 million with legalization? Wall Street banks refuse to hold pot money. Since the State of Arizona controls marijuana, the State Bank of Arizona should hold the pot funds and invest it. There is an enormous amount of money that is being withheld from investment in our state– thanks to Nanny State laws like prohibition. Banking the pot revenue and investing the funds is not that outlandish; other states are considering combining public banking and legalization efforts.

3- Eliminate Planned Corporate Welfare

Stopping unaffordable corporate tax cuts is a no-brainer– even Arizona’s mainstream media outlets have called for this.

Let’s go back to the family budget kitchen table scenario. If the Joneses are in debt and can’t pay their bills, do you think they are going to continue making charitable donations? Of course not.

The Arizona Legislature and Governor Jan Brewer illegally cut millions of dollars from the public schools and gave it away to out-of -state corporations in tax cuts. In addition, they set up a “planned giving scheme” which will dole out another $883 million in cuts this year and on into the future. Even Brewer said on her way out the door that maybe the additional corporate tax cuts weren’t a good idea. Ya think?

So far, the Legislature has given away billions, and we’re worse off. Corporate welfare has destroyed our state. Trickledown economics doesn’t work.

When you’re in a hole, stop digging!

4- Invest in the Future

Research universities are a hotbed of innovation. The best jobs in Tucson started out as a university professor’s bright idea. Depriving the university system not only makes tuition increases inevitable, it eliminates capital that the universities need to attract the best and the brightest young doctors, scientists, and students.

Years of corporate welfare have hurt our state; those giveaways didn’t create the promised jobs. University-based inventors now must go to Wall Street to get money to develop their ideas. If they could get investment capital locally– like through a public bank– all of the money stays here and churns through our economy, creating jobs and spin-off businesses.

It’s time to stop thinking of unversities as an expense and start thinking about them as an investment.

It’s time to start investing in our future and stop giving money away to big corporations that are not headquartered in Arizona. Give the planned $883 million trickledown giveaway to young innovators– not to the 1%.

Take-home Lesson

Austerity is a lie. There’s plenty of money. It’s time to invest in our state– instead of starving it.

 

 

 

6 responses to “AZ Budget Solution: Grow the Economy, Don’t Starve It (video)

  1. I have indeed offered to volunteer. Since January. I have not received a single response so far. However after my email address was available I have been receiving a huge amount of political junk mail requesting donations-the messages in those mailings are not very creative and show a troubling path to another political drubbing in 2016. In my various activities I have also inquired from younger people if they were involved or not and I was disappointed to hear the level of disinterest and resignation. I know that there are those out there who are highly motivated. They were present at the Oracle demonstration last year https://www.flickr.com/photos/18171509@N00/14664269672/in/set-72157645714347195
    Unfortunately, as of this week they are part of a generation whose educational opportunities have been several cut back by a legislature where critical thinking skills appear to be at the level of a parking meter.
    and you are correct on the spending-but the key issue is low voter turnout-the massive amounts that were spent resulted in only a 36.24 percentage of voters being active, so my viewpoint is that lack of political activity and lack of motivation are major factors.

  2. My purpose in writing this is not to complain about the Republicans in power, but to show that their belt-tightening austerity measures are unnecessary. These cuts will bring unnecessary misery to hard-working Arizonans. There is revenue out there, but the Republicans are blinded by their ideology and held tightly in check by their party. They are minions of ALEC, the Goldwater Institute, and the Koch Brothers, who bought the election for Ducey and Brnovich.

    I am sick of government of the corporations, by the corporations, and for the corporations– against the people. That is what we have.

    One party can’t save us. The people need to wake up and demand representative government.

  3. Pamela,
    I fully agree with your article. We need change urgently.
    Democrats of Arizona helped create this mess by not electing a sufficient number of legislators to oppose the oligarchs that rule the Arizona Government. We failed to present a viable candidate for governor. We allowed other marginal republican candidates to win by not overwhelming them with better democratic candidates. We totally failed to motivate the Hispanic community to vote. Even Ron Barber was defeated by a candidate who had no real platform and who relied on bullying and screaming to get out her marginal vote.
    After the electoral disaster there did not appear to be single meeting of democrats in charge to assess the mess and to make changes for the future. Now we are stuck with a sellout for a governor and legislators with questionable reasoning skills who hold out envelopes behind their backs that are being filled by rich businessmen including local car dealers. If democrats are serious about the current situation, I would like to see a serious solution path, better campaigning and better candidates so we can clear the junk out of our Arizona Legislature.
    The best solution right now is for Arizona Democrats to clean out the dead wood in their own organization and to make space for New Democrats with better organizational skills and which can attract younger people for a more dynamic party. When will this start?

    • I think Cheryl Cage in Pima County is a good start, but I think everything you said John, is right on. We need a 30 district strategy. We need to run a decent Dem in every single district. We also need to get rid of Carlyle Begay who was the lone dem to vote for and then pass the budget.

      • Actually, let’s put this into perspective. Pima County has been recognized nationally for reaching more voters in person and by phone than any other county in the nation. That’s organization. Unfortunately, some county organizations have completely collapsed. To have good organization, you need volunteers and money. Your scenario leaves out the extreme monetary disadvantage the Dems have. DuVal raised more money than any other Dem running for gov- $4 mil. Ducey put $2-3 mil of his own money in and received a total of $12 mil. The affect of negative advertising can’t be ignored.

        The only 2 Dem incumbents who lost were Clinco and Barber. Clinco was recently appointed, and Barber self-destructed by voting R too many times, not sufficiently separating himself from his opponent, and pissing off his base. Since Dems beat Orr, Dems lost no seats in the Legislature– a rare feat when you look at defeats across the nation.

        So- rather than Dem-bashing, volunteer and donate if you want to get things done.