Cross-posted from RestoreReason.com.
I was at a SOS AZ presentation on public education funding last night and after a slide about corporate tax credits, one young woman advocated for holding the corporations responsible for not supporting our schools. Although I would normally be one of the first to vilify corporate America for their greed at the expense of the rest of us, I think her ire was a little misplaced. Arizona corporations after all, are just taking advantage of the laws incentivizing them to act a certain way. These aren’t loopholes that corporations are paying high-powered lawyers and accountants to find for them, but incentives the Legislature has directly handed to them to. It isn’t after all, like the tax credits allow the corporations to pocket more profit, they are still paying out the same amount of money (whether in taxes or credits), they just get to choose where their taxes go.
THEREIN lies the rub. THEY get to choose where their tax dollars go…not us, the people. That’s the problem with all these tax credits and exemptions, 331 is the number I heard last night, that the Arizona Legislature has granted. You see, ideally, tax credits should be granted to incentivize behavior that voters want and that produces good for all of us. We’ve all heard the saying though, that “power corrupts and absolute power corrupts absolutely.” When all the power in a government is consolidated on one side, the tendency is not to look at the common good, but the good of “your” people. And, when it is apparent to lawmakers that they can act with impunity because they will continue to get reelected despite their failure to provide for all the people in their care, the tendency is for them to do whatever they want.
Yes, corporations also have a responsibility to care about the common good, but I really don’t blame them for taking advantage of legal incentives for directing their tax dollars where the Legislature wants. The rest of us suffer though, because these incentives reduce the size of our general fund “pie”. We also suffer because the diverted funding, essentially our tax dollars, then has no accountability nor transparency associated with it. We don’t know if it is being used for the purpose intended and we certainly don’t know the return on our investment.
This is a huge problem in Arizona with at least 75% of corporations paying the minimum $50 in state taxes. Again, it isn’t like they aren’t giving up the money, but it isn’t coming into the general fund in the form of tax dollars that we can then hold the Legislature accountable for. In fact, on a budget of less than $10 billion, Arizona gives away almost $13 billion in corporate sales tax relief alone. This is just one of the reasons the Arizona Town Hall on PreK–12 Funding last year, wrote that it is the “size of the pie” that is the problem, not the relative percentage given to our public schools. This was clearly illustrated by the SOS AZ briefing when a slide comparing state populations versus annual budget was shown. AZ has about 7 million people, with a budget under $10 billion versus Wyoming with 585,00 people and a budget of $8.8 billion and Maine with a population of 1.33 million people and a budget of $7.6 billion. To be sure, there is a lot to unpack here, but it is interesting none the less.
None of this is by accident, the AZ Legislature is just following the “drown it in the bathtub” playbook to reduce the size of government. No sense, (I’m guessing they think), in having government do something the private sector could do better and cheaper AND…make a profit on.
Only problem is, that often isn’t the case. Take the privatization of Arizona prisons for example. Arizona’s corrections annual budget is over $1 billion—at 11% of the General Fund, the third largest appropriation of any state agency. When the decision was made to privatize them in 2005, bids by the prison companies no doubt touted lower operating costs than the state. Since then though, spending on prisons has grown by at least 45%. Of course, we aren’t entirely sure of the exact amount because in 2012, the state Legislature repealed the statute requiring cost and quality comparison reviews between the state’s public and private prisons. Before that repeal, the Arizona Department of Correction found in a 2010 review, that medium-security state prison beds cost $48.16 while medium-security private prison beds cost $55.30. In fact, between 2008 and 2010, Arizona overpaid for its private prisons by about $10 million. Now, the lack of transparency and accountability for our tax dollars is most assuredly guaranteeing skyrocketing costs, lackluster results, and pay-for-play abuses between lawmakers and the private prison corporations.
The same thing is happening with our public schools. Tax credits and Empowerment Scholarship Accounts (ESAs), divert or withdraw funding from our General Fund and the public schools it resources, and give it to private entities with no responsibility for transparency and accountability. And, because there are huge out-of-state monied interests that are using Arizona as ground zero for war against public education, our lawmakers are being bought off (via campaign contributions or influence peddling) to do their bidding. Numerous charter school operator abuses that have recently come to light are, no doubt, just the tip of the iceberg.
The Washington Post tag line, “Democracy Dies in Darkness” says it all. If our democratic republic is to stay strong and vibrant, we must have transparency and accountability so that our government, at all levels, can remain one of the people, by the people, and for the people. The privatization of programs and services that provide for the common good (the military, public schools, prisons, police, fire, etc), is simply a way to take “the people” out of the equation…to ensure we no longer have a say in how we are governed. It is absolutely critical for these “common good” programs and services to be paid for by all of us so that we retain ownership, the authority and yes, the responsibility, to ensure they produce OUR desired return on investment. It is really this simple, to have a government that works for us, we must work for it.