The financial mismanagement of the state by our Tea-Publican controlled legislature

arizona_legislature_11274934985There are two good opinions in the Arizona Republic about our Tea-Publican controlled legislature’s financial mismanagement of the state, but only one opinion tangentially mentions the underlying cause: Proposition 108 (1992), the “Two-Thirds for Taxes” Amendment, Arizona Constitution Article 9, Section 22.

As I have posted previously, If you want tax reform, repeal of Prop. 108 (1992) is a necessary prerequisite:

I consider Prop. 108 the GOP’s “weapon of mass destruction.” Here is why: it only takes a simple majority vote of the legislature to approve cuts to tax rates, or to enact tax exemptions and tax credits (tax expenditures). But these tax revenue reducers become permanent in practical reality because Prop. 108 requires a two-thirds super-majority vote in both chambers of the legislature to increase tax rates, or to reduce or eliminate any tax exemption or tax credit.

Since Prop. 108 was enacted by voters in 1992, the Arizona legislature has not increased tax rates, and has not closed “tax loopholes” as all the pundits decry that we desperately need to do. A tyranny of a minority of anti-tax zealots in the Arizona legislature are empowered to prevent any such tax reforms: 11 members in the Senate, or 21 members in the House.

This is how the anti-government, anti-public education, anti-tax GOP game is played: in each legislature since Prop. 108 was enacted, the legislature has enacted tax rate cuts and/or special interest tax exemptions and tax credits. This has had the intended effect of reducing tax revenues, creating a structural revenue deficit which results in a budget deficit. Because raising tax revenues is always off the table in the ideological GOP, the legislature takes out its meat ax and cuts the budget to essential state services like public education, health care and infrastructure (primarily roads).

The Arizona GOP can manufacture a perpetual budget crisis in Arizona by a simple majority vote for yet another one of their faith based supply-side “trickle down” tax cuts that have not magically produced the unicorns and rainbows they promised us. And because a tyranny of a minority of anti-tax zealots can prevent any reversal of these tax policies, Prop. 108 thus becomes a “weapon of mass destruction” of Arizona’s government, and of sound public policy.

Laurie Roberts writes, Where is Ducey’s promised second step for schools?:

In 31 days, we should know whether Arizona’s leaders are listening to the people for whom they work.

Whether Gov. Doug Ducey will follow through on his promise to voters and to the children we’ve been stiffing for years.

Nearly three quarters of Arizonans believe the state is spending “too little” on K-12 public education, according to an Arizona Republic/Morrison/Cronkite News poll. Republicans, Democrats and independents all panned the state’s financial commitment to public schools.

And that was in August, three months after passage of Proposition 123.

Ducey: Wait, that’s just the first step

You remember Prop. 123, Ducey’s plan to siphon money from the state Land Trust in order to pay the schools $3.5 billion over the next 10 years – or about 70 percent of what a judge has ruled schools are already owed, given a voter mandate that the Legislature fund inflation.

But Prop. 123 did nothing to reverse deep cuts to public education made during the recession.

During the campaign, Ducey promised that Prop. 123 was just the “first step” in better funding the schools.

“There’s many ideas we have,” Ducey said, in April. “But we know none of them come without the success of Prop. 123. Give us this next month-plus to have success on Prop. 123 and then we’ll be talking about that.”

After Prop. 123 passed, Ducey again hinted at good things to come.

“With the passage of Proposition 123, Arizona has taken a historic first step to provide schools with the necessary resources to continue providing students with a quality education,” according to a statement issued by the Governor’s Office.

Seven months later, Step 2 is … ?

Seven months later, we’re still waiting for that second step.

It’s difficult to see the Legislature as a champion of public education. Arizona schools endured some of the deepest cuts to K-12 education in the nation and ranks 48th in overall per-student spending, according to the U.S. Census Bureau. Now add in the fact that the new Senate president is Steve Yarbrough, a guy who has championed (and profited from) diverting public funds to private schools via tuition tax credits.

It’s difficult, too, to see Ducey as a supporter, given that his priority is to cut taxes every year.

And never, apparently, is enough enough.

In the last 20 years, the Legislature has slashed taxes time and again, shrinking the annual state budget by an estimated $4 billion.

The state is on the hook to lose another $796 million over the next three years, according to legislative budget analysts. Next year alone, $428 million in corporate tax revenue will vanish, thanks largely to 2011 tax cuts still being phased in.

Something to remember, when our leaders say they’d really love to do something for the schools but just can’t find the money. (Seems to me it’d be easy enough to postpone those cuts until the state’s revenue picture improves.) [And you’d be wrong.]

I never thought I’d say this, but state Superintendent Diane Douglas gets it. Last week, she called for $680 million in new funding to pay for teacher raises, school repairs and new buses.

“I am posing this question,” she wrote in her AZ Kids Can’t Wait plan. “As a state, do we want the best education system in the United States or the cheapest system we can get by with?”

In just 31 days, the Legislature convenes and Ducey – curiously silent since the passage of Prop. 123 – will have to answer that question.

Kevin Olson and Sheila Breen from the 109th Arizona Town Hall write, Viewpoints: How low taxes and bad investments hurt Arizona’s future:

A group of diverse Arizonans concluded that Arizona’s government financing system does not follow the best practices for government finance systems, fails to adequately invest in basic needs and, instead, creates larger than needed costs for incarceration and other social services that could be avoided with wiser investments that take a longer view.

Our conclusions and recommendations took time and effort. In preparation for the 109th Arizona Town Hall on “Financing Arizona’s Future,” participants reviewed a comprehensive report about our state’s revenue and spending.

At the Town Hall, we spent three days hearing from national experts and discussing and deliberating the issues. The background report provided a wealth of insight about general fund revenue and spending that exceeds $9 billion each year, including these examples:

  • Almost 90 percent of revenue comes from individual and corporate income taxes (46 percent) and sales taxes (44 percent);
  • Over 90 percent of spending is allocated to only five major areas: K-12 education (45.5 percent), AHCCCS and other health care (19.5 percent), prisons (11 percent), universities (7.5 percent), and economic security and child safety (9.5 percent).

The problem: We haven’t invested wisely

For more than 20 years we have consistently reduced revenues and spending as a percentage of our state’s economy. In addition, we have become more dependent on highly cyclical income and sales taxes, producing surpluses in years of high growth, but large deficits when we are hit by recession.

Town Hall participants concurred that we have not been investing properly and that the bias in favor of tax decreases has gone too far, to the point of harming our economic future. We must invest in educating Arizona’s children so that they become productive citizens and we can meet the workforce needs of high-wage employers.

We also need to provide the infrastructure necessary to compete in national and international markets. And we must provide preventative services for Arizonans that will help reduce high incarceration costs.

The group concluded that Arizona’s finances should be based on a set of comprehensive guiding principles that recognize both our status as a low-tax state and our need to invest in areas that will impact our future. These principles for our tax system should include transparency, openness, fairness, simplicity, stability, accountability and predictability (all areas where we currently fall short).

We need a strategic plan so that we can eliminate structural deficits and help citizens understand where their tax dollars are invested. We must move away from a system driven primarily by short-term [political] objectives and special interests.

Where we need to invest (and reform)

The Town Hall’s major themes focused on the need to invest thoughtfully to ensure a robust future. These include:

Education. Spending cuts have hurt our ability to compete. To compete in a global economy, we should seek to be a leader in providing high-quality education at all levels. Well-directed investment will pay off when companies want to relocate to Arizona because of our well-educated workforce. We must restore a viable level of funding to achieve specific measurable outcomes for education and consider long-term solutions for financing education, including renewing and increasing the funding in Proposition 301.

Mental health care. Our prisons and jails are filled with people who would be better served with mental health care and it would save us precious tax dollars. We need to better meet the mental-health care needs of Arizonans and stop turning our prisons and jails into de facto mental-health care providers at a much higher cost.

Infrastructure and natural resources. Infrastructure and natural resources are critical to our future. Careful stewardship will allow us to improve and maintain our transportation and utility systems, satisfy our water resource needs, create healthy forests, protect wildlife, and promote tourism and recreation. We should consider a broad range of sources to finance the needed investments, including the gas tax (which should be increased and then indexed); public-private partnerships; toll roads; increased vehicle-registration fees; taxes on vehicle services; a mileage tax (which may become more important as electric cars replace gas powered vehicles); community facilities districts; and tax increment financing.

Public safety. Arizona’s allocation of funds for criminal justice is adequate overall — indeed, our failure to invest in education and mental-health care may well have led to more prison spending than would otherwise have been necessary. Our problem is that the funds are not properly allocated. We would be better served by funding programs that provide intervention before incarceration. Town Hall participants recommended that mandatory sentences should be eliminated and the sentencing guidelines should be re-evaluated with an emphasis on cost effective alternatives to prison for non-violent criminals, including prevention and diversion programs.

Social services. Arizona needs to invest in other social programs, including housing and family services for underserved populations, to provide for the well-being of all its citizens. For instance, adequate funding should be provided for Department of Child Safety programs to help keep families together, as well as programs to help care for Arizona’s aging population, particularly veterans.

Change laws to comply with best practices for government finance. Broaden and simplify our tax code to provide more stable and predictable revenue. Adopt a citizen initiative to repeal the two-thirds majority requirement for raising taxation and instead require only a simple majority. [Prop. 108 (1992)] Facilitate long-range planning by increasing legislative terms and eliminating term limits.

Three steps to improve our future

The failure of Arizona’s government financing system to properly invest in the future of our state negatively affects Arizonans and our future economic prospects. It imposes large costs for incarceration and other social services that could be avoided with a few wise and consistent investments.

To provide the best future for our state, we need to (a) adopt the principles of sound government financing; (b) invest wisely in education, infrastructure and preventative services; and, (c) stop our practice of short-term thinking and instead develop a long-term strategic plan that focuses on outcomes and supports spending that invests appropriately for the well-being of the state’s citizens.

We cannot realistically do any of this until we address the prerequisite of repealing Prop. 108, the “Two-Thirds for Taxes” Amendment, Arizona Constitution Article 9, Section 22. If no one is aggressively advocating for repeal in the legislature or governor’s office, then all of the Town Hall proposals above are just pie-in-the-sky wishful thinking.

16 thoughts on “The financial mismanagement of the state by our Tea-Publican controlled legislature”

  1. Sorry. The self correction function just changed “economic” to “condominium”. Can’t figure that. Must be a Trump spell checker.

  2. Seems you miss the point, John. And Rob Robb has been Arizona’s one party dictatorship’s mouthpiece for years here. With billions in needs, more tax cuts and tax credits are criminal. One simple idea, suspend all tax credits. ALL! Then everyone complains and no one. “Well my tax credit is essential to condominium development”. Nonsense.

    • I did not miss the point. The point was that Republicans are responsible for the fiscal shortcomings of the state because we will not increase revenue via more taxes.

      My reply is that when given the chance to do that, high level Democrats and the voters also opted for no tax increases. So blame Democrats and the voters also and not Republicans who campaigned not to raise taxes

      • No. It’s that the Repubs keep giving revenue away to every special interest, while massive State needs are neglected. Look at the taxation history of the State. Are we better off now than 35 years ago? The tax structure was fairer with less giveaways 35 years ago. Our investments in infrastructure and education were higher relative to the population. The economy was booming. The only idea Repubs have for economic development is less regulation or tax cuts. It seems to be its never investment. Brownback is showing what a disaster that is. I remember Ducey when he was Treasurer, but running for something higher in his first year in office, bragging how “he” balanced the budget with no gimmicks. Hysterical. He didn’t do the budget, but the never ending revenue reductions and fund shifting I guess we’re not “gimmicks”. Read the Town Hall report, a non partisan, broad based citizen generated report, not an ideological bromide.

        • And Democrats Fred DuVal and Eric Myer campaigned on NO TAX INCREASE platforms. Why are you afraid to blame them too? Is it party loyalty? If so, that is hypocritical.

          • Not that you are owed any explanation, but for your information I told Fred DuVal on several occasions in conversations both before and during his campaign that his adopting the GOP position on taxes to try to appeal to GOP cross-over voters (there are none) was misguided and bad public policy, and would cost him votes from voters who want to fix what is wrong with this state. I was right. Eric Myer just lost his election as well. My position is vindicated. For what its worth, I disagree with our Democratic leadership on issues all the time. They would be the first to tell you so.

          • But your blog headline only criticizes Republicans, when your own leaders and voters should have been mentioned. That is my point.

            The headline should have read, “The financial mismanagement of the state by our Tea-Publican controlled legislature abetted by some of our own Democrat leaders and the voters who nixed a tax increase for education.”

            NB I do not think there was mismanagement but that’s another argument.

          • Your point is irrelevant. Republicans are in complete control of the budget process and tax policy, and even what bills get heard in the legislature. Democrats have been completely shut out of this process since Governor Janet Napolitano left office. We have one party rule in Arizona; you own it. Democrats actually voted against many of those GOP tax proposals, and those Democrats that did are in no way complicit or abetted your mismanagement of this state. They were simply on the losing end of the vote. Those Democrats who did not challenge GOP orthodoxy on tax policy, e.g., Fred DuVal who never held elective office, merely demonstrated a lack of political courage. He paid the price for it.

            Arizona has always had low voter participation rates. In a good year, maybe half of the voting age population votes. Most years it is far less. When elections are closely decided, as they frequently are, maybe a quarter of Arizona voters elect the winner; nearly an equal number voted against that candidate. Half (or more) of all voters did not even bother to participate. You can hardly claim a mandate from this. Rather than govern on behalf of the best interests of all Arizonans, Tea-Publicans only represent that minority of voters who voted for them — and the special interests who funded their campaigns.

      • I keep hearing from the legislators, “we just don’t have the money.” Because you keep giving away the revenue in tax cuts and credits. Stop it!

    • Oh, I wouldn’t say that Rob Robb has been the mouthpiece of conservative Republicans.

      1. Robb bought into the Climate Hoax big time and has never renounced it despite the complete intellectual collapse of the case for man made climate change and its effects.

      2. Robb never bought into supply side economics despite the overwhelming evidence. Since 1980, France has lost 3 billion hours of work while the US has added 80 billion hours of work – the difference being the equivalent of 53 million full time jobs. Robb would have us believe that the mammoth difference between those two outcomes is explained by monetary management, a theory that doesn’t pass the laugh test.

      3. Robb believes that increased spending on education on education will improve outcomes. Not only do the overwhelming weight of hundreds of studies cast doubt on this but the last four years in Arizona really cast doubt on it. In the last four years, operational spending by Arizona schools dropped by $400 million – at the same time, Arizona had the largest combined math and reading gains in the nation. The moral of the story seems to be: when students are the only source of money, they really become precious in every way but when you have a sugar daddy, students aren’t so precious.

      • Falcon9, please stop. Even the oil companies admit to man made climate change.

        From Exxon

        From Shell

        They’re forced to admit that the science is correct because they have shareholders and can be sued for not including possible harm to their business when reporting to shareholders.

        These are the same companies that pay for the cherry-picked mis-information climate hoaxers like you spread. They publicly admit to the damage they do while behind the scenes convince feeble minded people that climate change is some commie plot.

        As far as you trickle down bit of weirdness, please explain why California’s economy is booming and Kansas’ economy is shrinking?

        As far as education spending goes, what is your problem with paying teachers a living wage? People like you move from Bleed the Beast to Starve the Beast without the least bit of self awareness or sense of irony.

  3. While you’re quoting Arizona Republic columnists, don’t forget Robert Robb two days ago:

    “Those criticizing Ducey for not proposing a tax increase have short-term amnesia. Ducey ran pledging tax cuts, not tax increases, and was elected. His Democratic opponent pledged not to increase taxes. And voters turned down a sales-tax increase for education in 2012.”

    So let’s see…. The governor, his Democrat opponent and the voters nixed tax increases. In addition, Rep. Eric Meyer, then House Minority leader, also said no to a tax increase. Hmmmmmmmmm. Sounds like one of those inconvenient truths.

    • Election results do not mean that a policy is correct or justified. Voters frequently elect fools — Donald Trump and yourself are good examples.

      • Just as long as you also recognize that your candidates also said NO to tax increases. I would not want people to think you were a biased hypocrite.

        • A politician should strive to keep taxes low and to spend taxpayer money wisely.

          At times, this may require a tax increase, at times, a tax cut may be in order. Reagan cut taxes, but he also raised them 11 times, and he went after GE when he found out they didn’t pay taxes.

          Saying you’ll never raise taxes plays to the base, but it’s bad management.

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