TIME'S UP!

GROE NOTE: Hooray! I just received this email about the demise of the TIME Initiative and a "dragon-slaying" party to celebrate the good news. Please take a moment, as Tom suggests, to send a note to those who fought on your behalf to kill this tax increase.

Dear Arizona Taxpayer,

You are invited to a Dragon Slaying Party this Friday evening, August 29th, at the George and Dragon Pub in Phoenix. The occasion for the festivities is the demise of the TIME Ballot Initiative, which was thrown off the ballot today by the Arizona Supreme Court:

http://www.bizjournals.com/phoenix/stories/2008/08/25/daily27.html

The TIME Initiative would have increased the state sales tax by 18 percent, and thrown $42 billion at unspecified transportation projects, including projects—such as light rail—that have very little to do with transportation. The government largess for rail projects would have been doled out by the members of a “Passenger Rail Projects Committee,” a majority of whose members would have been appointees serving at the pleasure of the Governor.

To learn about the many disastrous provisions of the TIME Initiative, read this analysis by transportation expert John Semmens:

http://www.americansforprosperity.org/includes/filemanager/files/az/timeinitiativeanalysis.pdf
And please send a note of thanks to Steve Voeller of the Arizona Free Enterprise Club (http://www.azfec.org/), for the work AZFEC did to oppose the TIME Initiative on the legal front. Steve’s email is steve@AZFreeEnterpriseClub.org.

If anyone is interested in organizing festivities outside of the Valley, let me know, and I will help.

For Liberty,
--Tom

Tom Jenney
Arizona Director
Americans for Prosperity
(Arizona Federation of Taxpayers)
http://www.aztaxpayers.org/
tjenney@afphq.org
(602) 478-0146

Easy Ways to Stay Informed

The Arizona Free Enterprise Club is an fiscally conservative organization that sends out email updates during the Arizona Legislative Session discussing the pros & cons of proposed legislation. I am almost always in agreement with their position. If you click on the red circled envelope at the bottom right corner of their website, you can sign up for their email updates.

Americans For Prosperity or, as the Arizona Chapter is known, Arizona Federation of Taxpayers, is also a great source of information during the legislative session. Tom Jenney, the ATF’s president, sends out email updates on budget issues & legislative proposals that effect the taxpayer. Some of his emails serve as “action alerts” so that you can organize a group of like-minded folks to call or email legislators.

The Goldwater Institute sends emails almost daily during session about all types of legislative proposals, weighing in on both fiscal & social proposals. They also rate legislators each year & compile a scorecard, much like Americans for Prosperity/Arizona Federation of Taxpayers.

Gov Backs Tax Hike

From the Arizona Free Enterprise Club:

Napolitano Backs Two Tax Hikes as Arizona Economy Struggles ~
Sales tax increase would add $1.2 billion and property taxes another $250 million
annually in new tax burden.

Phoenix, AZ – Steve Voeller, president of the Arizona Free Enterprise Club, today warned
Arizonans to brace for a heavy tax burden in 2010. Against the backdrop of a slowing economy,
a $1.5 billion deficit next year, and billions more in total state debt, Gov. Napolitano is
supporting two major tax increases.

This year the governor vetoed a bill that would have prevented a statewide property tax
increase from coming back on the books in 2009. Without further action, a property tax cut that
passed in 2006 will return next year at a cost of $250 million a year.

In her veto message, Napolitano said that making the tax cut permanent would “be the
height of fiscal irresponsibility.” Soon thereafter, the governor signed a budget into law that
added $2 billion in new debt, including $1 billion in university construction that is financed by a
planned expansion of the Arizona lottery.

The governor is also the lead proponent of a new statewide sales tax increase for various
transportation projects, grants to non-profit organizations, and wildlife habitat preservation (the
TIME initiative). This tax would add $1.2 billion annually to the Arizona tax burden beginning
in 2010. The new state sales tax rate would be 6.6 percent (a 17.8 percent increase) and would
give Arizona the fifth-highest sales tax rate in the country.

“Arizona’s economy just had one of the worst quarters in recent history and an
unemployment rate jump not seen since 1991,” Voeller said. “The last thing we need now is
a tax increase.”

According to the Joint Legislative Budget Committee, Arizona personal income grew by
3.8 percent in the first quarter, the slowest growth rate since October 2003. On an annualized
basis, Arizona personal income growth ranked 42nd in the nation.

“You can’t tax your way to prosperity,” Voeller said. “What our economy needs now
is a freeze on all tax increases and a serious dose of spending restraint.”

Catching Up ~ Abeit Briefly

UPDATE: Arizona Federation of Taxpayers also came out against the Mason Solar Tax Credit bill. Mason has decided to hold the bill at this point.

Forgive my lack of posts over the last two days. We are more than knee-deep in garbage here at the Capitol and instead of pressing forward to negotiate a responsible budget we are passing out bills that without question will result in increased taxes.

Two of these bills I am referring to are provisions that were in the now defunct job stimulus package: Lucy Mason's Solar Tax Credit and Pima County's Cactus League~Spring Training Bill. Unfortunately for the taxpayer, both of these bills passed out of committee despite objections from such groups as the Arizona Free Enterprise Club, the D.C. based Taxpayer Foundation, and the Arizona Restaurant Association. The Mason Solar-Energy Tax Credit received a thorough beating during our recent republican caucus so perhaps there is a ray of hope (get it?) that it will go down in flames.

As you have probably read by now, the Senate passed out their horrific budget proposal last night ( or rather, at 5:33 this morning) that includes $2 BILLION DOLLARS IN NEW BORROWING besides the fact that we are currently facing a $2.3 BILLION DOLLAR SHORTFALL! Ugh! Props to my good friend and seatmate, Senator Ron Gould for seriously doing all he could to protect the citizens of Arizona and prevent the Senate from successfully passing the budget. Senator Gould got almost no assistance from his fellow republicans...it is a shame that he has to take heat from his colleagues for taking seriously his oath of office.

Oh, surprise, surprise...house leadership just put the APPALLING Senate Budget Feed Bill (HB 2209) on the "Board of Truth" and the bill passed with the assistance of the following republicans:

Lucy Mason
Jennifer Burns
Michelle Reagan
Pete Hershberger

Without these REPUBLICANS ( though now perhaps, RINOS), the outrageous Senate Budget Feed Bill would not have passed and we would have then had the opportunity to negotiate a more fiscally responsible budget on behalf of the taxpayers.

FYI, I will list the travesties of the Senate Budget in a later post...must pay attention to the bills as they are voted. Can you believe that I am receiving emails from district 3 AEA members pleading me to vote in favor of this Senate budget? Increased gambling, increased photo radar, increased borrowing...and AEA members believe this is prudent?

AZ Free Enterprise Club Press Release

UPDATE: As of today, June 24th, it looks like this proposal is dead in its tracks! The commerce committee hearing scheduled to hear the bill has been cancelled! Glory be...there is still a bit of reason left among my colleagues.

Arizona Legislature Should Reject Stimulus Package
Christmas Tree of goodies will hurt, not help, Arizona economy

Phoenix, AZ – The Arizona Free Enterprise Club, a pro-economic growth advocacy group, today announced its opposition to an “economic stimulus” package that reportedly consists of subsidies for a downtown entertainment district, solar production, and research and development. The package also intends to grant Pima County the authority to hold an election seeking a sales tax increase on restaurants, hotels and rental cars to enhance Tucson-area spring training facilities. The package, the details of which have not been released, is being formulated by a handful of special interest groups and lobbyists.

“There is no way a package larded down with this much pork should ever get off the ground,” said Steve Voeller, president of the Club. “not only is this not economic stimulus, it’s not even decent public policy. Tax credits and exemptions are exactly like spending items. Proponents of this package want to pay people for these activities. Do they need to be reminded that the state faces a $2.2 billion budget deficit?”

The plan does not address the looming statewide property tax increase set to occur next year.

“The state faces a $250 million tax hike next year since the governor vetoed a bill to prevent it from occurring. The notion that you can bestow tax subsidies on a few developers and companies and think you’re going to turn around the economy, all while ignoring a massive tax hike on millions of Arizona taxpayers, is sadly absurd. You want to create jobs? Let’s start by not raising taxes.”

In addition to the veto of the property tax repeal, the governor and some business leaders are pushing for a 17.8 percent statewide sales tax rate increase for roads, trains, light rail, open space, non-profit groups, and other endeavors.

“The policies coming out of the state legislature should scare everybody concerned about the status of the state’s economy.”

Big Boondoggle Bill of 2008

The latest attempt to garner good press at the expense of good public policy, otherwise known as the Big Boondoggle Bill of 2008 is now posted on the AZLEG website in the form of an 81-page amendment to Senate Bill 1433. If you do not have the fortitude to read the entire amendment, I will touch on the 4 main ideas:

Solar Tax Credits - This would offer incentives for qualifying new businesses that manufacture solar energy components in Arizona.
Research and Development Tax Credits - This would enhance current corporate and income tax credits for new research and development projects.
Cactus League Baseball - This would allow Pima County voters to approve targeted taxes, proposed by a private Tucson-area group, to pay for improvements to new and existing Cactus League ballpark facilities, and is targeted at keeping teams in their southern Arizona location.
Urban Redevelopment Project - This would establish new entertainment districts, targeted at urban downtown areas.

Though these proposals may sound innocuous, the devil is in the details. The list of organizations opposed to this measure is growing and now includes:

Arizona Federation of Taxpayers

The Arizona Free Enterprise Club

Arizona Restaurant Association

A Message from Arizona Federation of Taxpayers

Dear Arizona Taxpayer:

Right now, members of the Arizona Senate are considering whether or not to award a private company the privilege of issuing $750 million in tax-free bonds, so that it can build a rock music theme park in Eloy.

If the project turns out to be a flop, and if tourists fail to come to Eloy in sufficient numbers, the state could have to pay back creditors, or it could jeopardize its bond rating, making it more expensive in the future to borrow money for traditional projects, such as road construction.

But the economic downsides of the Decades Theme Park deal are not nearly as important as the question of principle at stake: whether or not the government should not be handing out special privileges to chosen companies. The answer to that question is clearly, “NO.” The government should not be in the business of picking winners and losers in business.

PLEASE CONTACT YOUR STATE SENATOR, AND ENCOURAGE HIM OR HER TO OPPOSE THIS BILL. WE ARE ESPECIALLY CONCERNED ABOUT ANY SENATOR WHO VOTED YES (“Y”) ON THE EARLIER VERSION OF THE BILL:
http://www.azleg.gov/FormatDocument.asp?inDoc=/legtext/48leg/2r/bills/sb1450.sthird.1.asp

In response to a query from the Senate, AFP Arizona hereby announces that the bill, SB1450, will be included in our 2008 Legislative Scorecard. Given the potential yearly fiscal impact, and the importance of the principle at stake, the bill will be a 50-point bill. In last year’s scorecard, that would have been just under 5 percent of the total, but there are fewer bills this year, so SB1450 could weigh as much as 10 percent of the overall score.

For more information about why SB1450 is a bad bill, see the pieces from the Goldwater Institute and the AZ Free Enterprise Club (pasted below).

For Liberty,

Tom Jenney
Arizona Director
Americans for Prosperity
(Arizona Federation of Taxpayers)
www.aztaxpayers.org
tjenney@afphq.org
(602) 478-0146


Springtime for Decades: Eloy theme park bill bad for Arizona
By Byron Schlomach, Ph.D., director of the Goldwater Institute Center for Economic Prosperity.

In the Mel Brooks play, The Producers, a planned swindle would only succeed if a joke of a Broadway play was a monumental flop. The play, Springtime for Hitler, ended up being a success against all reason. Right now the Arizona legislature is planning a similar heist: the Decades Music Theme Park.

The Arizona legislature has proposed a law to create a “special attraction district” in Eloy that would only include the Decades park and give it quasi-governmental status. Why is this proposed law a scam? In essence, the law is designed to subsidize private companies that cannot raise the money or otherwise get financing without special government treatment. In this case, the special privilege is the ability to issue government bonds. The bill now being considered would allow the owners of Decades to issue $750 million in government bonds.

People who buy government bonds accept less interest than they would otherwise for two reasons. First, they don’t have to pay federal income tax on the interest earned. Second, government bonds are backed by the ability of a government entity to tax its citizens, so they are generally safe investments.

In the case of the proposed theme park, the bonds will be financed by sales taxes paid only by park visitors. That means these bonds are really every bit as speculative as corporate bonds, because they are entirely dependent on the ability of a company to attract customers.

There are very likely to be good-faith buyers of these special attraction district bonds who will have every reason to think the bonds are as safe as school district bonds. Then, if the park doesn’t work out and goes out of business, widows, retirees, and institutional investors could find their government-grade bonds worth pennies on the dollar at best. If this unfortunate scenario were to happen, disappointed investors would likely sue those responsible, including the State of Arizona.

Even if there’s no lawsuit, Arizona’s bond ratings will suffer if the park goes belly-up. Future bond buyers, with no idea if they’re really buying speculative corporate bonds or genuine government bonds, might avoid buying Arizona bonds all together.

Not only could Arizonans lose financially if policymakers ultimately approve this highly speculative project, we could lose in other ways. The private sector sets a pretty high bar for potential enterprises to pass in order to get funding. That doesn’t mean there is always success when enterprises are privately funded, but it does mean the winners often win big. Who knows what kind of big winner this government-backed project might prevent from opening.

If a theme park comes to Arizona, it needs to stand on its own financial feet. The test any such proposal passes should come from the private sector school of hard work, not the political school of smooth talking.

Decades Music Theme Park Bill Strikes the Wrong Chord~
exempting income and property taxes is corporate and investor welfare
Phoenix, AZ – The Arizona Free Enterprise Club, a pro-economic growth advocacy group, today announced its opposition to SB1450, the Regional Attraction District, otherwise known as the Decades Music Theme Park. The legislation exempts for-profit companies within the district from paying income and property taxes.

During testimony on the bill in Senate Commerce, proponents claimed that without this legislation, the area in Eloy where the park is proposed would not be an internationally recognized music theme park. Proponents of the bill also stated that some of the private investment was contingent on the bill.

“What gets built in Eloy should not be determined by legislating corporate subsidies being pushed by those who stand to benefit financially,” said Steve Voeller, president of the Club. “When corporate welfare is needed so that the private investment pays off, you could say the role of government has been exceeded.”

The legislation exempts businesses who locate with the district from paying property or income taxes. The park’s supporters claim that because they are required to raise $100 million in private investment before the bonds can be issued, the state’s investment is a sound one.
“If building a music theme park in Eloy makes economic sense, so much so that the first $100 million can be raised privately, then the project should be financed like other large projects and the owners should pay taxes like everybody else.”

THE FISCAL NOTE

An Examination of Tax and Fiscal Matters
By the Arizona Free Enterprise Club

Theme Park Legislation is Off Key

Senate Bill 1450 (Theme Park bill) is poor tax policy. One of the principles of sound tax policy is neutrality. Whenever possible, the tax code should be agnostic toward whatever business activity is taking place. The tax code should not micromanage the economy and should interfere as little as possible in the decisions being made in the marketplace. Private enterprise should be left to succeed or fail based on the merits of the product or service being sold, the quality of the business plan, and the execution of the plan. A private company’s ultimate success or failure should not hinge on preferential tax treatment.

On December 2, 2007, The Arizona Republic made the following additional points:

• Attendance: Decade's projections are extremely optimistic, with 6 million visitors in the first year. Only six U.S. theme parks, all in Florida, reached that level in 2006. "Nobody gets 6 million visitors their first year," says Dennis Speigel, president of International Theme Park Services.

• Market: The theme-park industry is mature, with little growth in attendance outside the Disney parks. Hard Rock Park, a similar project, is opening in Myrtle Beach, S.C., next spring. It should give an indication of whether a rock-themed park will draw crowds. Decades supporters are assuming that the $400 million S.C. park would be a complement, whetting people's appetite for a larger attraction in the West, and not a competitive threat. Meanwhile, there's competition from theme parks next door. "You've got the entire developed Southern California market just a few hours away, which markets aggressively," says Robert Niles, editor of the Theme Park Insider Web site.

Supporters point out that the new tax wouldn't replace the regular sales tax but be on top of it. They say taxpayers wouldn't be on the hook for repaying the bonds. But Kevin McCarthy of the Arizona Tax Research Association sees a risk if Decades flounders. "When bonds go bad," he says, "it reflects poorly on everyone that's involved." There could be pressure for a bailout.

McCarthy also testified in Ways and Means that the legislation is likely unconstitutional because it exempts certain taxpayers from paying property taxes.

Lawmakers continue to raise valid concerns about this bill and are on solid footing as they do.

###

The Arizona Free Enterprise Club is a 501(c)(4) non-profit organization whose mission is to advance policies that promote a strong and vibrant Arizona economy. The Club believes that entrepreneurs and private enterprise are the principle drivers of our economy. The Club lobbies Arizona lawmakers in support of policies that allow the market to flourish and vigorously opposes policies that hinder private industry. Visit us at www.azfec.org.

THE FISCAL NOTE

An Examination of Tax and Fiscal Matters by the Arizona Free Enterprise Club

Economic Stimulus: What to Embrace, What to Avoid

Former U.S. Treasury economist Stephen Entin wrote: There is no such thing as a quick, temporary fiscal stimulus for the economy that does not lead to offsetting damage down the road. The only worthwhile tax changes that are beneficial in the short run are those that are also beneficial in the long run, ones that lead to a tax system with fewer obstacles to production.

There has been much discussion recently around designing an “economic stimulus” package for Arizona. It is easy to see why. Revenues for fiscal year 2008 will be up only 1%, and we’ll be lucky if 2009 is any better. What to do? Given the backdrop from Mr. Entin, here are some suggestions.

AVOID: Do not incur additional debt to “stimulate” construction activity. A plan being circulated by universities and contractors to borrow $1.4 billion to facilitate construction at Arizona’s three universities is not an economics stimulus package. Here’s why. If the state needs to issue additional debt to cover the activity of construction, it is simply borrowing the economic benefit created by the construction, leaving no additional benefit to the public, since they (we) own the debt. Arizona already faces a state and local debt burden of $32 billion, which is 16th highest in the country as a percentage of personal income, and the state has a $3 billion budget deficit. The added debt from this proposal will be extremely painful long-term.

AVOID: Do not advance a plan comprised of tax credits, new spending items, and new debt packages. In the face of Arizona’s huge budget deficit, a plan being discussed in the House to add new credits, grants, and spending would exacerbate the problem. With mounting debt and flat revenues, adding new subsidies and spending items will further choke off economic growth. Economic stimulus packages require an incentive effect. When tax rates are cut, for example, the incentive to earn the next dollar increases, since the return on investment is now greater. Tax credits, like rebates or subsidies, have no incentive effect, do not increase output or demand, and simply leave fewer taxpayers to pay for existing services.


SUPPORT: Make the 2006 state equalization tax cut permanent. Isn’t it ironic that proponents of a construction “stimulus package” are some of the same people who oppose making permanent the temporary elimination of the state equalization rate? There is no compelling reason to not make permanent a tax cut that lawmakers and the governor saw fit to provide in 2006. There is no negative impact to the state’s general fund next year by passing this permanent moratorium. Raising taxes $250 million in an economy that is already experiencing anemic growth, however, will further slow economic recovery. It will drive up expenses for everyone from latte drinkers to the construction industry (and everyone in between). Any economic stimulus plan that doesn’t include making this tax cut permanent isn’t a serious plan.


Given the state’s $3 billion budget deficit for 2008 and 2009 and the membership of the House and Senate, it is well-understood that asking for more than the permanent repeal of the state equalization tax is pushing the envelope. If, however, there is interest in other stimulus plans that will have both a short and long-term benefit to our economy and tax code, here are two:

SUPPORT: Reduce Arizona’s business personal property tax. Reducing the tax on business equipment, or allowing for immediate expensing, would spur new spending on plants and equipment, increase wages, increase jobs, and ultimately increase tax revenue to the state. A recent study completed for Idaho by Stephen Entin at the Institute for Research on the Economics of Taxation demonstrates the economic benefits of this rate cut.

SUPPORT: Reduce Arizona’s corporate income tax rate. Arizona’s tax on corporate income is 6.968% and is among the highest in the west (behind only California and New Mexico). Corporate taxes affect three things: 1) customers, through prices; 2) shareholders, through returns on invested capital; and 3) employees, through employment opportunities and wage growth. According to a new study by Fritz Foley and Mihir Desai of Harvard and James Hines of the Univ. of Michigan, workers share between 45 and 70 percent of the corporate tax burden. Reducing corporate taxes down to 4.76%, the average among western states, would instantly make Arizona more competitive in the region and across the country, increase after tax profits, increase employment opportunities, and increase wage growth. Reducing this tax to 4.54% would place the corporate income tax on equal footing with Arizona businesses and individuals who file income taxes in the state’s highest personal income tax bracket. In a fair tax system that encourages growth, neutrality is paramount.


Finally, the adage of “First, do no harm,” applies to this debate. Cutting taxes on capital would be the preferred tax changes to help Arizona’s economy both short and long-term. Short of that, however, doing nothing is far better than some of what’s being discussed at the Capitol.

###

The Arizona Free Enterprise Club is a 501(c)(4) non-profit organization whose mission is to advance policies that promote a strong and vibrant Arizona economy. The Club believes that entrepreneurs and private enterprise are the principle drivers of our economy. The Club lobbies Arizona lawmakers in support of policies that allow the market to flourish and vigorously opposes policies that hinder private industry. Visit us at www.azfec.org.

T.G. I. F....Oh Wait

Caffeine IV, STAT!

After an exhausting, emotionally draining (listened to testimony from family members of victims of 9/11 and their opinions on the Arizona 9/11 Memorial), & unexpectedly long work day yesturday, I am in great need of refreshing.

Wednesday started out with my favorite committee mtg, Health (ugh!), followed by a lunch mtg with the folks from the Arizona Free Enterprise Club, Floor, Third Read, and an eight-hour Appropriations Committee meeting. I left for work at 7:00am and returned home after 10:00pm!

Today, no Water and Agriculture Committee mtg but instead, Republican Caucus at 10:15 am. Floor at 1:00 where we have several Third Reads and eight COW Calendars, then a special Appropriations meeting that looks to be lengthy as there is a controversial ELL-related bill on the agenda.

Because of the long day, I am going to be unable to attend the London Bridge Friends of the NRA Banquet taking place at Shugrue's in Lake Havasu City this evening. Although I attempt to attend this event every year, I have yet to make the celebration as they take place on a weeknight during session. Sorry LB Friends of the NRA but KUDOS to all you do!

Note to self: Describe, in future blog post, how the committee meeting was derailed by a Minister representing United Methodist Church and Valley Interfaith Project. Testimony from this "gentleman" blindsided the entire committee membership.

AZ Free Enterprise Club Press Release

Gov. Napolitano Sets Stage for Property Tax Increase
Recent comments conflict with “no tax increase” commitment

Phoenix, AZ – The Arizona Free Enterprise Club, a pro-economic growth advocacy group, today called on lawmakers to pass the permanent repeal of the state equalization rate, which, if not passed, will increase taxes on all Arizona taxpayers next year by about $250 million.

According to The Arizona Republic, Gov. Napolitano told an audience of educators that legislative efforts to prevent this tax increase are misguided because the state faces billions in deficits.

“The governor’s support for this tax increase is a direct departure from what she wrote in her 2009 budget plan, where she pledged not to raise taxes,” said Steve Voeller, president of the Club.

In trying to sell the tax increase, the governor told the group that the tax equates to “two lattes a year.”

“Points should be deducted for unoriginality,” Voeller said. “When politicians justify tax increases by calculating them as lattes or steak dinners, they imply that we can’t figure out what’s really going on.”

“Property tax increases affect everyone, including those who can’t afford to drink lattes in the first place.”
“Property taxes continue to rise as valuations fall, so whether it’s one, two or 200 lattes, tax increases in today’s market will hurt everyone’s bottom line.”

“This is especially perplexing since the governor recently argued that people need help with their rising adjustable rate mortgages. Wouldn’t one way to do that include preventing property taxes from going up?”

Growing Government

Over the past seven years, the state budget has increased 94%, while the population has only increased 24%. According to the Goldwater Institute and the Arizona Free Enterprise Club, total state spending for fiscal year 2008, which began July 1, 2007 will be an estimated $27 billion – or $855 every second. This is one of the reasons, besides the steep economic decline, that the state is facing the current budget crisis today and, hopefully, explains my consistant opposition to the budgets presented the past three sessions.

Critique of Napolitano's Proposed FY 2009 Budget

News Release
FOR IMMEDIATE RELEASE: Friday, January 25, 2008
CONTACT: Steve Voeller: (602) 346-5061

Arizona Free Enterprise Club Criticizes Napolitano’s Reckless Budget Proposal
Governor’s budget proposal adds $2.3 billion in debt, according to JLBC

Phoenix, AZ – Steve Voeller, president of the Arizona Free Enterprise Club, a pro-economic growth advocacy group, today criticized Governor Janet Napolitano’s proposed fiscal 2009 budget.
In response to a $1.7 billion 2009 budget deficit, the Governor’s plan calls for $2.3 billion in new debt, an early tax payment, an expansion of photo radar, increased taxes from the lottery, and $700 million in revenue figures above consensus forecasts.

“The Governor’s budget plan for 2009 is irresponsible and should be rejected,” Voeller said.

The Governor’s plan shifts from paying cash to borrowing money for the following items:

$864 million School construction (FY’08 and ’09)
$967 million University building and maintenance
$470 million Phoenix medical school
$50 million Public safety communications
$7 million Emergency operations center
TOTAL $2.358 billion (source: Joint Legislative Budget Cmte.)

To realize new revenue, the Governor asks businesses to pay their July estimated retail taxes in June, meaning businesses will have to pay both June and July payments in the same month. She also assumes $90 million in revenue from an expansion of photo radar. It is unclear how much it will cost to implement photo radar statewide or how many tickets will have to be issued to net $90 million.

The Governor plans to spend additional state money promoting the lottery in hopes that an increase in lottery participation will bring $10 million to state coffers.

The Governor’s plan also calls for a $60 million shift from the state’s balance book to county budgets by housing felons in county jails rather than state prisons.

Over the last five years, government spending increased 32 percent after adjusting for population and inflation.

“The most troubling aspect of the Governor’s budget is the total lack of fiscal discipline,” Voeller continued. “After years of overspending, she attempts to plug a $1.7 billion dollar budget gap with $2.3 billion in new debt.”