Tucson Progressive

Pamela Powers Hannley, a progressive voice for Arizona

The big question for 2011: How will Arizona balance its budget?

How will Arizona balance its budget? With the Republican trifecta controlling Phoenix, the answer is easy:

  1. eliminate or drastically reduce funding for services that benefit citizens (ie, education, healthcare, parks),
  2. cut corporate taxes,
  3. ignore the $10 billion in tax loopholes that benefit special interest groups,
  4. borrow a few hundred million, and
  5. hope for an economic turn-around.

Republican Governor Jan Brewer released specifics of her budget plan last Friday. It included dramatic cuts for universities (20%), community colleges (47%), parks (100%), and commerce (82%). In addition, Brewer wants to cut the Arizona Health Care Cost Containment System rolls by about one quarter, leaving 280,000 people– virtually all adults– with no health insurance. (AHCCCS had been propped up by federal stimulus money.)

The only part of the budget that goes up significantly is corrections— surprise, surprise given Brewer’s and Senate President Russell Pearce’s cozy relationship with the private prison industry. (They do obviously get the connection between long-term unemployment, education cuts, and the inevitable increase in crime.) Arizona was already spending more on prisons than on university education; the new budget just widens that gap– corrections ($957 million) vs universities ($702 million). This budget is criminal.

Brewer did toss tourism– which had been zeroed out last year– $1 million to combat the state’s poor public image.

But, oops, with all of these budget cuts, the budget is still not balanced. According to the Arizona Daily Star (print edition), Brewer’s cuts reduce the budget from $8,518.9 billion to $8,474.3 billion– a $44.6 million reduction to fill a $2.25 billion hole. Brewer proposes to wreak havoc on post-high school education and the parks system, but all of that amounts to only a 0.5% reduction in the overall budget. What’s the point of releasing a budget that basically does nothing to alleviate the state’s fiscal crisis?

This is where the borrowing and the hoping for a brighter day enter into the Governor’s plan. She proposes to borrow $575 million to fill a hole– with the hopes that the economy will improve in the future. Brewer and other Republicans are also toying with the idea of completely eliminating the states’ Medicaid system (AHCCCS). Legislative comments from the Arizona Daily Star

House Speaker Kirk Adams called it “an excellent framework and starting point.”

“The governor has demonstrated that she continues to be willing to make tough choices,” he said. “And I think the Legislature is ready to follow suit.”

But House Minority Leader Chad Campbell called the plan “the same policies and the same maneuvers that we’ve seen for several years that have gotten us into this mess in the first place.”

He noted that Brewer plans to borrow $575 million just to bridge an anticipated $764 million deficit for the rest of this budget year. Her longer-term plans, he said, are based on a hope the economy will get better, something Campbell said is not a realistic long-term solution.

Campbell wants “long-term tax reform,” including closing what Democrats call $10 billion in “outrageous tax loopholes.”

I agree with Campbell, we need long-term tax reform, but my proposal goes beyond filling loopholes. I think the state should consider sliding scale corporate taxes (currently at a flat rate of 6.968%) and consider adding at least one more upper income tax bracket.  Another option would be to return to the tax levels the state had before the last Republican tax giveaway (which we obviously couldn’t afford.)

Arizona State University’s Morrison Institute released a report on our “structurally unbalanced” government. The bottomline is: We can’t cut our way out of our current economic crisis. Arizona’s tax system relies too heavily on growth and sales; when the economy is down, the state’s income plummets. As a result, the state suffers cyclical boom and bust cycles.

Just how bad is it?

Here is a recap of the deep hole Arizona’s tax cuts have left us in, from AZCentral [Emphasis added].

When lawmakers return to the Capitol in January, they face a $2.25 billion deficit over the next 18 months.

“What we are walking into is major structural-deficit reduction,” said House Speaker Kirk Adams, R-Mesa. “This is no longer a $5 million solution here or a $10 million cut there. It’s a $1 billion decision.” [I guess Adams didn’t send that memo to the Governor.]

GOP Gov. Jan Brewer and the Republican majority in the Legislature have ruled out tax increases, and other options for balancing the budget are nearly tapped out.

That means deep cuts are inevitable…

And because these leaders want to cut taxes to get Arizona’s economy rolling again, that means less revenue for state coffers and a larger hole to fill.

There are additional challenges as well: Lawmakers must erase an $825 million deficit in this fiscal year’s budget, compressing a year’s worth of cuts into a few months. Federal stimulus money runs out at the end of the budget year on June 30, adding to a hole of about $1.4 billion. The Legislature also has 37 new lawmakers, and they will have to quickly learn the intricacies of the state budget.

Some Arizonans already have felt the cuts – they lost child care, health services or educational programs. But many others have yet to feel the budget crunch personally beyond shuttered rest stops or state parks.

One thing is clear: After this session, every Arizonan is much more likely to experience the impact of the budget crisis. Lawmakers will wrangle with difficult decisions with potentially devastating consequences for Arizona residents.

13 comments on “The big question for 2011: How will Arizona balance its budget?

  1. endTaxBreaks
    January 18, 2011

    Arizona subsidizes greyhound racing and off-track betting, providing these amoral activities tens of millions in tax breaks.  In 2009 alone, according to the AZ Corporation Commission’s filings, Tucson Greyhound Park roughly $11 million, yet paid no taxes at all.  To add insult to injury, the owners are from out of state.
    It would be nice to see this paper research this and publish these public documents.  Perhaps then you could follow up with a few questions to those politicians who extol their family values and Christianity to explain how subsidizing gambling and cruelty to animals fits that bill.

  2. Dick
    January 18, 2011

    The Governors proposed FY 2012 budget still includes 6 million dollars for historical societies.  Non essential expenditures cannot be cut when they are needed to support the Governor’s pet boondoggle, the 5C Arizona Centennial Museum.

  3. Jim Hannley
    January 18, 2011

    A very well considered and well researched article, Pamela. I couldn’t agree more that the way out of a structural economic crisis is also structural: reform of the tax code to increase corporate taxes and restore the 35% cut in personal income taxes. The Morrison Institute article you cite is as plain as it can be: with the 25% cut from the criminal Gov. Fife Symington and the 10% ill-considered cut signed by Janet Napolitano would, adjusted for inflation create a $1B surplus in the State budget. I think it also the least painful way to restructure the revenue side would be with a sliding scale corporate tax rate. That way smaller, growing companies are not hampered. Excellent article.

    • Three Sonorans
      January 18, 2011

      I got the answer! Sell the state buildings and rent them back from the new owners at a profit to them! That’ll work!

  4. pepe
    January 19, 2011

    Like this country of mine (Spain):  with Chinese money, like the US Gov.

  5. lrate
    January 19, 2011

    CUTTING BUDGETS, LIKE ANY DEFENSE ARE NOT ENOUGH TO WIN.
    We are THE center for the Sun-belt, where the Solar industry could pay for itself. With just 90 square miles of solar panels we could power the entire United States, with twice that we could power it 24 hours a day. There are one-thousand times that acreage in overheated rooftops, or un-covered parking lots in Arizona. If we encouraged, even DEMANDED that Solar manufacturers moved here, THEN THERE WOULD BE ENOUGH JOBS HERE TO MAKE NORMAL TAXES MAKE ARIZONA THE RICHEST STATE IN THE UNION.

  6. lrate
    January 19, 2011

    PS: EVERY CORPORATION IN ARIZONA DID WELL IN THE CLINTON YEARS, AND WE HAD A SURPLUS. LET’S GO BACK TO THAT TAX RATE!!!

    • Pamela Powers
      January 19, 2011

      I totally agree.

  7. Pingback: What happened to the War on Poverty? Is the US marching backward? - Tucson Progressive

  8. pepe
    January 19, 2011

    Yes, with Chinese  money like Obama

  9. Pingback: Bruce Ash– gag me - Tucson Progressive

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  11. Pingback: February 14, 2011: Arizona’s statehood is 99 yesterday; next year is The Centennial | Unobstructed Views

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About

The Tucson Progressive: Pamela Powers Hannley

I stand on the side of Love. I believe in kindness to all creatures on Earth and the inherent self-worth of all individuals--not just people who agree with me or look like me.

Widespread economic and social injustice prompted me to become a candidate for the Arizona House, representing Legislative District 9 in the 2016 election. My platform focuses on economic reforms to grow Arizona's economy, establish a state-based public bank, fix our infrastructure, fully fund public education, growlocal small businesses and community banks, and put people back to work at good-paying jobs. I also stand for equal rights, choice, and paycheck fairness for women. I am running as a progressive and running clean.

My day job is managing editor for the American Journal of Medicine, an academic medicine journal with a worldwide circulation. In addition, my husband and I co-direct Arizonans for a New Economy, Arizona's public banking initiative. I am a member of the national board of the Public Banking Institute, and I am co-chair of the Arizona Democratic Progressive Caucus, the largest caucus of the Arizona Democratic Party.

I am a published author, photographer, videographer, clay artist, mother, nana, and wife. I have a bachelor's degree in journalism from Ohio State University and a masters in public health from the University of Arizona. I grew up in Amherst, Ohio, but I have lived in Tucson, Arizona since 1981. I am a proud member of the Unitarian Universalist Church of Tucson and the Public Relations Society of America.

My Tucson Progressive blog and Facebook page feature large doses of liberal ideas, local, state, and national politics, and random bits of humor. I also blog at Blog for Arizona and the Huffington Post.

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Chicago blues + surf rock = fun dancing. #tucson #dancing #swing
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