Robb : Gov. has chance to reshape budget

Published: 12.17.2007

Robert Robb
The Arizona Republic

From the political notebook: • The state's budget crunch gives Gov. Janet Napolitano an unusual opportunity to reshape government to her preferences. It will be interesting to see whether she takes advantage of it.

She holds virtually all the cards in the budget game. Legislative Republicans won't want to adopt her proposals to bridge the deficits for this year and next, since they are likely to be light on overall spending cuts.

However, House Republicans will find it difficult to stick to an alternative that cuts deeper, and Senate Republicans may not even try.

So Napolitano is likely to be able to set the overall level of state spending, so long as she doesn't propose tax increases. She also would likely have considerable leeway to move funding around within that figure.

Napolitano faced deficits when she was first elected. That time around, she mostly sought to preserve the status quo.

She was, however, new to the job. After five years at it, she's presumably reached some judgments about which state programs are more important or effective than others.

She probably could use this opportunity to shift funds to the programs she thinks should have priority.

There is incredible inertia in government spending. When there is plenty of money, it's virtually impossible to decrease funding for some programs to increase it for others. Government spending just sort of moves along as a lump, with only minor changes usually possible on the margins.

Shortages are about the only times that the politics permit a shuffling of priorities.

If Napolitano takes advantage of this opportunity, her reprioritization of state government would, of course, become the new inert status quo once the days of plenty return. This might be a chance for her most enduring legacy.

• The latest newsletter from the Arizona Tax Research Association documents why there are the stirrings of a property tax revolt in the state.

Statewide property tax values soared 32 percent this year. Collections are up 10 percent.

For the most part, the increasing property tax burden has been imposed by voters on themselves. Property taxes for voter-approved items, such as bonds and school overrides, are up 16 percent.

Nevertheless, voters have clearly had enough. This year, Maricopa County voters rejected two-thirds of all ballot measures requesting the approval of school spending supported by property taxation. Statewide, nearly half of such measures were defeated.

• There is probably a window to get voters to approve some dramatic and permanent measure to control property taxes on the November 2008 ballot. It will take some people with money to step forward to take advantage of it, however.

There are two groups circulating property tax initiatives. One is championing a clone of California's Proposition 13, capping property tax values.

The other has a pair of initiatives: a property value cap that seeks to avoid the inequities that occur in California, where home values for tax purposes reset to market when they are sold; and a direct limit on the ability of taxing jurisdictions to collect increased property taxes without voter approval.

Neither group has much money, so their chances of making it to the ballot are dim.

These sorts of moments where fundamental reform is possible can come and go pretty quickly. Residential property values, which have been the visceral stimulus for voter discontent, will be coming down as assessments catch up with the real estate decline.

So, 2008 is the ballot of opportunity.

The Arizona Free Enterprise Club is the financial arm of the fiscal conservative movement in Arizona. It needs to look into stepping in and taking over this issue to make sure something gets to the ballot that is worthwhile and has a good chance of passing.

Marc Goldstone of Arizona Tax Revolt has done a good job of figuring out how to cap values while minimizing the inequities of California's Proposition 13. However, his levy limit is too draconian, requiring, for example, a two-thirds voter approval for bonds.

Requiring a majority vote to approve increased collections above an inflation factor would be preferable, and more saleable.

Moreover, a single ballot proposition would be preferable to two. The Arizona Supreme Court has made the state constitution's single-subject rule for constitutional amendments a moving target, but capping values and levies to control property taxes should satisfy any reasonable application of its most recent ruling.

Robert Robb, an Arizona Republic columnist, writes about public policy and politics in Arizona. E-mail: robert.robb@arizonarepublic.com