ATRA in the News: 2009
The Arizona Tax Research Association, a fiscally conservative organization once on record supporting the sales tax referral to the ballot, has since changed its position. Director Kevin McCarthy said the state has not done the hard work it needs to do to clamp down on spending, and he won't support any new revenues until that happens.
After adjusting for accounting tricks, state general-fund spending topped out at $10.5 billion in 2008, according to the Arizona Tax Research Association. After the last round of budget cuts, state general-fund spending is authorized at about $10 billion for this fiscal year, or a reduction of around 5 percent.
"We need at least four members of the Democratic caucus," Burns, R-Peoria, said late last week, after discussing the state budget at the annual tax watchdog luncheon of the Arizona Tax Research Association. He said he and other legislative leaders planned to spend the weekend looking for those votes.
The Goldwater Institute and the Arizona Tax Research Association had been readying for a bid to challenge the constitutionality of the district's levy to help bring schools into racial balance, preparing to argue that it's illegal to levy unlimited property taxes for an unlimited time without voter approval.
Experts say the economic downturn probably made voters think twice about approving many budget overrides... "There have been record job losses, record home foreclosures and apparently they're sending the message that they don't think government ought to be insulated either," said Justin Olson, senior research analyst...
"With the economic crisis facing Arizona serving as a painful reminder, Tucson taxpayers can be assured that, if approved, Proposition 200 will certainly force a tax increase at some future date," wrote McCarthy, who added that adopting spending programs via initiative tends to result in fiscal disasters.
By any measure, Proposition 200 will force increased spending that will either drive future tax increases or impact other city services. With the economic crisis facing Arizona serving as a painful reminder, Tucson taxpayers can be assured that, if approved, Proposition 200 will certainly force a tax increase at some future date.
Regardless of one's views on the amount of funding taxpayers provide districts and charter schools, most can agree that double counting results in an inequitable distribution of available resources and inappropriately favors those who game the system.
President Kevin McCarthy wrote that its support was contingent on the tax increase being used to cut the deficit, not pay for increased spending. McCarthy told our reporter that ATRA's board of directors was caught off guard by Brewer's vetoes last month.
PHOENIX—A prominent business advocacy group has withdrawn its endorsement of Arizona Gov. Jan Brewer's proposal for a temporary sales tax increase to help balance the state budget.
And the trend in Maricopa County is a sign of trouble, said Kevin McCarthy, president of the Arizona Tax Research Association. “Those are not good numbers,” he said. “The system is not supposed to work this way.”
Kevin McCarthy of the Arizona Tax Research Association said Adams' advocacy was admirable, but his quick reaction to the flat tax's negative reception showed a well-tuned political ear.
Kevin McCarthy of the Arizona Tax Research Association agreed. "People have a tendency to characterize him as a strident partisan," McCarthy said. Although staunchly conservative, Burns has a pragmatic streak, the longtime Capitol lobbyist said.
Kevin McCarthy, president of the Arizona Tax Research Association, called increasing the QTR to address budget deficits “a horrible idea” because Arizona already has high business property taxes and increasing them makes the state less attractive to new and relocating businesses.
There is no allowance in the state Constitution for what has transpired during the past two months, said Kevin McCarthy, president of the Arizona Tax Research Association, a public finance and tax policy think tank. McCarthy said the Constitution “does not contemplate us being in mid- August and not having a budget.”
"There are really no good options to get out of this mess that anyone's happy about," said Kevin McCarthy, a longtime Arizona resident and the president of the Arizona Tax Research Association (ATRA), a Phoenix-based finance policy group.
Kevin McCarthy, president of the Arizona Tax Research Association, said many taxpayers saw a dramatic increase in the assessed value of their homes during the recent real estate boom. But some taxing jurisdictions left their rates the same. In short, while the tax rate did not necessarily increase, taxpayers’ bills did as a result of soaring home valuations.
"In no small way, our property-tax system is a job-killer," said Kevin McCarthy, president of the Arizona Tax Research Association. "It's the equivalent of putting a stop sign at the state border saying, 'You don't want to come here.' "
Kevin McCarthy with the Arizona Tax Research Association doesn't believe Republican lawmakers will agree to a tax increase. He predicts the issue will be put to a vote in November. "At the end of the day I think you'll see a referral that will allow citizens to have the final say on whether or not we'll have a tax increase," said McCarthy.
Kevin McCarthy, president of the Arizona Tax Research Association, says he was surprised to find the idea in the $8.2 billion state budget passed last week by the GOP-led Legislature, but supports it nonetheless. McCarthy says the plan doesn't constitute an immediate tax increase because it only affects bonds passed by voters in future elections.
McCarthy points to the fiscal 2008 and 2009 budgets as particularly heinous examples of unwillingness by state officials to rein in spending in anticipation of a downturn. The signs were on the wall that the one-time revenues resulting from the housing boom were about to evaporate.
Justin Olson, an analyst at the Arizona Tax Research Association, criticized the increased levy. Foreclosures, depressed home values and fewer new homes suggest that property-tax increases will hit harder than in previous years.
"Per unit, if you want to look at it from a purely business perspective, we are efficient," said Justin Olson, a research analyst for the Arizona Tax Research Association. "The school that has the higher student-to-teacher ratio, the school that understands this premise, is probably paying its teachers better and is getting the better, the more sought after, teacher."
The Census Bureau figures aroused the suspicions of the indispensable fiscal sleuths at the Arizona Tax Research Association. So, they started digging into the data's details. They found that Arizona's figures were missing huge sums of money. The state education sales-tax revenue wasn't included.
The Arizona Tax Research Association, a business-backed lobbyist group, recently reported that districts began the current fiscal year with $329.8 million of money they legally couldn't spend. That's apart from money required for debt service and other legal purposes and obligations, the association said.
“All those,” said Kevin McCarthy, president of the Arizona Tax Research Association, referring to the ballot propositions, “were intended to do the same thing, and that is to strip lawmakers of the authority that they otherwise had to try to (deal with a budget crisis), which is why we opposed all of those.”
An outstanding piece of work to guide us comes from the Arizona Tax Research Association. Led by President Kevin McCarty, ATRA's recommendations are a must-read for anyone interested in solving not only our current deficit, but also our state's structural shortfall.
The economic crisis facing Arizona is extraordinary. Arizona's unemployment is up to 7 percent, and 155,000 Arizonans lost their jobs in the past year. This economic collapse has led to a record state budget deficit.
In essence, the state was buying ongoing programs and services with one hand and trimming its ability to pay for them with the other. "It's safe to say there are fingers to be pointed all over the map in terms of why we're in this situation," said Kevin McCarthy, president of the Arizona Tax Research Association.
Kevin McCarthy of the Arizona Tax Research Association said he expects taxable tobacco sales to plummet. Increased prices have driven consumers to buy more cigarettes from businesses on American Indian reservations with low tax rates and on the Internet from businesses located in areas with lower levies, McCarthy said.
Groups signing onto Wednesday's letter include the Arizona Tax Research Association, Greater Phoenix Chamber of Commerce, Arizona Free Enterprise Club, Arizona Manufacturers Council, National Federation of Independent Business and the East Valley and West Valley chambers of commerce.
There could be some good news in all of this if the lower assessments automatically meant lower tax bills. But that is not the case, said Kevin McCarthy of the Arizona Tax Research Association, a private organization that monitors state and local tax policies.
Joining the chamber in supporting House Bill 2073 were Pinnacle West Capital Corp., the National Federation of Independent Business, the National Association of Industrial and Office Properties and the Arizona Manufacturers Council. The Arizona Tax Research Association and Americans for Tax Reform also supported the bill.
There are "hundreds" of similar deals draining cash from the state's general fund, according to Kevin McCarthy, president of the Arizona Tax Research Association in Phoenix. The Legislature appropriated $300 million in 2003 for expansion of the Phoenix Civic Plaza. "It still costs the state millions every year to help fund that project," McCarthy told us.
According to the Arizona Tax Research Association, overall property-tax collections in the state have increased 42 percent in the past five years, nearly 8 percent in just the past year. Moreover, there's about to be great stress on government finance backed by the property tax, as residential values reset to reflect current market conditions.
But Kevin McCarthy, executive director of the Arizona Tax Research Association, said tax reform is just code for tax increases. "We shouldn't be coy about it," McCarthy said of tax overhauls. "If anybody's talking about it in this environment (of budget deficits), it's to raise taxes."
The Arizona Tax Research Association, under the leadership of Kevin McCarthy, opposed both of last year’s property tax initiatives. But he has lobbied the legislature to curb the taxing power of fire districts.
According to the Arizona Tax Research Association, authorized General Fund spending for this year was $10.7 billion. You will hear and read lower figures. But that's the real sum, according to ATRA, when adjustments are made for accounting gimmicks and debt.
The Arizona Tax Research Association and the Goldwater Institute are expected to file a lawsuit soon to fight desegregation funding. Kevin McCarthy, president of ATRA, said unlimited desegregation funding not approved by voters "is in complete violation" of the state constitution.
Kevin McCarthy, president of the tax association, said the system sets up an inherent imbalance by giving the districts with the desegregation levies a funding advantage over others. In the case of TUSD, he said, the district is getting 23 percent more funding than it would otherwise be entitled to collect.