Our view: Should taxpayers make up for deficit?

East Valley Tribune
May 7, 2010
Tribune Editorial

Businesses across the East Valley have had to make hard choices during the recession. Cuts have been made, services altered, employees laid off.

Families are making similar choices. We’re eating out less, curtailing vacation plans, making more conscientious decisions at the grocery store.

Belt-tightening isn’t fun, but at times it’s necessary.

Should that reality be shared by our governments as well? That’s a question voters will answer May 18 at the polls.

Sales tax revenues are down to 2004 levels, causing huge budget deficits in our city and state governments. Should those shortfalls be passed on to you, the taxpayer? Here is our view on three sales tax initiatives facing voters in the May 18 election — Proposition 100 in the state, Proposition 406 in Gilbert and Proposition 401 in Tempe.

Prop. 100

This 1-cent sales tax increase would raise the rate to 6.6 cents per dollar for a period of three years. Two-thirds of the estimated $1 billion a year it will generate would go toward education and one-third toward public safety and health and human services.

Given Arizona’s track record in education — we rank near the bottom in the country in many comparisons — the sales tax increase is needed. Throwing more money at schools is not going to fix the problem by itself. But the amount of cuts schools will be facing if it doesn’t pass will be daunting. School districts are preparing to increase class sizes, lower staff salaries, lay off teachers and eliminate music, art and athletic programs in some cities.

The Arizona Tax Research Association, a group that historically opposes tax increases, is supporting Prop. 100. The Tribune — like ATRA — is supporting the sales tax increase but would like to see further budget cuts (not Band-Aids) by the state legislature over the next three years so we’re not faced with this issue again in 2013 when Prop. 100 expires.

Prop. 406

Gilbert runs a leaner government operation than most cities and has the lowest city sales tax rate (1.5 percent) in the Valley. So asking for a quarter cent sales tax increase doesn’t seem unreasonable.

But there are three problems with this proposal.

First, not all Gilbert Town officials agree the tax is necessary. Mayor John Lewis and council member Jenn Daniels are both opposed to the tax increase and insist there are ways to reduce the budget.

Second, a citizens advisory committee spent months poring over the Gilbert budget with Town officials and offered other ways to cut the budget. Many of those recommendations have not been acted on.

And third, the tax increase is permanent. Increasing sales taxes as a temporary way to weather the recession is one thing. Making the increase permanent is another.

Gilbert is saying the tax increase will go toward public safety. But, really, there’s nothing to prevent Gilbert from earmarking Prop. 406 money to public safety, then pulling an equal amount away from the general fund that would have been used in that capacity.

Cuts will only be made to public safety if Gilbert chooses to make cuts there. And from what town officials and the citizen’s advisory committee recommend, there are other places that can be cut first.

Prop. 401

Tempe is seeking a .2 percent sales tax increase for the next four years that will raise the city’s tax rate to 2.0 percent.

Tempe has already made several cuts to its budget, and firefighters and police officers are voluntarily taking a 2 percent pay cut for the next fiscal year.

But if Gilbert can find ways to trim excess fat from its budget, we think Tempe (with its higher tax rate) can do the same. Belt tightening shouldn’t be limited to the private sector.