Sales-tax hike passes

Arizona Daily Star
May 19, 2010
Rhonda Bodfield and Alexis Huicochea

The state sales tax will be a penny higher for the next three years after a decisive majority of voters in nearly every county agreed to help backfill state coffers and avoid deep cuts in education.

With nearly 85 percent of polls reporting, Proposition 100 was winning by a nearly 2-1 margin, with 64 percent of voters in support.

Estimated to raise about $1 billion a year, the state sales tax will be 6.6 percent starting in June. With local taxes added on, Tucsonans will pay 9.1 cents per $1.

If the measure, spearheaded by Gov. Jan Brewer had tanked, the state Legislature had already outlined nearly $1 billion in additional cuts to help balance the budget for the fiscal year beginning July 1.

About two-thirds of the extra sales tax collected will go to primary and secondary education. But even those programs will see budget cuts - just not as deep. The remaining third will go to public safety and health and human services.

"The most important thing to me is that our teachers can go to work tomorrow knowing their community and state supports what they're doing," crowed Vail School District Superintendent Calvin Baker.

Ann-Eve Pedersen, head of the Arizona Education Network, was likewise celebrating. "It reinforces my faith in regular Arizonans to do the right thing. They were willing to do what legislators weren't - and that is to ensure proper funding for education and public safety."

Brewer directed some of her comments toward repairing relations with the substantial minority of Arizonans who did not want the tax hike.

"I know that those people probably believe we need to continue to cut state spending," the governor said. "And we will continue to streamline."

The governor said she has a commission looking at ways to trim government expenses. At the same time, Brewer said her plans to replace the state Department of Commerce with a quasi-public authority should help generate new jobs to stimulate new tax revenues.

Ultimately, Brewer said the measure passed because Arizonans believed her message that there is no responsible way to balance the budget without new revenues.

But critics of the measure, including taxpayer associations and the National Federation of Independent Business, contend the increase will hurt small business at a time the state has already dropped 300,000 jobs in the past few years. They were vastly outspent by supporters, who poured about $2 million into the effort, and who drew on interest groups as diverse as the Arizona Education Association, state chambers of commerce and the fiscally conservative Arizona Tax Research Association.

Farrell Quinlan, state director of the National Federation of Independent Business, said he wasn't surprised at the defeat, given the anemic "no" campaign.

"I think what worked for the other side was their reliance on the emotional appeal and the promises they made that Prop. 100 is a three-year solution and a bridge to a more solvent future," he said. "People were sold on the idea that this tax increase is the total they'll have to bear and none of the programs being threatened are going to be cut." He predicted they won't be able to keep those promises.

Quinlan said the vote didn't make sense in light of other political races throughout the country, with the defeat of Pennsylvania Sen. Arlen Specter and the win of tea-party-backed Rand Paul in Kentucky. "You'd think the national mood shifted toward smaller government and lower taxes, but it seems Arizona is going counter to the libertarian vein that we're seeing elsewhere in the country."

Pollster Earl de Berge disagreed with that assessment. "I think this is really kicking the politicians in the butt. This may be the first sign in Arizona of a continuation of the anti-incumbent mood, with people saying the Legislature could have made this decision already and we'd be farther along by now."

The pollster said politicians should read into the vote the depth of concern Arizonans have about education cuts and further economic stagnation. "They see a government that's unable to pay its bills and provide services, and they're seeing that's not going to be helpful in attracting business and reinvigorating this economy."

University of Arizona political science professor Tom Volgy said small government plays well until people see core services going away. Even so, he said he was still stunned at the margin. "The big fear was that Arizonans wouldn't trust this Legislature with a penny, yet they were willing to take the risk that the Legislature wasn't lying to them about where the money would go."

John Kromko, head of the Pima Association of Taxpayers, one of the most active critics of the increase, was disappointed because he fears voters believe the problem is resolved.

"I hope this doesn't sound like sour grapes, but I really hope this doesn't reduce the incentive of people who support education to do something to change our tax structure - because this doesn't do anything to resolve the problem. We're still in the same boat," he said.

Kromko said interest groups will have to monitor the Legislature.

Ron Shoopman, head of the Southern Arizona Leadership Council, which endorsed the measure, said the vote doesn't mitigate the need for a longer-term fix to the state's tax structure.

"This vote and the money that we'll take in is a band-aid for a still very bad situation. It will, in fact, help mitigate some of the things we're facing, but it certainly doesn't solve it. There are still going to be cuts and sacrifice, but this will keep it from getting any worse. The message that we are at a critical juncture came through."

"The people of this state essentially said they value education, they value public safety, and they value health care. And in the future, the Legislature should take away from this that they should take the responsibility among themselves to pass the necessary taxes to cover the essential services."

Studies circulated by both sides agree there will be some losses for small business.

The University of Arizona determined the sales-tax increase could cost 7,400 private sector jobs. But after UA economists plugged back in the jobs that would be saved by the additional resources - from government jobs to what the government spends directly on contracts with private business - they estimated the net effect would be to save 13,000 jobs and preserve more than $442 million in federal matching funds.

With the state facing a $3 billion shortfall, education, for example, will still see $160 million in cuts in next year's budget, even with the tax.

But it saved cuts of a larger magnitude, the largest, in K-12 education, weighing in at nearly $428.6 million. The university system would have seen a 12 percent drop in funding, the equivalent of $107 million.

Elizabeth Celania-Fagen, former superintendent of Tucson Unified School District, said while the district still must deal with a $19 million cut, the vote helped to avoid what she characterized as "catastrophic" reductions.

"Students are still losing pieces of their education that they'd like to have, but we're not going to have to go to ultra-extreme measures."

Even with this vote, the budget may be out of whack again in November, since keeping it balanced is contingent on getting voters to agree to raid two funds and divert those resources to other uses. That includes $300 million from an early-childhood-education program and another $123 million from a land-conservation fund.

By the numbers

With vote tabulation nearly complete, Proposition 100, the 1-cent state sales-tax increase, was carrying statewide. The most recent totals available showed the tax receiving:

Pima County

64% 36%

yes no

Maricopa County

65.5% 35.5%

yes no

Statewide

64% 36%

yes no

NOTE: Results as of 11:30 p.m. Tuesday. 88 percent of precincts reporting