Hear Me Out: Is Proposition 302 good or bad for Arizona?

ABC15
August 28, 2010
Editorial Kevin J. McCarthy

PHOENIX - The nation faces tough questions in tough times, and there are people on both sides of every issue.

Arizona is no different. But who’s saying what about the issues important to Arizonans?

Each Sunday, ABC15.com debuts an Arizona issue - along with two opposing sides on the topic.

Don’t worry, you always have the opportunity to make comments at the bottom of the page. Yeah, your opinion matters too.

This week we're tackling the debate over controversial Proposition 302.

The measure would repeal Arizona's early childhood services program, "First Things First", moving its $324 million into the state's general fund.

Supporters of Prop 302 say the recession is still affecting Arizona's economy, leaving the state with a massive budget deficit that would be greatly helped by the program's $324 million.

Opponents contend the "First Things First" program is vital to Valley families, who should not be penalized for Arizona legislators' overspending.

So, is Proposition 302 good or bad for Arizona?

PROP 302 NEEDED IN ECONOMIC CRISIS: By Kevin McCarthy, President, Arizona Tax Research Association

The Arizona Tax Research Association (ATRA), Arizona’s only statewide taxpayer organization, supports Proposition 302.

As all Arizonans are now painfully aware, the recession has had a devastating effect on the Arizona economy.

Almost 300,000 Arizonans have lost jobs in recent years. The recession has also created historic budget challenges at the state level. Since the high-water mark in Fiscal Year 2007, state general fund revenues have fallen $3.6 billion or 37%. The state’s current structural budget deficit is $1.7 billion.

In struggling to close state budget deficits over the last three years, state policymakers have faced a myriad of difficult decisions. Taxes have been increased over $1.2 billion. On-going state spending has been reduced $1.1 billion. However, despite the progress that has been made, Arizona will continue to be faced with major budget deficits for the foreseeable future.

If there is any silver lining with budget deficits, it is that policymakers are forced to re-prioritize spending within available revenues.

However, in Arizona, those budget decisions are complicated by a series of voter initiatives that handcuffed lawmaker’s budget authority. Those initiatives have mandated expenditures for education, low income health care, early childhood programs, and land conservation. Each has played a role in increasing the deficit.

Proposition 302 would redirect 80 cents of our current tobacco taxes that are earmarked for the Early Childhood Development and Health fund to the state general fund to be appropriated for health and human services for children.

If passed, Proposition 302 will plug a $324 million hole in the current state budget. Failure will result in further reductions in the programs that receive state support: K-12 schools, universities, low income health care, and prison spending. Or worse, taxpayers will once again be looked upon to close this chronic budget deficit.

When “First Things First” passed in 2006, ATRA correctly pointed out that the huge tobacco tax increase would actually have a negative impact on overall tobacco tax collections. The proponents of “First Things First” were remarkably unconcerned in the fact that their idea to increase tobacco taxes would strip the state general fund of millions in annual tobacco taxes.

Unlike previous tobacco tax increases that recognized that cigarette sales decrease as taxes are increased, the drafters on “First Things First” failed to hold harmless the existing recipients of tobacco tax dollars. The result has been a $59 million dollar decrease in available funds at the state level for primarily low income health care programs.

Finally, the prolonged recession that has gripped Arizona has impacted every segment of our society.

The financial decisions that have been made in both the public and private sectors have had major impacts on many Arizonans. In the public sector, policymakers have been forced to prioritize spending toward the most critical programs.

It is ironic and sad that at a time when lawmakers are forced to consider eliminating health care for 310,000 Arizonans and 47,000 children on KidsCare, that “First Things First” has the money to waste on a half-billion dollar marketing campaign. In good times, such a waste of taxpayer funds would be inappropriate.

In our current crisis, it is offensive and provides further evidence that you should vote YES on Proposition 302.