YES: State needs money to balance its budget

Arizona Daily Star
October 17, 2010
Kevin McCarthy Editorial

The following opinion piece was written by Kevin McCarthy, president of the non-profit Arizona Tax Research Association.

Question: Are the programs financed by First Things First no longer important to Arizona's future? Please be specific in explaining why or why not.

Arizona is at a critically important point in our history and the choices we make today to address our massive state budget deficit will certainly affect our future.

As all Arizonans are painfully aware, the national recession has had a particularly devastating effect on Arizona. Almost 300,000 Arizonans have lost jobs and the state confronts a historic budget challenge where policymakers are challenged with a 37 percent reduction in general fund revenue. Even after the passage of the temporary 1-cent sales tax increase, the structural deficit still stands at roughly $1.8 billion.

Arizona's budget crisis has forced difficult choices on all Arizonans. In the worst economic climate since the Great Depression, taxpayers have been asked to dig into their pockets to pay higher property and sales taxes.

The Arizona Tax Research Association (ATRA) supported the sales-tax increase in an effort to mitigate more budget gimmicks that will only lengthen Arizona's budget crisis. Supporting a major tax increase in this economic climate was not an easy decision for ATRA. However, ATRA recognizes that there are no easy choices left to close the budget deficit.

ATRA's support for Prop. 302 is not based on whether the programs financed by First Things First are important.

Our support for Prop. 302 is based on the simple fact that the recession has forced policymakers to set clear priorities for the expenditure of scarce tax dollars.

The core functions of state government are public education, low-income health care and prisons.

Prop. 302 requires the proceeds of the tobacco tax revenues to be separately accounted for and appropriated to health and human services for children. These are the core services for children that should not be eliminated in favor of keeping the new, less-essential services provided by First Things First.

Question: If voters agree to sweep First Things First money into the general fund, will this prevent further cuts in state funding for education and health care?

The honest answer is no.

Even with the passage of Prop. 302, the state faces serious budget deficits for the foreseeable future.

The only thing that is certain is that the failure of Prop. 302 will increase our current budget deficit by another $324 million. That deficit will have to be closed with further reductions in state's core programs or even more tax increases.

In 2006, during a booming economy, Arizonans approved a new program we thought we could afford. In four short years, everything has changed.

A "yes" vote on Prop. 302 is a simple reflection of that reality.