Guest Opinion: Columnist's view of state funding twists truth

Tucson Citizen
Thursday, February 6, 2003
Sharon B. Megdal

Bob Robb, in his column on the Fiscal 2000 Committee, quotes numbers in a way that serves a certain purpose. Not only does he tell just part of the story, but his analysis is too simplistic.

In 1989, I chaired the State Select Committee on State Revenues and Expenditures, better known as the Fiscal 2000 Committee. The 15-person committee, made up of elected officials and several representatives of the private sector, studied Arizona's fiscal structure carefully.

We developed several findings and recommendations that, despite what Robb may say, have stood the test of time well. People from all sides of the political aisle regularly comment on the relevance of the Fiscal 2000 report. However, copies are hard to find. So, in truth, comments can be made about it and few can check on their accuracy.

Robb would make you think that all tax increases are bad. An interesting and very relevant fact he fails to mention is that in 1990, after the Fiscal 2000 Committee submitted its recommendations, the Legislature enacted a tax increase. And hear this: The economy did extremely well after that tax increase was enacted. It did so well that soon afterward policymakers enacted a series of tax decreases.

I am an economist and occasionally have to speak like one. Robb confuses causality and correlation. Just citing how certain things relate to each other over time does not establish whether one thing causes another.

In reality, the relationship between the economy and revenues is there. It's just difficult to look at general trends and sort out what's cause and what's effect.

A state budget is like a snapshot. Elected officials have to figure out how much to spend and how to fund those expenditures for a particular year. The economy, however, is dynamic. Whatever tax structure and expenditure combination, a year later revenues and expenditures won't match up. What happens during that year depends on the economy and the growth in population.

When the economy is performing well, revenue growth is sufficient to cover expenditures and even allow expenditures to grow or tax rebate/reductions to be implemented. When economic performance cools, then reality hits. It is no coincidence that, like the late 1980s, we are once again in the throes of dealing with a serious imbalance between revenues and expenditures.

Robb was correct in noting that the "rainy day fund" did not exist at the time Fiscal 2000 made its report. It was implemented because Fiscal 2000 recommended that a contingency revenue fund be established. Robb seems so intent on slamming Fiscal 2000 that he is unwilling to give credit where credit is due.

Whether or not you consider yourself a fiscal conservative, it is unfair to conclude that all changes to the tax code are bad - unless you want to stymie government's ability to deliver those services the public expects of it, that is.

Let's not forget that government is there to serve the public.

It is prudent to take another comprehensive look at our fiscal structure. But let's not bias our look with selective reconstruction of history. Let's look at these issues in a deliberate, thoughtful manner. Let's get some idea of what might be advisable to do, because at least then we'll also understand the implications of what we don't do.

Sharon B. Megdal, a Tucson economist, was chair of the Fiscal 2000 Committee of 1989.