Sewers vs. Sports Arenas

By Stephen Slivinski, Goldwater Institute

When government issues debt, you probably think it’s paying for the construction of a highway or water and sewer improvements – the sort of things that we usually expect government to provide.

For almost a quarter of state and local government debt in Arizona, however, the bonds pay for projects that directly benefit private interests instead of the public at large. And none of this debt is subject to the constitutional debt limits, nor did voters approve much of it.

The city of Glendale, Ariz. is a prime example of what can happen when government is not bound by constitutional debt limits. Over 40 percent of Glendale’s current long-term debt load ($475 million out of just over $1.12 billion in debt) goes to finance the hockey arena, the Cardinals stadium, hotel and retail centers, and subsidies to retail giant Cabelas. Glendale has used financing methods that keep its debt outside of the debt limits in the state constitution.

Repayment of the bonds is premised on the revenue that these projects are expected to generate from, say, well-attended hockey games or highly popular retail centers. But if that revenue never materializes, as has happened often, someone else will have to pay the bonds. Taxpayers are the likely target.

One way to protect the public’s money from special debt-financed subsidies to private interests is to put an overall cap on all government debt and to subject all local debt issuance to voter approval. These steps would require elected officials to make the case to voters that a bond to give subsidies to a sports team or a big retail corporation is more important than keeping open some of their bonding capacity for things like sewer improvements or public safety. When the trade-offs are so explicit, it’s unlikely that voters will approve letting local governments abuse their power to issue debt.

Stephen Slivinski is a senior economist at the Goldwater Institute.

Learn More:

Goldwater Institute: Cutting up the Credit Cards: Seven Ideas to Reform the Culture of Debt in State and Local Government

Goldwater Institute: Debt and Taxes: Arizona Taxpayers on Hook for $66 Billion Tab Run Up by State, Local Governments

City of Glendale: Debt Management Plan

Prop 204 supporters see what they want to see

By Jonathan Butcher

One of the perks of being a dad is that your children keep you current on popular culture. My son worked his way through the Harry Potter series this summer and informed me that “rememberalls” are small orbs to help you remember things and you can eat chocolate frogs, if they don’t hop away first.

He told me about the Mirror of Erised, which appears in the first of the seven-book series, and is a mirror that allows Harry to see exactly what he wants to. Everyone who looks into the mirror sees what they want to see.

Supporters of Prop 204 seem to be looking into the Mirror of Erised, and they want you to look, too. They hope you’ll see “guaranteed” funding for schools through a 1-cent sales tax increase.

What Prop 204 supporters hope you don’t see is the mishmash of special interest projects, like highway spending, that will also be funded and the fact that schools will have little accountability for what they do with the increased funding.

Simply spending more on schools doesn’t mean better results for children. Research from Harvard and Stanford Universities demonstrates there is no direct relationship between spending and achievement (otherwise the dots on this graph would all be assembled on the red line).

On the chart linked above, states that have increased school spending more in the past 20 years are on the right side, while higher-achieving states are near the top. Notice in states like Florida and Delaware, spending did not increase as much as in places like West Virginia and Maine, yet the achievement gains were greater.

Arizona has tried to improve test scores for 40 years by spending more on schools, but achievement scores haven’t budged. Arizonans should vote against Prop 204 and reject the vague promise that things will be better if only we raise taxes again.

Jonathan Butcher is Education Director for the Goldwater Institute.

Learn more:

Goldwater Institute: Proposition 204 Not as Advertised

Goldwater Institute: It’s the Same Old Song

Goldwater Institute: An Abbott and Costello Routine: Who’s on… 49th?

Education Next: Is the U.S. Catching Up?

Scholastic.com: The Harry Potter Collection

Passengers in the Same Cab: Free Speech and Economic Liberty

By Nick Dranias, Goldwater Institute

Last week the Arizona Supreme Court ruled in the Goldwater Institute’s favor that the First Amendment protected a tattoo business from being shut down by the City of Mesa, Arizona. The Court held that tattooing is a form of protected communication, just like painting or writing. Just as booksellers and art dealers are protected by First Amendment, so too are tattoo businesses. The decision illustrates that there is often no real distinction between economic liberty and free speech.

But that hasn’t stopped taxi regulators in New York City from trying to ban a smart phone app that hails cabs. Although the app simply allows passengers and taxi drivers to communicate with each other, regulators don’t like how the app bypasses laws that force passengers to call a service company’s dispatch center to arrange a ride. It is okay for a would-be passenger to stand in the rain on a street corner and wave their hand or whistle, but it is forbidden to sit at a table in Starbucks and press a button on a smart phone that communicates the same information directly to a taxi driver. Regulators want to stop taxi drivers and passengers from more conveniently communicating with each other—in practice, they want to ban a form of speech.

This is not just absurd regulation; like Mesa’s effort to close down a tattoo business, New York City’s action highlights the artificial divide between economic liberty and free speech that still drives much of constitutional law. In footnote 4 of a case called United States v. Carolene Products, the Supreme Court famously declared that economic liberty deserved less constitutional protection from the judiciary than so-called fundamental rights, like free speech. Most conservatives and libertarians have long denounced this decision, arguing that there is no principled way to justify treating free speech as more fundamental than economic liberty. This is because, in reality, neither right can be exercised freely without the other.

Modern technology is making this point ever more clear. Communication is increasingly the most important and dominant element of economic activity. Economic activities that previously required vast investments in physical and human capital, such as dispatched taxi service, now only need a couple of smartphones and the willingness to communicate through them.  It is becoming easier and easier to see that the regulation of most economic activities is, in substance, equally the regulation of speech—if not more so.

These trends will eventually swamp the artificial constitutional divide between free speech and economic liberty. And courts will have to decide whether to protect all forms of liberty equally. Let’s hope they follow the Arizona Supreme Court’s lead and choose to robustly protect both economic liberty and free speech, recognizing that freedom is freedom.

Nick Dranias holds the Clarence J. and Katherine P. Duncan Chair for Constitutional Government and is director of the Joseph and Dorothy Donnelly Moller Center for Constitutional Government at the Goldwater Institute.

Learn More:

New York Times: As a Taxi-Hailing App Comes to New York, Its Legality Is Questioned

U.S. Supreme Court: United States v. Carolene Products

Prop 121′s Dirty Little Secret

By Clint Bolick, Goldwater Institute

While most voters are focused on the national election, Arizona voters need to pay careful attention to a ballot measure that could imperil freedom in our state.

It’s Proposition 121, the so-called “Open Elections/Open Primary” initiative, and it’s the ultimate Trojan Horse.

Its backers acknowledge that their goal is to produce more moderate elected officials—that is, fewer conservatives.

They accomplish that by abolishing party primaries and replacing them with a single primary in which anyone can run and everyone can vote. Sounds good.

But then, only the top two candidates proceed to the general election. No one else—no independents, no third party candidates—can gain access to the general election ballot. The idea is that the more moderate candidate emerging from the primary will win.

The dirty little secret is that in many instances, voters in the general election will be limited to a choice between two Democrats or two Republicans. In California, which implemented the “top-two” system this year, both candidates will be from the same party in one out of every five congressional districts.

That will happen frequently when more candidates from one party compete in the primary, thus dividing the vote. In Arizona’s new 9th congressional district, which has a slight Republican registration edge, Republican Vernon Parker will face off against Democrat Kyrsten Sinema this fall in a classic conservative/liberal contest. But if the top-two system was in place, Sinema would be facing off in November against David Schapira, another liberal Democrat who received the second-most primary votes, which would be no choice at all for the hundreds of thousands of independents, Republicans, and people registered in other parties.

In 2014, if more Republicans than Democrats run for governor and divide the primary vote, we could be limited to a choice between two Democrats in the general election–in a state with more Republicans than Democrats! The perversities go on and on and will afflict both parties.

But because Arizona is a conservative state, the net result will be to move our state to the left. At a time when our state’s sovereignty is all that stands between us and an ever-growing federal government, we can ill afford a system designed to sabotage our freedom spirit.

Proposition 121 is complex. Please take time to explain it to your friends who may be taken in by the benign-sounding rhetoric being used by its supporters.

Clint Bolick is director of the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation.

Learn more:

Save Our Vote: Website

Arizona Republic: What If We Had a Top-2 Primary Now?

Goldwater Institute: Save Our Vote v. Bennett

Licensing Hurts

By Byron Schlomach, Ph.D., Goldwater Institute

After Hurricane Isaac blew through Louisiana, Gov. Bobby Jindal temporarily suspended licensing rules to allow EMTs to travel from other states and care for Louisianans. Similarly, after hurricanes ravaged Florida in 2004, then-Gov. Jeb Bush sought to ease licensing rules for roofers.

Professional licensing supposedly protects vulnerable people from the unscrupulous by putting government between us and those we would hire for services like plumbing and medicine. Yet, when unforeseen events like hurricanes make people even more vulnerable, authorities often ease or suspend licensing rules. These examples bear testimony to the fact that professional licensing hurts consumers of licensed professional services. When free enterprise prevails and demand rises, more individuals offer their services, even moving across states if necessary. Licensing prevents this, and leads to higher prices, lost opportunities, lives unsaved, and roofs unrepaired.

At a time when health care costs have risen faster than general inflation for decades, licensing laws prevent more people from practicing all aspects of medicine. A proposed law to allow out-of-state doctors to administer aid temporarily at a free clinic in Arizona was actively opposed by licensing advocates. Their offered “compromises” always consisted of red tape that would have prevented caring out-of-state doctors from bothering to come here.

Despite the heavy cost of licensing, every legislative session more professions seek to be licensed. Legislators should resist these efforts. Instead, if they want Arizona to be a land of opportunity, legislators should make private certification a more viable alternative to licensing and start repealing the licensing laws we already have on the books.

Dr. Byron Schlomach is the director of the Goldwater Institute’s Center for Economic Prosperity.

Learn more:

Goldwater Institute: Six Reforms to Occupational Licensing Laws

National Roofing Contractors Association: Florida roofing licensing laws complicate reroofing effort

WSLS 10: Gov. Jindal suspends EMT licensing requirements

Every Arizonan Owes More than $7,500 in State Debt

Contact: Lucy Caldwell, (602) 633-8986

FOR IMMEDIATE RELEASE: 

Phoenix, AZ—Every Arizona household’s debt is getting bigger—but most people don’t even know they owe. In Arizona, every man, woman and child owes state and local governments more than $7,500 for bills ranging from sports stadiums to parking garages.

State and local per-person long-term debt grew from $4,568 per Arizonan in 2000 to $7,587 in 2009, an increase of 66 percent in less than a decade. Arizona’s per-person debt load is almost $1,000 more than the national median of around $6,800 in per-person debt.

The $7,587 owed by every Arizonan to pay off state and local debts is in addition to the $51,000 per-American share of the mounting federal debt.

In a new report, Cutting up the Credit Cards: Seven Ideas to Reform the Culture of Debt in State and Local Government, Goldwater Institute Senior Economist Stephen Slivinski examines the vastness of the state’s debt and recommends seven key reforms to rein in Arizona’s debt culture.

“In economic times like these, most people have their hands full trying to balance their own checkbooks,” said Slivinski. “Yet our policymakers can’t restrain themselves from committing to more and more new debt that Arizona families ultimately will have to pay off.”

Although Arizona’s framers established a constitutional debt limit to cap state debt to $350,000—roughly $8 million in today’s dollars—the limit is not effective at actually limiting debt. This is because the courts have interpreted the debt limit to apply only to a specific type of debt: the “full, faith, and credit,” or general obligation debt. Politicians are able to commit current and future taxpayers to paying off a variety of debt instruments—usually called “non-guaranteed debt”—that are not subject to the constitutional limit and often do not require voter approval.

Debt-service payments were the fastest growing category in Arizona’s noncapital budget for state general expenditures in the last decade, growing 170 percent from 2002 and 2009. Almost one quarter of all state and local debts in Arizona are for projects primarily benefitting private interests, such as shopping centers or sports arenas.

For many local governments, debt payments have caused cities to cut essential services.

For example, Glendale, Arizona recently fired 49 employees, including a handful of policemen, to help cover its $35 million spending gap. The city has paid the National Hockey League $50 million over the past two years to keep the Coyotes hockey team in the city’s taxpayer-financed Jobing.com Arena, fearing that if the Coyotes move, the city will be unable to pay off the debts it owes from constructing the arena in 2002. Meanwhile, the city has had to table plans to complete the remodel of the city’s courthouse and to build a new library.

“When our elected officials commit funds to private-interest projects like sports stadiums, it doesn’t just drive up our families’ tax bills—it often means cutting the services we rely on, like law enforcement in our neighborhoods and libraries for our children,” said Slivinski.

In his paper, Slivinski recommends seven reforms to rein in Arizona’s debt, including a strict cap on debt for state and local governments, voter approval of all debt at the local level, and transparency requirements for all state and local debt.

To read the entire report, click here.

For a bio and high definition photo of Goldwater Institute Senior Economist Stephen Slivinski, click here.

The Goldwater Institute protects America’s greatest inheritance – the liberty and economic freedom of the individual – by holding government accountable and standing up for regular taxpayers just like you.

The 2012 Legislative Report Card is out

The annual Goldwater Institute Legislative Report Card scores Arizona lawmakers on their support of principles of limited constitutional government. Each piece of legislation is assessed in one of four categories for whether it expands liberty consistent with the Arizona Constitution, or restricts liberty.

This report card assesses 517 votes. Average scores were 56 percent in the House and 59 percent in the Senate, indicating that slightly more votes upheld liberty than undermined it. These scores are respectively 23 percent and 20 percent higher than the scores first reported in 2003. The increase reflects a long-term trend of improvement in voting patterns. Education scores, in particular, were sharply higher in both major parties this year. The highest overall score was Sen. Steve Smith’s 76 percent. Rep. Eddie Farnsworth received the highest score in the House, which was 73 percent. These high scorers received overall grades of A-. As in 2011, not a single legislator in this year’s report received an overall score of A or higher.

Beyond the individual legislator grades, this report card includes an assessment of each bill’s impact on the status quo with “high impact,” “moderate impact,” and “incremental impact” categories. It reveals a significant narrowing of the difference in voting patterns between the major political parties with respect to high-impact bills as compared to prior years. This year the difference between the parties with regard to high impact bills was only 37 points; in 2011, by contrast, the difference was a dramatic 71 points. No such dramatic narrowing of scores occurred with regard to moderate or incremental impact bills.

The 2012 Legislative Report Card also compares traditionally funded and publicly funded candidates. As with all previous years, the source of campaign funding appears to have no significant impact on voting behavior.

The report card is not an absolute measure of a legislator’s merit and does not constitute any endorsement. It is meant to be a tool for general research and for accountability, helping voters assess the work of their elected representatives.

To read the report and to see how your legislators did, click here.

Risky Business: Understanding the Business Side of Government Bonds

By Mark Flatten, Goldwater Institute

Three law firms dominate the legal work that goes into issuing state and local government debt in Arizona, according to a review of bond documents done by the Goldwater Institute. That finding is consistent with what bond lawyers and government officials have said in interviews about the industry.

Near the end of the lengthy documents that describe government bond offerings to investors is a section called “relationships among the parties.” This is where potential conflicts of interest among the law firms and bond houses involved in the deal are disclosed. The number of names that appear is small but the relationships are extensive.

The Goldwater Institute analyzed the official statements in 75 recent bond sales with a total value of almost $6.8 billion, issued by a variety of state and local governments, to determine who profits from putting the deals together. All but one of those issues involved at least one of the three law firms: Greenberg Traurig, Gust Rosenfeld or Squire Sanders. Two-thirds of the transactions involved more than one of the three firms in different roles.

Two other firms were involved in far fewer transactions, but did work for agencies such as the City of Tucson and state universities that issue large amounts of debt. Those firms are Ballard Spahr and Kutak Rock.

There is nothing illegal or unethical about the close relationships among the law firms, the bond houses they work for and the governments that issue the debt, as long as those relationships are disclosed and conflict-of-interest waivers are obtained.

To read the entire Watchdog Report, click here.

State Licensing Raises Prices, Reduces Job Opportunities

New Goldwater Institute Analysis Says Strengthening Fraud Laws Could Protect People Without Hurting the Economy

PHOENIX — State license requirements for professions ranging from fumigators and ginseng nurserymen to horse traders and hair braiders may cost Arizona more than half a billion dollars annually in lost economic activity, according to a new analysis from the Goldwater Institute.

In Six Reforms to Occupational Licensing Laws to Increase Jobs and Lower Costs, Goldwater Institute economist Byron Schlomach, Ph.D., details how government-required licensing hurts all Arizonans—job-seekers, consumers, and licensed professionals alike.

Licensing is harmful to job-seekers because it creates difficult barriers to entry for many professions. For instance, obtaining a cosmetology license in Arizona requires 1,450 hours of costly training at a cosmetology school, followed by $142 in exam fees and a combined 372 days of education and experience. “Licensing discourages people from entering an occupation in which they might succeed if their success hinged only on the satisfaction of customers,” said Schlomach.

The practice of licensing hurts consumers too, because it drives up the costs of available services. Ultimately higher prices hurt licensed service-providers themselves. “In response to higher prices, consumers either learn to do without those services or they do with less, thereby reducing their purchases of services from the licensed profession,” Schlomach noted.

Schlomach estimates that licensing may cost Arizona as much as $660 million annually in lost economic activity.

Yet this is not just about dollars and cents. Licensing requirements can intimately impact our daily lives. Consumers may forgo modest medical treatments because the cost to have a doctor perform the procedure is prohibitive. But if the treatment were allowed to be administered by a nurse or other professional, the price may be more affordable, putting the treatment financially within reach. Some people die without preparing a last will and testament, because an expert in will preparation cannot legally sell his services without completing law school and passing the bar exam, even if they never perform any other legal service besides will preparation.

Most licensing requirements are put in place in an effort to protect people from a dangerous or fraudulent service. In some cases licensing can protect consumers. But in other cases, requiring a person to be licensed doesn’t protect people at all. For example, some states require people to be licensed if they want to be called an interior designer. But interior designers can’t design the structure of a house or business. An interior designer is the person who picks the color scheme and decorative touches. Consumers don’t need the government to protect them from a bad paint job, says Schlomach.

Schlomach says strengthening the punishments for committing fraud could eliminate the need for some licensing requirements. “If a professional misrepresents who they are or the skills they have and someone gets hurt, they should be held accountable. And that can be done with existing laws, we don’t have to require a government license too,” said Schlomach.

An estimated 800 occupations are licensed in at least one state. In Arizona about 85 professions are required to be licensed by the government, making up approximately 10 percent of the state’s workforce.

In Six Reforms to Occupational Licensing Laws to Increase Jobs and Lower Costs, Schlomach identifies common-sense reforms that could open career opportunities and reduce prices without sacrificing consumer safety, including “sunrise” provisions to require licensing advocates prove the barriers are needed before they are enacted, and a requirement that all licensing laws be periodically reviewed to make sure they are meeting a real consumer safety function. Schlomach also recommends that licensing boards have a supermajority of members drawn from the general public rather than the licensed profession itself.

Read “Six Reforms to Occupational Licensing Laws to Increase Jobs and Lower Costs” here.

Read Byron Schlomach’s bio here.

For more information, contact Lucy Caldwell at (602) 633-8986.

The Goldwater Institute protects America’s greatest inheritance—the liberty and economic freedom of the individual—by holding government accountable and standing up for regular taxpayers just like you. Learn more about the Goldwater Institute at www.goldwaterinstitute.org.

A Tale of Two Cities

By Stephen Slivinski

It was almost like the gold rush all over again in Stockton, California. With booming property values and tax revenue during the past decade, city coffers were flush and cash was flying to sports arenas, retail centers, office buildings, and parking garages.

Today, Stockton faces bankruptcy. Property values have plummeted, blowing a massive hole in the city budget, and police and fire forces have been cut by around 30 percent. The newly built city hall – which never officially opened – has been repossessed after bond defaults by the city. Bond holders have also repossessed a few new parking garages. The arena – mainly a home to the local minor league hockey team – is under-booked for the foreseeable future. The city has dwindling reserves and is expected to run a budget deficit of around $26 million this year.

Stockton will be entering Chapter 9 bankruptcy to reorganize its hemorrhaging balance sheet and renegotiate with public-sector unions that have heaped hundreds of millions in unfunded liabilities and unsustainable short-term costs on the city. It will be the biggest American city to ever declare bankruptcy.

The tale of Stockton is also a cautionary tale to many cities across the nation that heavily indebted taxpayers during the boom years, including Glendale, Arizona. Just last weekend, for instance, the Arizona Republic reported that the city might need to pledge city hall and the police station as collateral for more bonds.

Like Stockton, Glendale gambled on retail centers and sports arenas. In both cases, much of it was fueled by public debt. Glendale’s overall long-term bonded debt load is just over $1 billion, according to data from the Arizona Department of Revenue. That’s $4,341 per resident of Glendale (over $17,000 for a family of four). By contrast, Stockton’s bonded debt was around $700 million, or around $2,400 per resident – about half of Glendale’s.

Of course there are plenty of differences between the cities. But it’s important to note that for many cities across America, avoiding Stockton’s fate might be simply a matter of making sure they don’t over-leverage themselves during boom periods in the first place.

Constitutional debt limits can provide such a barrier, but in Arizona and many other states, judges have eviscerated debt limits. Policymakers across the nation owe it to taxpayers to consider the importance of limiting public debt, particularly for risky ventures that provide more benefit to private interests or government unions than the public at large.

Stephen Slivinski is a senior economist with the Goldwater Institute.

Learn more:

Goldwater Institute: Living Debt-Free: Restoring Arizona’s Commitment to its Constitutional Debt Limit (PDF)

Sacramento BeeVote Tuesday could send Stockton to bankruptcy court

Arizona RepublicGlendale weighs options to cover sports-related debt

Arizona Charter School First Native American School to Win Title I Award

By Jonathan Butcher

At an award ceremony earlier this year, Akimel O’Otham Pee Posh charter school became the first Native American school to be named the Arizona Distinguished Title I School of the Year.  The school is now entered in the National Title I Association’s national competition, which recognizes schools that are doing the best job of helping kids in some of the most disadvantaged areas in the country.

“Our children did it,” says Principal Jacquelyn Power, who also serves as the superintendent for the small district located on the Gila River Indian Reservation.  The reservation is home to the Akimel O’Otham (River People – Pima Indians) tribe and the Pee Posh tribe (Maricopa Indians).  “We performed as well or higher than the children around [us] in public or charter schools. We did it with a strong focus on achievement and consistency and excellence, and our kids did it,” Power says.

Gov. Gregory Mendoza of the Gila River Indian Community declared February 3, 2012 as ‘Blackwater Community School Day,’ in recognition of the school’s accomplishment.

Powers says the fact that Pee Posh is a charter school is significant to its success.  While the kindergarten through second grades are a Bureau of Indian Affairs traditional school, grades three through five operate as a charter school.  She says the charter status gave her access to grant opportunities and allowed her more flexibility to develop a strong instructional model.

Powers says the school has focused teaching efforts on reading. “If [students] can read, they can be successful in any other subject area,” she says. “We have high risk students, and by putting in a solid reading model, it changed our school.”

Some 94 percent of the school’s students qualify for the federal free or reduced-price lunch program, yet last year Pee Posh earned a B on its first state report card.  Among 3rd graders, 88 percent met the reading standard on the 2011 AIMS test.

Arizona’s state charter board and department of education should continue to support charter schools serving a wide range of students from different backgrounds.  The diversity of charter schools in communities across the state provides more opportunities for children, and proves that success comes in different shapes and sizes.

Jonathan Butcher is the Education Director for the Goldwater Institute.

Learn more:

Goldwater Institute: Digital Learning: Improve Educational Opportunities for American Indian Students

Goldwater Institute: 18 Years of Charter Schools in Arizona: Now We Know

Blackwater Community School

National Title I Association: Akimel O’Otham Pee Posh Charter 3-5

Who’s Afraid of African Hair Braiders?

By Byron Schlomach, Ph.D.

Why are cosmetology boards so obsessed with African hair braiders? African hair braiding is a technique of braiding hair into intricate patterns without using any dangerous chemicals. And even though cosmetology schools rarely, if ever, teach the art, at least every other year a story appears somewhere in the country about an African immigrant or American teenager ordered by a cosmetology board to stop braiding hair for money.

The latest installment comes from an article in The New York Times Magazine, featuring a Sierra Leone immigrant in Colorado who has been denied a livelihood in the name of required government licensing. That article says 30 percent of the workforce today is required to have a license to perform their jobs. Other economists put the estimate at around 20 percent of American workers. Regardless, the author of the Times article got it right: licensing requirements blocks opportunity. It keeps enterprising Americans from moving up the economic ladder by starting their own businesses.

Though Arizona is not the worst of states when it comes to state licensing, the Institute for Justice recently produced a report rating Arizona the worst state – the very worst – when it comes to regulating certain low-income occupations. Combining the number of regulated low-income professions with the high bar of fees and red tape to get a license, we do more than any other state to deny people job opportunities by requiring they have a government license.

In a state with a lot of low-income workers, this is not a good place to be. Do we want people receiving government benefits or creating wealth so they can take care of their own families?

It’s time to rein in professional licensing. Here’s how:

  • Only a minority of licensing board members should come from the licensed professions.
  • The state should transition out of licensing and into certification for most currently licensed professions. Certification would allow both certified and uncertified professionals to practice a profession but require people to disclose their certification status. As part of this transition, the state should preempt local licensing with certification laws.

If Arizona takes on its burdensome professional licensing requirements, we will have an economically healthier state where opportunity for all can truly blossom.

Dr. Byron Schlomach is the director of the Goldwater Institute‘s Center for Economic Prosperity.

Learn more:

New York Times Magazine: “So You Think You Can Be a Hair Braider?”

Institute for Justice: License to Work: A Study of Burdens from Occupational Licensing (PDF)

Washington Should Let Highway Dollars Make a U-turn and Head Home to States

By Stephen Slivinski

The U.S. Congress has been deadlocked for about three years over re-authorizing the federal highway program. During that time, they have passed temporary extensions of the program. The ninth extension expires at the end of this month.

While Congress idles and lets the program just roll along, year after year, we miss out on debate over whether the current system is working and what the alternatives are.

What happens now is that state governments collect fuel taxes and send the money to the federal government. Then the feds put all the money into a pot and distribute it, mostly by formula, back to the states. The problem is, due to bureaucratic overhead, pork project earmarks, obsessions with funding projects like high-speed rail, and certain demographic and geographic realities, not all the money that a state sends to Washington may come back to pay for road upkeep and construction. And the dollars that do find their way home often have federal strings attached. (Remember the federal 55-mile-per-hour speed limit?)

Arizona has been on the losing end of this for a while. As a “donor” state, we routinely pay more in fuel taxes than we receive back from the federal government.

Rep. Jeff Flake has introduced a bill to require that all states receive back at least 95 percent of the money they pay into the federal highway trust fund. It’s a good step, and one that should be seen as a move toward fundamental reform of the system. But the best thing to do would be to guarantee that each state gets 100% of the fuel tax revenue it collects. And the only way to do that is to eliminate the federal highway system as we know it and instead let states control their highway programs and set their own tax rates and revenue needs accordingly.

As cars become more fuel efficient, how much fuel a driver purchases is becoming a less reliable way to gauge how much driving someone is doing and, subsequently, how much wear and tear they are inflicting on state roads. States need to be able to freely experiment with innovations like open road tolling, which are a better way of aligning the costs and benefits of road use.

That sort of experimentation is limited as long as Washington controls the money.

Stephen Slivinski is senior economist for the Goldwater Institute.

Learn more:

Stateline: While Congress Stalls, States Worry about Highway Funds

Rep. Jeff Flake: Announcement of Passage of Flake Resolution in House

Cato Institute: Liberating the Roads

When Will Free Speech Be Free?

By Nick Dranias

You know things have gotten out of hand when a government agency can’t figure out its own rules. The Federal Election Commission recently was unable to give a grassroots group clear guidance on whether its proposed political advertisements concerning health care, regulatory, and fiscal issues were regulated under federal elections law. The group gave the Commission 11 proposed political advertisements for the presidential election season to review. In response, the Commission reached split decisions on two different draft opinions and then finally agreed upon a third opinion which declared that it could not reach a decision on whether five of the 11 advertisements were regulated under federal campaign finance laws.

The Federal Election Commission seems to be trying to dance around, or even ignore, the U.S. Supreme Court’s recent free speech ruling in Citizens United. The central principle enforced in Citizens United is that the First Amendment means what it says—“Congress shall make no law . . . abridging freedom of speech.” Justice Anthony Kennedy emphasized in his opinion that there is no such thing as an insignificant denial of free speech. The opinion also underscored that the First Amendment is violated when complex campaign finance laws force people to hire lawyers and accountants before they can safely spend their money to engage in protected political speech.

Under Citizens United, the mere fact that the Federal Elections Commission could not reach a clear decision after three bites at the apple should be sufficient evidence of the unconstitutionality of the campaign finance laws it is charged to enforce. No one should be left with little more than casino odds to guide decisions about the legality of running political advertisements during election season. Fortunately, Goldwater Institute senior fellow Benjamin Barr and the Wyoming Liberty Group will soon challenge these laws, underscoring that free speech is not free so long as the meaning of campaign finance laws remains murky even to the Federal Election Commission.

Nick Dranias is the Director of Policy Development and Constitutional Government for the Goldwater Institute.

Learn more:

Federal Election Commission: Advisory opinion response (PDF)

Wyoming Liberty Group: In re Free Speech

Goldwater Institute: Citizens United Policy Report

More Evidence That Health Insurance Drives Up the Cost of Care

By Byron Schlomach, Ph.D.

The Los Angeles Times recently published the price based on payment type for a CT scan at eight hospitals in Southern California. As you can see, cash prices ranged from 6 to 68 percent of the average charge; and insurance prices were 48 to 84 percent of the average charge.

This table is further evidence that using health insurance paid for by employers to insulate patients from the cost of their health care is actually causing health care costs to go up. This year, Senator Nancy Barto sponsored a bill to require hospitals and doctors in Arizona to make cash prices available to patients, a reform the Goldwater Institute has been advocating for three years. This isn’t the sort of regulation we normally champion, but because there is no true market in health care forcing a little transparency would ultimately benefit consumers by lowering prices.

Unfortunately, after making it through the Arizona Senate, the bill was stymied in the House Judiciary committee due to opposition from insurance companies, hospitals, and doctor organizations. One has to wonder why hospitals, doctors, and insurance companies wouldn’t want patients to know the cash price of a medical procedure.

The Obama administration is right about one thing when it comes to health care: we are all likely to be patients. If the federal health reform law is struck down by the U.S. Supreme Court there will be a window of opportunity to advance policies that will actually lower health care costs, like having honest cash prices available to patients.

Dr. Byron Schlomach is the director of the Goldwater Institute’s Center for Economic Prosperity.

Learn more:

Goldwater Institute: Removing the Middleman: What States Can Do to Make Health Care More Responsive to Patients (PDF)

Los Angeles Times: Many hospitals, doctors offer cash discount for medical bills

Arizona State Legislature: Senate Bill 1384

Arizona State Legislature: House Judiciary Committee Hearing, March 13, 2012

Fixing Arizona’s Income Gap

By Byron Schlomach, Ph.D.

First the bad news: Arizona’s per capita personal income is eleventh lowest among the states and is 14 percent lower than the national average. But there’s also good news: In the past, Arizona’s per capita income has been closer to the national average and there is no reason it cannot be again.

The chart below compares Arizona’s per capita income to the national average. Arizona’s relatively modest-sized population explains much of the big fluctuations that occur right into the 1990s since any change in large employers could be significantly reflected in the statistics. Another likely explanation is national defense spending. The big blip in 1941 coincides with the buildup to World War II. The next peak in 1952 coincides with Korea. The big rise in the 1960s coincides with Vietnam. During wars, both hot and cold, Arizona’s per capita personal income performed relatively well because we have a decent base of defense industry jobs. The last big drop in Arizona’s personal income occurred with the end of the Reagan defense buildup and the end of the Cold War. Arizona’s personal income then stabilized and we did not see another spike in personal income until the housing bubble.

(Full size chart available here.) There are a couple of lessons that can be learned from this chart. One is that Arizona must look to itself for increased prosperity, not uncertain federal defense spending or money from big banks taking advantage of federal housing programs, or any other government program at any level – federal, state, or local. Another lesson is that Arizonans cannot presently afford the expansive government programs and projects some other states can afford because our incomes won’t support them.

Arizona need not be doomed to always lag the nation in per capita personal income. If we get the basics right – good roads, sound property rights, little red tape, lean and efficient government – Arizonans’ creativity, willingness to take risks, and hard work will make our state the best that it can possibly be.

Dr. Byron Schlomach is the director of the Goldwater Institute’s Center for Economic Prosperity.

Learn more:

Goldwater Institute: Delivering an Anti-Poverty Revolution

Goldwater Institute: How to Win the War on Poverty: An Analysis of State Poverty Trends

Federal Reserve: Changes in U.S. Family Finances from 2007 to 2010 (PDF)

An Abbott and Costello Routine: Who’s on …49th?

By Jonathan Butcher

This is how I imagine legendary comedians Abbott and Costello would discuss public education:

     Costello: I want to help public schools. Which state is last in education funding?

     Abbott: That’s Utah, but Idaho falls close behind.

      Costello: Wait, so Idaho’s behind? That makes them last.

      Abbott: No, Idaho’s almost last. But Oklahoma says they’re second-to-last, too. And Florida and Arizona.

     Costello: So who’s behind who?

      Abbott: They’re all behind.

      Costello: You’re not telling me who’s last but who’s not last?

      Abbott: There’s no competition for last, but five are almost last, 49th.

      Costello: Idaho, Oklahoma, Florida, Arizona…that’s four.

      Abbott: North Carolina makes five.

      Costello: But I thought there were four.

      Abbott: Now there are five. But there used to be 8.

      Costello: Eight states are last?

      Abbott: No, 8 states are next-to-last: 49th.

      Costello: But now there are 4?

      Abbott: Five.

      Costello: So who’s last?

      Abbott: No, Who’s on first…

Various states and media outlets have been essentially parroting Abbott and Costello’s famous “Who’s on First” routine this way for years. Since 2007, local media in five states have named their state “49th” in education funding. In 2005, eight states were crowned 49th. While we all argue over who is second-to-last in funding, we ignore the larger problem: Despite decades of increasing education funding, student achievement is no higher today than it was 40 years ago. In Arizona, real per-student funding more than doubled between 1969-70 and 2008-09, but test scores are flat.

Competition to be named next-to-last in education funding distracts from real education reform. Voters should reject the education union’s initiative to raise Arizona’s sales tax and instead demand reforms that give all parents the power to choose the best educational experience for their child. That will help put Arizona on first.

Jonathan Butcher is Education Director for the Goldwater Institute.

Learn more:

Abbott and Costello: “Who’s on first?” from The Naughty Nineties

The Idaho Statesman: “Idaho 49th in Education Spending

Tulsa World: “In Oklahoma, support for children lacking; study says state ranks 49th

Orlando Sentinel: “Florida cheap on education spending”

The Avery Journal: “N.C. per-pupil spending drops to 49th in U.S.

East Valley Tribune: “Census report: Arizona ranks 49th in per-pupil education spending

Arizona Republic: “Rankings cloud real school indicators