by Matthew Ladner, Ph.D.
Goldwater Institute
 
Through the magic of public access television, I recently watched debate before the state House of Representatives on bills to reform the tuition scholarship tax credit program. I’m happy to report that legislators engaged in a substantive discussion and adopted amendments from both parties.

Congratulations to Representative Rick Murphy for bringing an important and helpful bill, HB2663, to the House. His bill will strengthen oversight through several steps, including empowerment of the state Department of Revenue to revoke the designation of “Student Tuition Organization” for rogue scholarship groups.

I was also impressed with the level of debate from House Democrats. In years past, I’ve had the impression many of these elected officials were content to complain about the scholarship tax credits, but they were not serious about doing anything to address their concerns. In this debate, I saw serious proposals offered.

For instance, Representative Steve Farley offered a floor amendment to allow the Department of Revenue to collect a fee from STOs to fund better oversight. Farley made a convincing case that state government is moving towards user fees during this economic downturn, and scholarship groups ought to be included. The amendment wasn’t adopted. But a fee of less than one-half of 1 percent on the total amount each STO raises each year should provide sufficient funding and merits further consideration.

Other amendments would have required that scholarships funded by the individual tax credits go to students from low-income families, and would have forbidden STOs from considering any recommendations from donors about who should receive scholarships. Reasonable people can and have disagreed on these subjects.

Only the Internal Revenue Service can ultimately determine the legality of donor recommendations. I’ve seen legal opinions going both ways. In the meantime, HB 2663 specifies that donor recommendations cannot be the sole reason any student receives a scholarship, and scholarship groups must consider financial need as a part of their criteria.

No one is getting everything they desire from these reforms. But this bill represents a positive step towards improving transparency and accountability in the program if the Senate and the governor also approve it.

Dr. Matthew Ladner is vice president of research for the Goldwater Institute.

by Clint Bolick
Goldwater Institute
 
It was like a scene from Atlas Shrugged: Polly Shaw of China-based Suntech told an Arizona House Government Committee hearing that massive solar production subsidies and even bigger consumer subsidies were not enough. If the Legislature passed House Bill 2701 and repealed the Arizona Corporation Commission’s rules that require utility companies to purchase increasing amounts of solar energy over the next 15 years regardless of the projected $1.2 billion cost to consumers, her company would pull its operations and a few dozen jobs from the state.

The Committee rejected her threat, approving the bill 5-2. But the next day, Governor Jan Brewer and Speaker of the House Kirk Adams, who co-sponsored the bill before deciding to kill it, successfully pressured the primary sponsor, Representative Debbie Lesko, to withdraw it.

Solar may be the most-subsidized industry in America, and is perhaps the only product that the Arizona government forces people to buy regardless of cost or technological feasibility. Solar doesn’t yet make sense as a wide-spread energy policy, and the mandates vastly exceed the Commission’s rate-making authority. That is why the Goldwater Institute is challenging the rules in court and 51 legislators co-sponsored the bill that would repeal them.

So, the solar lobby invoked the one word that will make normally sensible elected officials do crazy things: jobs. Yes, Suntech will employ 75 people. But between the lavish subsidies and costly mandates these may be the most expensive jobs ever created. Nevertheless, the strategy eventually worked; the bill is dead for now.

Suntech’s Shaw claimed the bill would “obliterate the demand for solar,” which may be true if that demand primarily is government-created. Mandate-based industrial policy didn’t work out well in the Soviet Union and it won’t work in Arizona. What’s especially perplexing, though, are the supposedly “pro-market” politicians who think its time has come.

Arizona should stop spending more and more in a frenzied competition with other states over who can give the biggest subsidies to solar and instead create a favorable tax and regulatory climate for all businesses, large and small, in any industry.

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

Several sources are reporting that Senator John McCain has withdrawn his support from the Dietary Supplement Safety Act of 2010, S. 3002.

Arizona’s senior senator will now get behind another effort being proposed by Utah Senator, Orrin Hatch (R) offering an alternative to the McCain-Dorgan bill. Supposedly, the revised bill will seek transparency to the supplemental industry without the heavy handed regulatory components of the original bill.

Apparently, McCain was under intense pressure by millions of Americans who rely on vitamins and supplements as part of their daily dietary regimen.

One is also left wondering that if this was not an election year and Senator John McCain was not facing a serious primary challenger, he would have remained committed to sponsoring and passing the bill.

McCain Withdraws Support For Dietary Supplement Safety Act, OverTheCounterToday.com
McCain Withdraws Support from Supplement Safety Bill, Natural Products Insider

The invisible Gabby Giffords, who perpetually proclaims herself a “fiscal-conservative-blue-dog-democrat-who’s-always-looking-out-for-the-residents-of-Arizona”, just announced yet another bill to balance the federal budget.

Snort of the day: Not wanting to put too much pressure on herself and her fellow congressmen, the bill would not take effect until 2020.

WASHINGTON – “Arizona families and businesses struggle every day to make sure their expenses don’t exceed their earnings,” said Giffords. “Balancing a budget is not a complicated concept. Yet over the last decade it has proven difficult for the federal government to grasp. This amendment is intended to change that.”

Giffords is one of 33 original co-sponsors of legislation introduced today that would make a balanced federal budget a requirement of the U.S. Constitution. Arizona and 48 other states have a similar requirement in their state constitutions.

The amendment would:

• Require Congress to produce a balanced budget every fiscal year beginning in 2020.

• Require the president to submit a balanced budget in his or her annual transmission to Congress.

• Prohibit outlays for a fiscal year from exceeding total receipts for that fiscal year unless Congress, by a three-fifths roll call vote of each house, authorizes a specific excess of outlays over receipts (in cases of emergencies).

Read the whole thing here.

And don’t forget that Gabby is also a big supporter of PAYGO. Again from her website:

Giffords, who last week was named the most centrist member of Arizona’s congressional delegation by the respected National Journal, has been a strong supporter of pay-as-you-go legislation. Known as PAYGO, the legislation requires future spending increases or tax cuts to be paid for with either cuts to other programs or new streams of revenue.

And that’s working out really well too.

by Byron Schlomach, Ph.D.
Goldwater Institute
 
Last week, the House Committee on Natural Resources and Rural Affairs approved HCR 2040, a measure that would refer yet another tax increase to Arizona voters. The proposal would require every Arizonan to pay an additional $12 for each license plate registration. The money would be directed to the state parks agency in an attempt to reopen some sites and to fund improvements at others.

HCR 2040 would establish this new tax at a time when few can afford the luxury of paying for other peoples’ recreation. Not everyone benefits from the state parks any more than everyone benefits when my family dines at a restaurant.

This new funding mechanism would place state parks in a position of unaccountable financial independence somewhat similar to the state transportation department and the new Early Childhood Development & Health Board. Self-funded agencies often are not particularly responsive to those they are supposed to serve.

One of the biggest complaints from legislators as they work on the state budget this week revolves around Proposition 105, the 1998 initiative that protects voter-approved spending. The repeated excuse for failing to respond to falling tax revenues has been that much of the spending is off-limits to legislators.

HCR 2040 would make this problem worse, placing more of a financial burden on Arizonans that cannot be easily offset and would further erode our tax-paying capacity. Tax revenues should be spent according to current circumstances and constitutional limits, not momentary whims that later become inflexible mandates.

There is another solution on the table to keep parks open: let private companies manage them and pay the state for the privilege. Last week Fox News commentator Glenn Beck interviewed a local business owner who wants the opportunity to keep our parks open. Until the legislature gives this idea a fair shake, a tax increase shouldn’t even be discussed.

Dr. Byron Schlomach is an economist and the director of the Center for Economic Prosperity at the Goldwater Institute.

by Byron Schlomach Ph.D.
Goldwater Institute
 
Today, the Arizona Senate Committee on Appropriations will consider an important measure from Senator Jonathon Paton which would require all levels of government (including cities, towns, counties, school districts) to disclose in detail how they spend taxpayer money. It would also require the state to maintain a website where anyone could get quick access to information on every government in Arizona that has the power to levy taxes on them. Those governments would post details on a website about every expenditure and tax revenue collected, like an online checkbook register for city hall or the county courthouse.

This bill also would require government agencies and departments to establish performance benchmarks and list them for the public to review. Accurate crime statistics and details about county prosecutions would have to be reported as well.

For little cost, information about government operations can be made available 24 hours a day to people researching on their home computers or even on their cell phones. Most local governments have websites now, but the information they post often is so general that it doesn’t provide any real insight into how it conducts the people’s business.

The primary objection to these websites is that they will be costly to create and maintain. But experience proves otherwise. State Treasurer Dean Martin launched a transparency website in the midst of budget cuts, and states like Virginia, South Carolina, Kansas and Texas put spending information online using only existing resources. Nebraska created its spending transparency website, which does much of what this bill would require, for only $40,000. Some software companies, like ProcureNetworks, are even offering software to government agencies for free.

I have a question for those who use cost as a reason to oppose spending transparency: considering the recent declines in government revenue, how can we afford not to engage citizens more comprehensively in determining spending priorities and hunting down new efficiencies?

Taxpayers who foot government’s bills deserve the widest possible access to information on how their money is spent. Perhaps then Thomas Jefferson’s vision will be fully realized.

Dr. Byron Schlomach is an economist and the director of the Center for Economic Prosperity at the Goldwater Institute.

Finally Arizona is drawing the line against more federal incursions into Arizona’s sovereignty.  Cap-n-Trade is a disaster to any developed society and to think that Senator McCain remains staunch in his belief that its the right thing to do is completely beyond belief.

The McCain/Palin position from 08

Cap and Trade Nullification

“Arizona State Senator Sylvia Allen (R) of District 5 needs your help! She and Senators Gould and Grey are the primary sponsors for Senate Concurrent Resolution (SCR) 1050. Together, they have made Arizona the fourth state to introduce Cap and Trade nullification legislation, and this bill has “teeth”!

Known as the “Freedom to Breathe Act”, the legislation, if passed, would make it illegal for “..any governmental official to enforce within the borders of the state of Arizona federal laws or federal regulations purporting to restrict intrastate emissions of anthropogenic carbon dioxide or other greenhouse substances is herewith declared a violation of civil rights and unlawful under Arizona state law.””

Senator Allen addresses the AzFRW on Cap-n-Trade

At last an idea who’s time has come … sure beats missing committee hearings like her left-of-center opponent seems to.  Here is the full story:

http://arizona.tenthamendmentcenter.com/2010/02/cap-and-trade-nullification-arizonas-freedom-to-breathe-act/

To: poster #2 on the Konopnicki swap with Allen story (PCbutnotPC). Since you said Konopnicki has something to offer it got us to wondering and we found this little gem. What we really thought was interesting was the food tax proposal and in the video, a hospital bed tax proposal. Yes, Konopnicki does have something to offer … but isn’t leadership putting your name on your work?

Arizona lawmakers review Mystery Alternative Budget Proposal

By Paul Davenport

PHOENIX (AP) – Arizona legislators are examining and debating an alternative budget-balancing proposal whose origin remains somewhat murky.

The proposal widely circulating at the Capitol in recent weeks has been called a bipartisan alternative to Republican Gov. Jan Brewer’s budget proposal, skipping her spending cuts while using significantly more tax increases and borrowing.

Brewer’s plan is the basis for a legislative budget proposal that majority Republicans are drafting behind closed doors.

Several legislators have voiced support for parts of the alternative while acknowledging involvement in 2009 discussions leading to its preparation.

Republican Rep. Bill Konopnicki of Safford has told The Associated Press he personally paid $2,000 to a retired California university economist to help compile the proposal.

However, none of those lawmakers accepted invitations to discuss the proposal Thursday during a joint House-Senate briefing to compare it with Brewer’s offering, said House Appropriations Committee Chairman John Kavanagh, R-Fountain Hills.

That left Kavanagh and several other senior Republicans complaining they don’t know the alternative proposal’s true origins and couldn’t ask questions to its drafter or drafters about its revenue assumptions and specific provisions.

“If they can’t put on their big-boy pants … and take responsibility for the plan they’re trying to implement, then they must not really believe in them,” said Rep. Rick Murphy, R-Glendale.

http://www.azpbs.org/horizon/play.php?vidId=1704

[does anyone remember watching Horizon on PBS on Feb. 2, 2010?]

Kavanagh said he won’t spend more time on the alternative because issues as important as the budget require more transparency.

“It’s a real threat to the institutional process. This committee is not a hotel where you book a room and bring in whoever you want,” he said.

However, several other lawmakers, including Democrats and at least one Republican, said their colleagues should keep the door open and not reject the alternative proposal out of hand.

“We have a culture that doesn’t encourage people to step out and try to find ideas that are out of the box,” said Rep. Vic Williams, R-Tucson.

Responded Senate Appropriations Chairman Russell Pearce: “I’m not sure I’m finding any gems here. It’s $3 billion of taxing.”  Pearce, R-Mesa, at one point said parts of the alternative proposal mirrored a budget spreadsheet linked to an Arizona State University administrator.

But ASU officials have denied involvement, Pearce said.  The university official named by Pearce, Richard Stanley, did not immediately respond to a query e-mailed to him by the AP.

The Goldwater Institute’s outstanding investigative reporter Mark Flatten has produced one of the most important pieces of Arizona journalism in many years called Shifting The Burden: Cities Waive Property Taxes for Favored Businesses.  In it he methodically and devastatingly deconstructs the complicated “government property lease excise tax” or GPLET scheme that insiders close to Gov. Jan Brewer and other top Arizona politicians use to shift hundreds of millions of dollars from small businesses and homeowners to their special interest friends.  The topic is a bit dense but any taxpayer who has asked why their property tax liability keeps going up should work through it so they can understand how the powerful and their lobbyists like Brewer’s man Chuck Coughlin game the system to the misfortune of average guy and gal.

Shifting The Burden: Cities Waive Property Taxes for Favored Businesses

By Mark Flatten
Goldwater Institute Special Investigation
February 18, 2010

Special deals between cities and hand-picked developers have exempted more than $2 billion in development projects from property taxes in Arizona, shifting the tax burden to surrounding property owners and creating a competitive disadvantage for other businesses, an investigation by the Goldwater Institute has found.

Those high-rise office buildings and sprawling retail centers would generate more than $30 million annually in property taxes if they were not exempted through lease agreements with the cities. As a result of those deals, the owner of a $200,000 home near Sky Harbor International Airport in Phoenix pays about $183 in additional property taxes every year. A similar home in downtown Phoenix is charged an extra $90 annually, according to state legislative studies.

The unpaid property taxes are supposed to be replaced by the Government Property Lease Excise Tax or GPLET. However, the Institute’s investigation found GPLET payments amount to a fraction of what would be paid in property taxes.

Virtually every high-rise office tower that has been built in downtown Phoenix in the last decade is covered under a GPLET lease. The tax exemption also has been granted to a now-shuttered dog racing track in Phoenix, a tattoo studio in Clifton and regional shopping malls in the East Valley. In coming years, additional projects worth billions of dollars will be covered under GPLET leases.

Last year efforts by state lawmakers to curb the lucrative breaks in the law were blocked by Mesa officials and the developer planning to use the exemption for a $1 billion resort on the eastern outskirts of the city. But, State Representative Rick Murphy has introduced a bill again this year to curb these agreements.

A recent Arizona Supreme Court decision also puts the property tax exemption in jeopardy. The court ruled that sales tax rebates for a shopping center in Phoenix amounted to an unconstitutional gift of taxpayer money to the developer. Promises of future job growth or other tax revenues are not enough to justify special sales tax breaks, the court ruled. Those are the same arguments that are used to justify GPLET agreements.

Read Shifting the Burden here

Sidebar: Scottsdale’s SkySong Avoids Property Taxes Without GPLET lease

Investigation Analysis by Clint Bolick

What’s all this fuss about “snakes in Guam” that I’m hearing about on the radio?

The last few weeks, Senator John McCain has had some raspy-throated woman shilling for him in a political ad claiming that JD Hayworth voted for some snakes in Guam.

I decided to look into these “snakes” in Guam and instead of diving into the wealth of knowledge provided by the US Department of Agriculture and other scientific papers, I went to one of my favorite websites – YouTube! Here are a few clips about these “Brown Tree Snakes” that have invaded the island of Guam and devastated entire bird populations in addition to terrifying the citizens of Guam.

After viewing these videos, take a moment to read how these snakes are affecting the island of Guam and how they have even become a potential problem to Hawaii.

The Impact of Brown Tree Snakes on Guam’s Island Ecosystem

The spread of brown tree snakes throughout Guam is directly linked to changes in several animal populations. Eight species of forest birds, some found only on Guam, have disappeared from the island. Three other bird species are listed as threatened or endangered and remain in small numbers in the wild. Brown tree snakes eat young Mariana fruit bats (Pteropus mariannus mariannus), which are also listed as endangered on Guam. Small mammals are rare in forests and scrub habitat to begin with. Two gecko species once common on Guam are now considered rare, though they flourish on snake-free Cocos Island nearby. Indirectly, brown tree snakes may disrupt other aspects of Guam’s island ecosystem. Some native trees and plants that depend on birds and fruit bats for seed dispersal and pollination may not reproduce. Insects and spiders, normally controlled by forest birds, have become more abundant.

Economic Effects

Substantial economic losses are associated with brown tree snakes. Guam Power Authority reports millions of dollars in increased costs and lost revenue caused by brown-tree-snake power outages. Snakes climb on electrical transmission lines and short-circuit wires. After snake-induced power outages, electrical distribution equipment frequently needs replacement or repair. Thus, maintenance crew costs rise with overtime and night shifts, compensation must be paid to consumers for damages to electrical equipment, and the need for backup equipment increases. Island residents incur additional costs when food spoils during power outages and shops have to close.

The agricultural community also reports losses due to the brown tree snake. These snakes eat valuable pet birds, young chickens, and chicken eggs. Snakes will often kill prey too large to be eaten, including puppies, rabbits, and young goats. Medical expenses for treatment of bites by brown tree snakes are an additional cost. No human fatalities are known.

Here are a few other resources on the Brown Tree Snake problem in Guam:

USDA National Invasive Species Information Center: Brown Tree Snake

USDA: No Escape From Guam: Stopping the Spread of the Brown Tree Snake

United States Department of Defense Report to the Congress: Control of the Brown Tree Snake – August, 2008

FY04 Authorization for Guam Invasives Pilot Program

Finally, here’s the legislation related to the controlling “Snakes in Guam”  H.R. 1588 otherwise known as the National Defense Authorization Act for Fiscal Year 2004

And the Roll Call Vote on the bill? Both Senator McCain and Kyl voted for the bill (H.R. 1588) as did 93 other US Senators.