by Byron Schlomach, Ph.D.
Goldwater Institute
 
Last week the Legislature made some long overdue spending reductions after three years of gimmicks, one-time cash grabs and borrowing. Amidst the cries of Armageddon, it sometimes helps to back away and look at the big picture. 

In 2004, state General Fund spending was $7.5 billion. One year later, it stood at almost $9 billion and was more than $10 billion by 2007. With fund transfers and gimmicks taken into account, the budget proposal now on the governor’s desk is for $8.5 billion. Adding in the proposed 18 percent sales tax increase would keep spending for fiscal year 2011 well above the 2004 level.

Some will cry disaster looms with this level of spending. They will claim that roads will crumble and people will suffer. They won’t tell you that road funding isn’t even included in general fund spending, or that there are always alternatives to government when it comes to helping people who truly need it.

Already, an alternative to funding state parks through private contracting is being explored. The state Department of Insurance has proposed a method to become self-funded, a strategy the Legislature has so far rejected. There are ways to accomplish much of what state government currently does without higher taxes. So is this budget Armageddon? Hardly. This is a budget opportunity.

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
 
When government revenues drop during economic downturns, there are only three choices government officials have at the state and local levels. They cannot print money so they are left with reducing spending, raising taxes, or borrowing. Raising taxes is the worst option, with borrowing a close second.

Raising taxes assaults the very marrow of the economy; draining resources from the private sector at a time when it can least afford the loss. Borrowing money means an uncertain future burden. Both options make it harder to weather future economic storms. Right now, the state is spending $700 million more each month than it is collecting in tax revenue. All levels of Arizona government have a combined $41 billion in bonded debt.

Yet, many in government seem unconcerned. Everywhere one turns, new taxes are proposed. On Tuesday, Scottsdale and Tempe voters approved higher taxes on hotel room rentals. Phoenix just imposed a 2 percent food tax. The legislature is considering raising car rental taxes to pay for a new spring training stadium for the Chicago Cubs. The legislature also wants to raise license plate fees. Tucson is pondering a number of potential tax increases.

On May 18, voters across Arizona will consider an 18 percent increase in the state sales tax. Studies show that raising the sales tax by 18 percent will cut the state’s real economic output by $1.2 billion and that Arizonans will see their total after-tax income, already hit hard by recession, fall by an average of $300 per household.

What’s more, these proposals don’t take into account that the state’s property taxes went up this year, or the electricity tax passed by the Corporation Commission a few years ago.

This state has lost more than 10 percent of its private employment compared to its peak. State and local governments together have lost less than 6 percent of their workforces. The capacity of the private sector to pay higher taxes is at the breaking point. Even with an economic recovery, increased taxes will only feed an even bigger government that will be that much harder to finance in the next inevitable recession.

For now and for the future, reducing government spending is the only principled solution to the problem of shrinking government revenue.

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

For Immediate Release: Wednesday, March 10, 2010

Earmarks are only a small part of the problem

Tucson, AZ. The call for “no earmarks” is little more than a shallow campaign season stunt. The real issue is out-of-control government spending. A deficit is still a deficit, if it comes from earmarks or general appropriations.

The voters are tired of government overspending, whether it is the Arizona Legislature voting for Napolitano’s reckless ’08 budget, or a Congresswoman voting in favor of the pork-filled TARP program. To reduce deficit spending, you need to reduce the size and scope of government.

Jesse Kelly has a consistent record of supporting across the board spending reductions as well as a Constitutionality test for federal spending. The two career politicians in the CD8 race both have records of voting for excessive spending. The voters should not be fooled by talk of ending earmarks or mention of PAYGO. These terms are both the same, election year rhetoric from career politicians.

Jesse Kelly is a Republican candidate for Arizona’s Eighth Congressional District in the southeastern region of the state. For more information on the Kelly campaign please visit VoteJesseKelly.com or send an e-mail to media@jessekellyforcongress.

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.

A m e r i c a n P o s t – G a z e t t e

Distributed by C O M M O N S E N S E , in Arizona

County Supervisors spent more money on lobbyists than any other government agency

From yellowsheetreport.com Budget problems didn’t stop governments in Maricopa and Pima counties from shelling out the big bucks on lobbying expenses last year. Maricopa County Supervisors spent $414,000 last year on public and private lobbyists and consultants. They hired private sector notables like Marcus Dell’Artino, HighGround, Lasota and Peters, Lee Miller and Rip Wilson. Pima threw down $220,000 on lobbyists, including private guns Art Chapa and Michael Racy. On the city side, Phoenix dropped $192,000 for lobbying expenditures in 2009. Much of the reported expenses covered city employees like Karen Peters, Thomas Remes, John Gonzales and Tom Buschatzke. But the city also wasn’t shy about hiring private talent. They paid Kevin DeMenna almost $35,000. Gallagher and Kennedy received $28,500, and R and R Partners pulled in $15,000 from the city, which reported 29 registered lobbyists. Tucson spent even more, but their reported $235,000 lobbying tab was directed to city employee Mary Okoye. Phoenix’s 2009 lobbying bill increased by almost $35,000 compared to 2008. Tucson’s held steady.

Goldwater Institute
News Release

PHOENIX–As Arizona legislators convene for a special session focused on closing the state’s budget deficit, they could save billions by adopting recommendations made by various state agencies to streamline operations, says a Goldwater Institute policy memo sent to lawmakers last week.

Last fall, Governor Jan Brewer directed all state agencies to explain how they would handle a potential 15 percent reduction in funding. State agencies responded with lists of programs and services that could be scaled back or managed in ways that rely less on general tax dollars. In a December special session, the Legislature approved some of those suggestions and generally reduced funding for agencies not related to public education by 7.5 percent.

Arizona’s projected budget deficit for this fiscal year still stands at $700 million and could reach $2.6 billion in the next fiscal year that begins July 1, according to the Joint Legislative Budget Committee.

The Legislature could eliminate most of the deficit simply by committing to the full 15 percent in reductions and following through on other recommendations that state agencies offered months ago, writes Dr. Byron Schlomach, an economist with the Goldwater Institute.

“The state agencies themselves have provided a roadmap for Arizona to navigate out of its fiscal crisis,” said Schlomach. “Those recommendations coupled with a few additional steps that would lead to better long-term budget policy would allow the Legislature to eliminate more than $2 billion in spending, without crippling state government and without any general tax increases.”

In addition to combining some boards and commissions with existing agencies, in some cases, Dr. Schlomach suggests entirely new agency funding models:

· Allow the Department of Insurance to become self-funding and supported entirely by the industry it regulates, instead of supported by the general taxpayer. Total savings: $5.6 million

· Keep state parks open by allowing private companies to collect the gate fees and keep them maintained. Total savings: $20 million

· Eliminating the Automobile Theft Authority and allow the Attorney General to manage any required functions. Total savings: $5 million

· Give state government workers health care plans more closely matched to health care plans offered to taxpayers who work for private companies, like HSAs with high-deductible insurance plans. Total savings: $80 million

Read Dr. Schlomach’s memo on Arizona’s budget reduction opportunities here, or call (602) 462-5000 to have a copy sent to you by mail.

The Goldwater Institute is an independent government watchdog supported by people who are committed to expanding free enterprise and liberty.

Give the people the home-court advantage
By Ralph Benko

We send our elected representatives far from home to conduct The People’s business. We send them to Washington, D.C. where they form what our flyboys (and flygirls) call “a target-rich environment” for the lobbyists and for the political party leadership.

We send them far from us … to conduct our business. There was no other way in the 18th, 19th, and most of the 20th century. In the 21st century, of course, this is absurd.

As things now stand, it is too easy for lobbyists and party leadership to “get at” our elected legislators. And too hard — impossible, on a concentrated basis — for voters to spend “face time” with their representatives.

We plain folks, and our representatives, would be well-served by changing the rule requiring our legislators to vote from the floor of Congress. And this could be done by a simple rule change, no legislation or constitutional amendment required.

The Constitution simply provides that “a majority of each [chamber] shall constitute a quorum to do business” and does not even specify “present,” much less what that would mean in the 21st century of webcams, Skype, videoconferencing, broadband internet or other technologies out there. The rules of both the House and Senate provide that a quorum is assumed unless a quorum call shows that it is not.

Sheer proximity is a very powerful thing. Lobbyists consider “face time” the crown jewel of their pursuit. Proximity is a soft force, but a powerful one. In sports parlance, it’s called “the home court advantage.”

By a simple rule change, our legislators could give themselves permission to vote from their district offices. Not require it. Simply permit it. From there, they could tele-speak, by Web, and tele-listen, by Web.

Now, they listen by closed circuit TV and speak rarely enough. They could speak more conveniently, and thus more often, by Webcam than they do now, and from home.

In fact, they could invite their constituents to form a “studio audience,” changing the chemistry rather dramatically.) They could make a district office home-base for most of their staff, instead of doing it backwards, as now. (Jobs for constituents! What a concept!)

Travel is such a hassle, the cost of maintaining two homes beyond the reach of most of our legislators. Under such a rule, it is highly likely that a lot of members would vote, more and more often, from their district offices. (Many of their wives, or husbands, would see to it!)

More time in the District means less in D.C., and it would be a lot harder, and more expensive (all that travel!) for the lobbyists to smooth talk them and for party leadership to twist their arms.

At home, they would be much more in touch with the people who they represent. With much less wear and tear.

Of course, they would still come in to “the office,” to confer with one another whenever useful, attend major ceremonial occasions, committee meetings when important issues are genuinely at stake, hear out the lobbyists, raise money, get on TV, even play poker or attend prayer breakfasts (depending, of course, on party affiliation) with their colleagues. This would tip a balance. Right now, it’s easy for the lobbyists to get at them in concentrated doses and hard for constituents to get heard.

Legislators! Give yourselves permission to vote from your district offices: Amend Rule XX. Only the (unfairly maligned) lobbyists and the (fairly maligned) party leadership lose.

For them … our pillows will be soaked with tears. For the people … and for you … it’s win-win. Give the home court advantage back to your homies!

Join the People Powered Congress social site here.

Ralph Benko, a principal of Capital City Partners, of Washington DC, is the author of The Websters’ Dictionary: How to Use the Web to Transform the World, the eBook of which may be downloaded without charge from www.thewebstersdictionary.com. He has given himself permission to work from a home office, where he gets far more accomplished than at “the office.”

From the Washington Examiner

Today’s Phoenix Business Journal ran the following article by Mike Sunnucks:

U.S. Rep. Jeff Flake, R-Mesa, has been quick throughout his tenure to oppose federal subsidies and special incentives. But the East Valley congressman is keeping mum on state and local proposals within his district to build a new Cactus League ballpark in Mesa for the Chicago Cubs.

The Legislature is considering a plan to impose 8 percent ticket fees on all Cactus League games and $1 Maricopa County rental car tax to help pay for the Cubs stadium. In addition, the city of Mesa will ask its voters to approve bonds and new spending for the $86 million project.

Phoenix Mayor Phil Gordon, the Arizona Diamondbacks and other Cactus League teams oppose the ticket fee idea. Instead, Gordon and D-backs officials would like to see special tax districts created around spring training ballparks and in downtown Phoenix to capture and dedicate sales tax revenue toward those areas, and perhaps bond against future expected revenue.

The Cubs have threatened to move to the Grapefruit League in Florida unless a new ballpark is built here by 2013.

Flake is not taking a stance either on the ticket fees or the tax district idea to help pay for a new stadium.

“We’re going to hold off on commenting for now,” said Flake spokesman Matthew Specht.

The city of Mesa is a prime backer of the ticket fee and car rental tax increase to keep the Cubs from moving.

A bill that would impose ticket fees and the car rental tax has been approved by committees in the Arizona House of Representatives. House Bill 2736 is not yet scheduled for a full House vote.

“This is budget week, and the Cactus League bill is on hold for this week,” said House Majority Leader John McComish, R-Ahwatukee.

Goldwater Institute
News Release

PHOENIX–Most Arizona families that receive welfare assistance have no one in the home working or training for a full-time job despite a federal mandate to do so, according to a new report from the Goldwater Institute.

In 1996, Congress passed a series of reforms commonly known as welfare-to-work, which reduced the number of people nationwide receiving direct welfare benefits from 4.4 million to 1.7 million by 2007. Welfare-to-work required states to motivate people on welfare to find at least part-time work or to enter job training to prepare for a new career.

Initially, Arizona had success with welfare-to-work. But once the state reduced its welfare enrollment by half, the federal government no longer held Arizona accountable for additional progress. In 2007, 9,662 Arizona families receiving welfare had at least one adult in the house who could work, but didn’t put in a single hour during the week. That made up 60 percent of all work-eligible welfare families.

In Making Welfare Work: Reforming Arizona’s Welfare System to Help Families and Save Money, Katherine K. Bradley, a visiting fellow at the Heritage Foundation, explains that other states continue to encourage welfare recipients to find work or job training with additional restrictions that go beyond the federal rules. “Arizona should consider reforms that would move more families into jobs and reduce the current welfare caseload in order to improve citizens’ independence and save millions of taxpayer dollars,” Ms. Bradley says.

Ms. Bradley suggests several steps that Arizona could take to move more people off of welfare, including:

· Set higher targets for getting welfare recipients into jobs or training. Hold staff at Department of Economic Security accountable for reaching those benchmarks.
· Require able-bodied recipients to immediately begin a four-week job search program. Recipients should report daily to a training site and log at least 30 hours a week of job search and training activity.
· Deny an entire welfare check the first time someone fails to report for work or job training.
· Require all parents of children receiving welfare payments to work. Illegal immigrants aren’t eligible for TANF checks, but their U.S.-born children are. U.S. citizens and immigrants alike should be required to work to support their children.
· Rely on private employers and community groups to manage work training and job placement.

Such requirements allowed Georgia to increase its work participation rate from 11 percent to 65 percent in three years, and Texas reduced its welfare enrollment by nearly half between 2003 and 2006.

Read Making Welfare Work: Reforming Arizona’s Welfare System to Help Families and Save Money online or call (602) 462-5000 to have a copy mailed to you.

The Goldwater Institute is an independent government watchdog supported by people who are committed to expanding free enterprise and liberty.

by Byron Schlomach, Ph.D.
Goldwater Institute
 
Adapt and overcome. This is part of a Marine Corps mantra born of a resource scarcity the service suffered when its equipment consisted mostly of hand-me-downs from the Army. This is exactly the kind of can-do spirit that we need from government officials today.

The Arizona economy has lost more than 300,000 jobs. Tax revenues have plummeted at every level. We cannot afford to continue funding government at its former levels. Unfortunately, officials with the City of Phoenix have demonstrated an unwillingness to adapt to changing circumstances.

Phoenix says it has eliminated 500 positions, but that’s only about 3 percent of the city’s 14,000 employees. Due to attrition, the actual number of layoffs will be less than 50, or around three-tenths of 1 percent. The City Council did eliminate an administrative assistant position that paid $95,000 a year. That’s a start, but it begs the question of how many other high-dollar assistant positions have been preserved. And, it lends credence to the assertion that the average cost of a city employee is $100,000.

Residents of Phoenix were told that the city needed to impose a 2-cent food tax to protect police and fire services from budget reductions. But on a recent episode of Sunday Square Off, Mayor Phil Gordon said he was shifting police officers to other city departments whose budgets were partially funded through federal or state tax money.

So, really, the City Council has made it more expensive for people to put food on the table so that they can protect the city’s $1 million budget for “arts and culture” and the $1 million budget for “government relations,” i.e. lobbyists.

When Mayor Gordon delivers the “State of City” address next Tuesday, he will talk about all the changes going on at City Hall, all the hard choices he’s made. But the truth is, the new tax on groceries and the refusal to realign government to focus on core functions show nothing has changed and the state of the city is disappointing.

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