When I first heard Governor Brewer’s proposal to retire debt on the state’s capitol buildings, I thought it was a bad idea. The main reason: early-payoff penalties. There just was no good reason to bear such costs.

It turns out that early payoff penalties are not an issue. The state has to deposit a lump-sum of $106 million into an account that is held by a third party, over which ownership is exercised by the creditors who lent the state the $81 million secured by the capitol buildings. The cash substitutes for the buildings as collateral and we get back the deeds, free and clear.

The $106 million accounts for all the interest and principal we were going to have to spend to pay off the loan over the next 20 years. There is no pre-payment penalty.

Some might say that getting back the capitol buildings’ paper is just symbolic nonsense for the sake of the state’s centennial. And sentiment is a bad reason to pursue any policy. But this is more than a feel-good idea.

The biggest advantage to this early payoff, though, is that it avoids the temptation to spend temporary money on ongoing programs – the ones that it looks like we can afford now, but that we might not be able to afford later. We did that for several years before the recession, and look where that got us.

It’s not safe to assume we’ve entered into a long-term, steady economic expansion with steady government revenues to accompany it. So, while we have a temporary surplus, let’s pay down the state’s debt.

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

Learn more:

Office of the Governor: The Facts about a Capitol Buy-Back

Goldwater Institute: Living Debt Free: Restoring Arizona’s Commitment to its Constitutional Debt Limit

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

Maricopa County manager David Smith proposing to settle million dollar lawsuits of cronies       Greedy county officials should be forced to litigate their claims fully to reveal how worthless they are, instead of receiving million dollar settlements

Maricopa County manager David Smith, the hatchet man for the County Supervisors, is proposing that the county settle the million dollar lawsuits filed by the Supervisors’ cronies against Maricopa County and its taxpayers for amounts of several hundred thousand dollars up to $15 million each. This is a bad, bad idea that will end up very costly to taxpayers. The greedy county bureacrats, who are suing the county over nothing more than “stress” from being prosecuted by Sheriff Arpaio and former County Attorney Andrew Thomas, should be forced to plead their cases in a court of law, so taxpayers can see how sketchy their lawsuits are. The Supervisors better do the right thing and not award their cronies million dollar settlements. Two of the lawsuits are from their fellow Supervisors Mary Rose Wilcox and Don Stapley! This is a blatant conflict of interest for them to award them huge amounts of money. The Supervisors have already paid Judge Fields $100,000 of your taxpayer dollars for his lawsuit against the county. He received that money for his claims that he was stressed over Arpaio and Thomas attempting to prosecute him. That prosecution went nowhere since he was able to thwart it.  None of his assertions of stress were ever heard and tried in a court of law, the county simply $100,000 at him in a settlement. Next, Judge Baca received a $100,00 settlement for her stress over being sued by Arpaio and Thomas. Stephen Wetzel, the county director of IT, received an undisclosed settlement amount. This is not right. These officials should be forced to go through the regular court system like the rest of us. They should not be awarded hundreds of thousands of dollars for “stress” based on their claims that they were wrongly prosecuted. We will never know if they were wrongly prosecuted, because they were able to successfully thwart Arpaio’s and Thomas’s attempts to prosecute them. It is despicable that they they are being awarded hundreds of thousands of dollars for successfully avoiding prosecution!!! David Smith claims that the county is saving money by settling the claims, but the claims are so groundless the county would end up not paying any money if they were fully litigated. He knows this but wants to guarantee his cronies are vindicated, which in turn vindicates his legal attacks against Arpaio and Thomas. This sets a bad, bad precedent for future bureaucrats down the road to sue over “stress” and receive millions of dollars too. If the greedy bureaucrats are awarded these lavish amounts of money, taxpayers will consider a citizens’ lawsuit against them. Tea Parties and organizations like the Goldwater Institute and Americans for Prosperity have grounds to sue them based on abuse of our tax dollars.  The Arizona Republic has coverage. ACTION ITEM: Contact the Supervisors who will be deciding whether or not to award these outrageous settlements and let them know that you disapprove of them awarding large settlements to the other two supervisors and their cronies. Tell them these speculative claims need to be heard in a court of law where they will inevitably be DISMISSED. Supervisor Andrew Kunasek (602) 506-7562 akunasek@mail.maricopa.gov Supervisor Max Wilson (602) 506-7642 mwwilson@mail.maricopa.gov Supervisor Fulton Brock (602) 506-1776 fbrock@mail.maricopa.gov

Right when we should be CUTTING spending (not just the rate of increase, but ACTUAL spending) and lowering taxes, certain elements of the RNC and “think tanks” are angling not just to keep existing spending and taxes going but ADD an entirely NEW federal tax for us to pay.

What the heck is going on, aren’t we in the midst of a teaparty?

The Goldwater Institute recently filed a lawsuit challenging Phoenix’s “release time” practice that sends six city police officers to work as full-time union managers, 35 to work as part-time union representatives, and one to work as a union lobbyist. Although these employees are released from city duties to perform union duties, taxpayers continue to pay the officers’ salaries and benefits.

The city and the union say this practice doesn’t waste taxpayer money because it’s police officers who pay for the release time by foregoing higher pay and benefits in exchange for release time.

But that isn’t true.

The city doesn’t consider release time a trade off for lower officer salaries – until recently the city council didn’t know release time existed. The city grants release time simply because it’s been buried in the city’s contracts with the unions since the 1970s.

And even if the city does grant release time in exchange for officers accepting lower pay, it doesn’t mean officers are funding release time. As long as the city signs the paychecks of officers doing union work, taxpayers are the ones who pay.

Officers would fare better if the city defunded release time and redirected the associated $950,000 per year to officer salaries. Then, individual officers could choose whether to keep their portion of the money or put it back into funding release time via union dues.

Of course, union bosses fear this idea — give officers direct control over the funding of release time, and they just might find that six full-time union managers and 15,000 hours of release time aren’t necessary after all.

Taylor Earl is a staff attorney at the Goldwater Institute’s Scharf-Norton Center for Constitutional Litigation.

Learn more:

Goldwater Institute: Cheatham v. Gordon

Goldwater Institute: “Money for Nothing: Phoenix Taxpayers Foot the Bill for Union Work“

FOR IMMEDIATE RELEASE: January 17, 2012
CONTACT: Genevieve Frye Rozansky

Washington, D.C. – Republican Congressman Jeff Flake, who represents Arizona’s Sixth District, today illustrated the size and scope of the growing national debt.

For a $2 fee and by placing a minimum order of either $8 or $10, some residents in the greater Washington, D.C. area could enjoy home delivery from fast food giant Burger King. It was announced over the weekend that Burger King has been testing home delivery for its menu items from four of its locations in the D.C. suburbs.

The U.S. is so broke that even adding the $2 delivery fee and based on a minimum purchase of $10, our $15.2 trillion federal debt could pay for $1.3 billion at-home Burger King deliveries.

“The level our debt has reached is a real Whopper,” said Flake.

Along with Senators McCain and Rubio, Congressman Flake introduced H.R. 634, the Debt Buy-Down Act, which allows taxpayers to designate up to 10 percent of their federal income tax liability to reduce the national debt. The bill then requires Congress to reduce federal spending by that amount. More information on the Debt Buy-Down Act can be found here.

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FOR IMMEDIATE RELEASE: January 12, 2012
CONTACT: Rey Torres

Commends Governor Brewer’s Tax Proposal

STATE CAPITOL, PHOENIX (January 12, 2012) – Speaker Andy Tobin today commended Governor Jan Brewer on her announcement of a series of tax reforms designed to spur economic growth. “I am very supportive of the Governor’s tax reform proposals,” said Speaker Tobin. “The fiscal health of our economy remains the number one issue facing our state.” Speaker Tobin further iterated the importance of promoting capital investment and workforce development as well as reducing the administrative and regulatory burdens placed on businesses.

Last year, House Republicans spearheaded Arizona’s Jobs Bill, which laid down the foundation for the state’s economic recovery, and which Governor Brewer signed into law. This year, Speaker Tobin is advocating for additional tax cuts as well as regulatory reforms to cement Arizona’s status as a place businesses want to set up shop.

In addition to the Governor’s tax reforms, Speaker Tobin is proposing a regulatory tax credit. This plan will provide a dollar for dollar tax credit equal to the cost of excessive government regulations. “The cornerstone of job creation is lowering the cost of doing business in our state,” said Speaker Tobin. “This tax credit will supplement the Governor’s other tax reforms to help encourage business expansion as well as new businesses locating across the state.”

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FOR IMMEDIATE RELEASE: January 12, 2012
CONTACT: Zach Howell

WASHINGTON (DC) Congressman Ben Quayle released the following statement Thursday regarding President Obama’s request for yet another $1.2 trillion increase to the debt ceiling:

“The President’s decision to seek yet another $1.2 trillion increase to the debt limit reinforces the unfortunate trend of raising the debt ceiling while taking no action to rein in spending.

“Because of President Obama’s lack of leadership, our national debt has surpassed the size of the American economy. House Republicans have passed numerous bills that will start to get our spending under control only to be blocked by the Democrat controlled Senate and the President. It’s time for the President and Senate Democrats to join Republicans in Congress in making substantive spending cuts and meaningful reforms to our entitlement programs.”

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It’s not every day that the New York Times makes a compelling case against government giveaways. But a recent page-one article underscored that the Solyndra scandal was only the tip of the solar-subsidy iceberg. Huge companies like Goldman Sachs, Morgan Stanley, General Electric, utilities including Exelon and NRG, and even Google are receiving government guarantees that ensure large profits with virtually no risk — except to the taxpayer.

The Times ascribes to the Obama administration a “gold-rush mentality” when Congress expanded green-power incentives in 2009, despite a paralyzing federal deficit. The chief executive of NRG, which received $5.2 billion in federal loan guarantees plus hundreds of millions in other subsidies for solar projects, gushed that “I have never seen anything . . . in my 20 years in the power industry that involved less risk than these projects.”

A start-up industry with no capital risk to investors? It’s a nifty deal if you can get it—and many have. “It is like building a hotel, where you know in advance you are going to have 100 percent room occupancy for 25 years,” the Times quotes the CEO of SolarReserve. Even some of President Obama’s top advisors have warned of industry “double-dipping.”

Solar may be the most-subsidized industry in American history. Not only are producers subsidized at the federal, state, and sometimes even local levels, but consumers are subsidized to purchase solar panels, utility companies are forced to use and further subsidize solar power, and higher utility rates are passed along to Americans amidst deep recession.

Arizona is immersed in solar subsidies, providing tax breaks and (through the Corporation Commission) mandating that 15 percent of all utility energy be provided through specified renewable sources. Cost and technological feasibility are no object, and every dollar in added costs is passed along to consumers through a utility surcharge.

If the New York Times gets it, shouldn’t sensible, self-styled conservative elected officials? It’s time for government to stop playing Santa Claus to this pampered industry.

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

Learn more:

New York Times: A Gold Rush of Subsidies in Clean Energy Search

Governor Jan Brewer has declared that one of her priorities in the coming session is to pay down the state’s debt. The idea, mirrored by leadership proposals in the state house and senate, is both timely and refreshingly frank.

By any straight-face test, the state has continuously violated the Arizona Constitution’s mandate that current-year expenses be funded largely on a “pay as you go” cash basis — not through debt. Now that the state anticipates as much as $650 million in surplus tax revenue, it is time to square Arizona’s fiscal policy with the state constitution.

Enabled by legal precedents that embraced fiscal gamesmanship decades ago, the state has long skirted the Arizona Constitution’s $350,000 debt limit using a variety of budget tricks. Officials have sold and leased-back buildings, used credit lines and warrants to cover huge gaps between spending and revenue, and rolled-over liabilities from one budget year into the next.

While last year’s budget was relatively gimmick-free, hundreds of millions of dollars of past fiscal gimmickry remain on the books.

An unretired debt is a tax on future generations. Our state’s founders largely banned debt to protect those voiceless future generations from taxation without representation.

Arizona’s “pay-as-you-go” constitutional policy properly imposes political accountability on current politicians for their fiscal choices. For this reason, constitutionalists, tax hawks and fiscal responsibility mavens should agree with Governor Brewer and legislative leadership: Use the surplus to retire the state’s unconstitutional debt.

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:

Arizona Republic: Plans for Arizona Budget Vary

Goldwater Institute: Living Debt Free: Restoring Arizona’s Commitment to its Constitutional Debt Limit

Promises of reduced spending swept dozens of self-proclaimed conservatives into power during the 2010 congressional elections. What did they do? They gave President Obama the power to lift the federal debt limit, twice failed to move a Balanced Budget Amendment proposal out of the House and promised spending cuts that look increasingly illusory.

As history increasingly shows, Washington’s limitless ability to incur debt is one of the greatest errors in our Constitution. Fortunately, there is no reason to wait for Congress to propose what Thomas Jefferson called the “Missing Amendment.”

Federalist No. 43, written by James Madison, emphasizes that Article V of the U.S. Constitution empowers “State governments to originate the amendment of errors.” This means state legislatures can compel Congress to call a convention for proposing constitutional amendments when 34 of them pass “applications” requesting one.

Not surprisingly, states and citizens are increasingly recognizing that Article V was designed to tackle the problem of the federal debt.

Last session, two states — Louisiana and North Dakota — passed National Debt Relief Amendment (NDRA) applications. They request an Article V convention to require any increase in the federal debt to be approved by a majority of state legislatures. Legislators in 20 states, including Arizona State Senator Linda Gray, will sponsor the NDRA this year.

Moving the federal debt debate to state legislatures would enable states and ordinary citizens to exert far more influence than they currently have. And the logistics of complying with this amendment would require the federal government to prepare budgets, debt financing proposals, and fiscal contingency plans months in advance.

The National Debt Relief Amendment would decentralize power, establish transparency and encourage basic fiscal responsibility. But no one should hold their breath waiting for Congress to propose it. The only realistic option is to impose it from the outside, and Article V of the U.S. Constitution gives us this power.

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:

Goldwater Institute: Article V research resources

New York Times: Obama Waits Before Asking for Increase in Debt Limit

RestoringFreedom.org: The National Debt Relief Amendment

House Republicans have worked hard this year to prove to Americans that we recognize the extent of our fiscal crisis. With tremendous political risk, Republicans passed a budget crafted by Budget Committee Chairman Paul Ryan that made tough, but necessary, decisions to corral out-of-control federal spending and bring about much-needed reforms to entitlement programs.

So after leading by example by embracing the Ryan budget, why are Republicans ending this year’s congressional session by passing another “now-you-see-it, now-you-don’t” temporary payroll-tax holiday? Because politics is dictating policy.

A year ago, Americans were told that a temporary reduction in payroll taxes would jump-start economic growth, improve the economy and put people back to work. This was misguided from the beginning. To begin with, temporary tax reductions don’t improve economic conditions. And make no mistake, this temporary reduction was always sold as a 12-month tax holiday. When short-term tax cuts expire, taxes go back up and the net result is effectively a non-stimulus. Don’t just take my word for it. Economic growth has been hovering between an anemic 1 and 2 percent.

How the payroll-tax holiday is “paid for” is another example in the art of congressional budgeting. Senate Democrats favored raising taxes on high-income earners as a spending offset. But they couldn’t get 60 votes in the Senate to pass it (thank goodness). House Republicans, on the other hand, opted for subterfuge, telling Americans that budget cuts will pay for a new payroll-tax holiday. Non-binding budget cuts that is, spread out over 10 years. That’s right, Congress is proposing to pay for one year’s worth of non-stimulative tax cuts with 10 years’ worth of budget cuts. Don’t get me wrong, I’m all for budget cuts. But budget cuts that kick in years from now aren’t really budget cuts. We’ve been down that road before.

Because payroll taxes fund the Social Security Trust Fund, another short-term tax holiday exacerbates the insolvency of the fund. It is pretty remarkable to see Democrats, self-proclaimed protectors of Social Security, so forcefully embrace blowing a huge hole in the Trust Fund, and Republicans, fierce critics of deficit spending (at least rhetorically), so willing to resort to gimmicks to mask larger deficits.

More than anything, the economy needs serious tax and regulatory reform, reform that would result in a permanent reduction in marginal rates for all income earners brought about by removing credits, deductions, loopholes and tax expenditures (like that envisioned by the Simpson-Bowles Commission). Ideally, capital-gains taxes would be eliminated for everyone, but at a minimum, the tax rates cannot increase.

America’s corporate-tax rate, currently the second-highest in the world, should immediately be reduced to 25 percent. Permanent reforms like these would unleash a torrent of economic activity and move the economy and unemployment rate in positive directions. Another round of a nickel-and-dime “now-you-see-it, now-you-don’t” tax holiday is misguided.

Jeff Flake is the U.S. representative for Congressional District 6, which includes parts of Mesa and Chandler and all of Gilbert, Queen Creek and Apache Junction.

Ideally, state government would provide genuine public goods (in the strictest sense of the economic term “public good”) and provide a social safety net, with minimal harm to taxpayers and minimal drag on economic growth.

Government support for K-12 and college education (which now take up over half of the state budget) would be voucherized, with money going directly to families to empower them to shop among competing private and non-profit schools.

The vouchers would be means-tested so that low-income families received bigger vouchers, with a formula for extra subsidies for children diagnosed as having special needs.

If K-12 vouchers were deposited into tax-exempt education-savings accounts, families would have a strong incentive to bargain for lower tuition and to save and invest excess funds for future education, health and retirement purposes.

AHCCCS/Medicaid, which currently takes up a quarter of the state budget, needs radical reform. By correcting flaws in the federal tax code, we could encourage the vast majority of citizens to buy portable health-insurance coverage through tax-exempt health-savings accounts, with means-tested government support for the poor (including block-granted federal dollars).

For people who are too sick to be easily insurable in low-premium, high-deductible HSA plans, the government could maintain high-risk pools in coordination with private charities.

Along the same lines, unemployment insurance would be based on contributions to private, individual accounts so that individuals saved their own money when they were working and spent their own money when they lost their jobs, thus creating strong incentives to quickly find new jobs.

Many state highways and roads (which often involve public-good holdout problems) could be made self-funding through long-term private concessions to finance, build, maintain and operate new roads and new highway lane-mile capacity.

With the above reforms, Arizona’s general-fund budget would be $9 billion a year. Ideally, that would be funded with a broad-based retail sales-tax rate of less than 4 percent — no personal or corporate income taxes, and no local education property taxes (which currently take up at least half of people’s property-tax bills).

As long as we’re talking about the ideal world, let’s go further and assume that the federal government was limited to its proper functions under Article 1, Section 8 of the U.S. Constitution.

With a federal government one-fifth of its current size and funded by a 5 percent national retail-sales tax (eliminating federal income, capital gains, dividend and death taxes), Arizona taxpayers could readily afford to replace and reform many of the federal entitlement programs.

By paying for those functions with an additional statewide sales tax of 5 percent, we could limit the total combined federal, state and local sales-tax rate to about 15 percent.

With a total tax burden about 15 percent of GDP, Arizonans would have the most efficient, most pro-growth tax system in the developed world, resulting in real annual per capita economic growth around 3 percent.

At that rate, Arizonans would double their real wealth every 25 years.

The tough question is not whether this would be good for Arizona.

The tough political question is how we get there from here.

Tom Jenney is Arizona director of Americans for Prosperity, which seeks to educate citizens about economic policy.

FOR IMMEDIATE RELEASE: December 16, 2011
CONTACT: Apryl Marie Fogel

Calls Bill a “Crap Sandwich” 

WASHINGTON, DC –Today, Congressman Paul Gosar, DDS (AZ-01) voted to support the Fiscal Year 2012 Consolidated Appropriations Act (H.R. 2055). This bill averts a government shutdown while decreasing federal spending from over $6 billion from fiscal year 2011 funding. This legislation means the total annual discretionary funding for fiscal year 2012 is $95 billion less than last year’s budget – a victory for conservatives.

“I have consistently said throughout my time in Washington that the American people deserve more from their government. This bill is a crap sandwich! You definitely do not want to bite into it, you cannot stand the taste, but you know you have to eat it. I hoped that this bill would include far more cuts, greater reforms, and more regulatory relief. I’m disappointed that it does not! Let me be the first to admit, this legislation is far from perfect! It does however inch us forward towards our ultimate goal of restoring fiscal sanity. 

It is important to remember that conservatives control just one-half of one-third of the federal government. We are a vocal and influential minority. Tough decisions have to be made and included in this bill are key provisions to strengthen our national defense and border security. In addition, it defunds several portions of Obamacare and supports important forest health initiatives.” 

H.R. 2055 makes important cuts while ensuring our service members abroad and the brave national guard and border patrol here at home have the resources they need to protect our country. Additionally, it provides badly needed transparency and conditions on foreign aid, will provide the resources necessary for wildfire suppressions and prevention, and facilitates increased economic development on public lands, like grazing.

Congressman Paul A. Gosar, DDS hails from Flagstaff, Arizona and is serving his first term in Congress as the Representative from rural Arizona’s First Congressional District. As a health care provider and small business owner, Gosar is focused on bringing jobs back to the district, reforming health care, reining in government spending, and ensuring that the American people are involved in the solution making process.

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FOR IMMEDIATE RELEASE: December 16, 2011
CONTACT: Genevieve Frye Rozansky

Spending Levels Simply Too High

Washington, D.C. – Republican Congressman Jeff Flake, a member of the House Appropriations Committee, today voted against H.R. 2055, the Conference Report for the Military Construction, Veterans Affairs, and Consolidated Appropriations Act of 2012.

“Aside from spending levels being simply too high, this is a 1,200-page bill that we’re voting on only a few hours after it was finalized. We’ll be discovering for months to come what’s actually in it,” said Flake. “This is unacceptable. We promised to do better.”

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FOR IMMEDIATE RELEASE: December 13, 2011
CONTACT: Genevieve Frye Rozansky

Broken Entitlement System Must be Reformed Before Reducing Dedicated Revenue Sources

Washington, D.C. – Republican Congressman Jeff Flake, who represents Arizona’s Sixth District, today voted against H.R. 3630, the Middle Class Tax relief and Jobs Creation Act of 2011.

“Simply put, we can’t keep passing one-year extensions and promising to pay for them over 10 years,” said Flake. “We’re unable to compel future Congresses to carry out any budgetary measures put in place now, so there’s nothing to ensure that this extension is paid for in the future.”

“We all concede that our entitlement system is broken. If we don’t have the courage to reform entitlement programs, we shouldn’t be siphoning off their dedicated revenue.”

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