For Immediate Release: March 17, 2010

Statement by Governor Jan Brewer 2010 Spokesman Doug Cole Regarding Letter from Terry Goddard Re: Proposition 100

“It’s amazing that the day after the budget is passed by the Legislature, the Attorney General finally begins to talk about Arizona’s budget crisis. The Attorney General, and his political partner, Janet Napolitano, helped drive this state toward the largest budget deficit in Arizona’s history. Governor Brewer has called on him since January to offer solutions to the fiscal crisis. So far – no proposals, and no solutions, just criticism from Goddard and members of his party.

“Governor Brewer is the only one who has proposed a comprehensive, balanced solution to the state’s budget calamity. The consequences of Proposition 100 failing would be devastating – $428 million from classrooms, $120 million from higher education, $100 million from public safety, $200 million from health and human services. All told, the Governor and legislature have permanently reduced state spending over the last two years by roughly $2.2 billion. This is why Republicans and Democrats alike, labor and business together, support Proposition 100, to prevent yet another $1 billion in reductions this year. One would think that Arizona’s Attorney General would support funding for public safety.

“The Governor supports responsible, long-term, prospective tax reforms that would kick-start Arizona’s economy and grow jobs. She does not support irresponsible tax measures that would cause damage to Arizona’s current budget crisis. The Governor has not changed her long-stated belief that job creation must be the top priority, and she has had proposals on the table since March of 2009 to help small, medium, and large businesses grow jobs in Arizona. Moreover, her actions to date have already resulted in regulatory reform to provide a pro-business climate, job training support, and the attraction of $1 billion in new investment in Arizona since taking office.

“Hard times call for hard decisions, and the Attorney General’s comments once again prove that when the times call for leadership, Governor Brewer has the only comprehensive solutions to our state fiscal crisis and for job creation.

“Judging by his comments today, it appears the Attorney General is once again waiting for Governor Brewer to provide him with budget and revenue solutions before he takes a position. Does Terry Goddard support Proposition 100, or does he not?”

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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.

For Immediate Release: Friday, March 12, 2010

The following statement is attributed to Speaker Kirk Adams on recent Arizona Board of Regents actions:

“Over the last two days, the Board of Regents has tackled difficult issues regarding the future financial position of our public universities and the impacts of their decisions on our students, their parents, and faculty. Our state’s financial troubles, coupled with increased demand and higher costs, require the Board to seek fiscal alternatives that will hopefully protect the quality and integrity of our public universities. Their continued leadership will ensure that our public universities do not eliminate valuable public services that not only move our economy forward but allow our citizenry access to a better life while still seeking efficiencies in the system.

Today, the Board of Regents directed the University Presidents to develop an implementation plan to reduce state supported salaries by 2.75 percent by May 2010. This gesture of solidarity and recognition that other state employees are losing pay and will be furloughed in the next three years demonstrates that the Regents are aware that everyone must contribute to the difficult solutions that we have made as we resolve Arizona’s worst fiscal crisis ever.

I encourage the Regents in their efforts to analyze universities’ operating budgets for cost efficiencies and look forward to working with the Board of Regents, President Crow, President Haegar and President Shelton as we pursue higher education reform. Last year, I supported the Regents, “Arizona Productivity Improvement Imperative” and am extremely proud of Arizona’s $1.5 million grant from the Lumina Foundation. In my letter of support, I stated that economic development depends in great part on innovation and access to a skilled and prepared workforce. I believe that our higher education system can meet that challenge through a student centered system that produces more degrees at a lower cost and a finance model that optimizes productivity.

Now that the FY2011 budget is near to completion, the Legislature must focus its attention on economic recovery and job creation. HB2250 will create the groundwork toward a strong and diversified Arizona economy. To that end, we must also partner with an equally strong higher education system — one that recruits and trains the talent necessary to meet workforce demands. Next month, I will visit each of our three universities and meet with institutional and business leaders to develop a strategy to combine our respective resources toward the common goal – a long-term, sustainable and prosperous economy.”

For Immediate Release: March 11, 2010

The following statement is attributed to Speaker Adams and President Burns:

“Today, our legislative leadership came together to produce viable solutions to Arizona’s tremendous budget problems. The road to this point hasn’t been easy. We’ve had to make decisions that were tough and we know that not everyone will be happy with the difficult choices we’ve made.

The most necessary choices, however, are not always the most popular. But, needless to say, our goal was never popularity. Our job was to right size Arizona’s budget, and we are.

At the end of the day, the hard decisions made by those of us who were willing to take the political risk will help Arizona get back on the path toward a balanced budget.

That’s more than we can say for our Democratic counterparts, who, despite repeated invitations to join the discussion by submitting their own budget solutions, never stepped up to the plate.

Instead of choosing to do the hard and gritty work of creating their own budget, they chose to play politics. And, with that choice, they effectively marginalized themselves and play no part in solving the largest deficit in state history.

These kinds of political games do not demonstrate the kind of leadership that Arizonans deserve.”

By Yellow Sheet Report

Published: March 10, 2010 at 12:07 pm

The primary campaign explanation to the McCain/Kyl statement against Governor Brewer’s sales tax increase was also backed by Democrat consultant Bob Grossfeld, who said John McCain acted to keep from being “boxed in” by J.D. Hayworth. “This had nothing to do with the governor, who is collateral damage, but everything to do with Hayworth,” he said. Grossfeld declined to offer his opinion on the proposal, but said Hayworth has proven his abilities to fight hard political campaign battles. Grossfeld, who consulted Democrat Steve Owens on two unsuccessful campaigns against Hayworth in the 1990s, said the following: “I’ve been through too many campaigns where people have underestimated John David Hayworth. You do so at your own peril.”

To read more on this item plus all the stories in the March 9 Yellow Sheet Report, go to www.yellowsheetreport.com (Yellow Sheet Subscription Required).

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.

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

With the state in desperate financial straits, Attorney General Terry Goddard has astonishingly agreed to turn over the bulk of the state’s proceeds in the Western Union settlement. Goddard initially went after Western Union for permitting illegal immigrants to send money to Mexico. The settlement was for $94 million, which Arizona could really use right now. But Goddard directed only $21 million of that to go to the state, which will be split between his office, DPS, and Phoenix Police. Of the rest, Goddard turned $54 million over to some nonprofit entity run out of New York,the Center for State Enforcement of Antitrust and Consumer Protection Laws. Why is this money going to some private organization in another state if Arizona won the suit? The settlement states that the nonprofit will then make the money available for grants to law enforcement agencies along the border – so agencies in Texas and California are going to be receiving money Arizona rightfully earned. Another $21 million of the settlement is going to be used by Western Union on itself to improve its anti-money laundering efforts. Western Union could simply use the money to upgrade its computer systems, add some fancy new offices, etc. Goddard is calling it a “historic settlement.” It’s historic alright, it’s the biggest settlement Arizona has ever flat out given away. In the middle of the worst budget deficit in history. And this guy wants to run for governor? Read Goddard’s spin on it here – http://www.azag.gov/press_releases/feb/2010/Press%20Release%20-%20Western%20Union%202-11-10.html

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.

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.