Op Ed: More than ever, AZ government needs a spending limit

More than ever, AZ government needs a spending limit
By Tom Jenney

The Legislature and Governor have passed a budget for Fiscal Year 2009, but Arizona’s budget crisis is far from over.

Thanks to heavy borrowing, fund transfers, and accounting gimmicks, the state government in January will have a total deficit of over $1.5 billion.

The obvious question is, What Next? 

The answer depends on your political orientation. Big Spenders, Muddled Middlers, and Fiscal Conservatives see the FY 2009 budget in very different ways, and will come to very different conclusions about what to do next.

For the Big Spenders in both parties, who wish to expand the size and influence of government, the FY 2009 budget is a major victory. It actually increases spending commitments by over $700 million–during a recession, and in a supposedly conservative state. State government spending now takes up 7.01 percent of the state’s economy—the biggest portion since 1980—and is set to get even bigger.    

For Big Spenders, the recipe for the future calls for more of the same: use every expedient to keep spending high, while blaming the deficit on the 2006 tax cuts and suggesting that Arizona’s tax system is “broken.”

The Big Spenders are pushing the state toward a constitutional crisis in which the Arizona Supreme Court must choose between Prop 108, the rule that mandates a two-thirds legislative majority for tax increases, and Props 301 and 204, which mandate large automatic spending increases for government schools and government-subsidized health care. With Prop 108 safely out of the way, the Big Spenders will raise taxes and increase per-capita government spending to the economy-strangling levels of California, Michigan, or New Jersey.

For members of the Muddled Middle, the FY 2009 budget process was very difficult. Middlers wanted to shield families and businesses from tax increases, but they also wanted to increase government “services,” in an attempt to satisfy constituents and spending interests. 

In response to the budget crisis, the Middlers will listen earnestly to those who say our tax system is broken, and to lobbyists peddling “stimulus” and “job creation” plans, searching for a nonexistent free lunch that combines low taxes with high spending.

More productively, the Middlers may focus on the problem of voter-mandated spending increases. Middlers probably do not have the stomach to send 301 and 204 back to the voters for revision, but they may support a reform such as the Majority Rules ballot initiative, which would make it more difficult for spending interests to enact new voter-approved spending mandates. 

For Fiscal Conservatives, the FY 2009 budget is the worst state budget in memory, and comes on the heels of four very bad budgets (FY 2005-2008), in which spending increases greatly outpaced the growth rate of the state’s private economy. Fiscal Conservatives understand that the FY 2009 budget will continue to push government spending to unsustainably high levels, paving the way for future budget crises, the end of Prop 108, and massive tax increases.

Looking forward, Fiscal Conservatives recognize that the Big Spenders and Muddled Middlers who currently dominate state government are not likely to limit their spending voluntarily. Since 2003, Fiscal Conservatives have issued repeated warnings that state spending was growing at unsustainable rates. Their warnings were deliberately ignored by the Big Spenders, and unheeded by the Middlers.

Fiscal Conservatives also put forth several proposals to implement spending limits, including one called the Taxpayer Bill of Rights (TABOR), which would have limited state spending to the rate of growth of Arizona’s population, plus inflation. [See Graph]

If TABOR had been adopted in 2004, after the state’s last major budget crisis, Arizona would have had a small surplus for FY 2009, instead of a $2.2 billion deficit. The government also would have refunded over $4.5 billion to taxpayers—a boon to the state economy.

TABOR and other spending limit proposals went nowhere during the last five years. But spending limit ideas are not dead. For Fiscal Conservatives, who wish to restrain spending, avoid budget crises, stop massive tax increases, and preserve economic prosperity, a strong spending limit is the only way forward. 

Tom Jenney is Arizona Director for Americans for Prosperity (www.aztaxpayers.org).


Comments

  1. After California passed Prop 13 in 1978, the state enjoyed 10 years of government fiscal responsibility and 12 years of unprecedented economic growth. Over the past 30 years, California’s property tax revenue has seen an average annual increase of 7.5% per year, even during real estate market downturns.

    Prop 13 Arizona can do the same for our state.

    Prop 13 Arizona uses purchase price as your tax basis, limits valuation increases to 2% per year, caps total tax at 0.5% for residential and 1% for commercial property, and eliminates overrides and exceptions to the caps.

    Raising income taxes requires a hard to achieve 2/3 vote in the Legislature and sales taxes are at the max leaving property taxes as the easiest way to raise taxes. Our current system has no limit on secondary tax increases. Prop 13 Arizona would close this avenue of unlimited taxation.

    We will re-file Prop 13 Arizona after the November election and will start working towards making the 2010 ballot.

    Lynne Weaver
    Chairman@Prop13Arizona.com

  2. Why do we need a Legislature or even a Governor? Let’s just pass lots of initiatives with predetermined absolutes, have oversight audits, and strictly control every aspect of “government”.

    While we are at it, the courts are so backed up and ineffective there has to be a solution to do away with that, too.

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