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Arizona Mayors Play the Shell Game

Arizona Mayors Play the Shell Game

I saw this article this AM and for just one brief moment I was almost giddy.  Or as Chris Matthews puts it, I had a tingle go up my leg”.  But then I read the whole thing and came crashing back to earth.

Four southeast Valley mayors challenged the Legislature on Tuesday to overhaul Arizona’s tax system and think more creatively about how to solve the state’s monumental budget problems.

In the process, they warned lawmakers not to pass down those problems to cities and towns, which have been largely successful in coping with their own fiscal issues.

Read the last paragraph one more time.  We will come back to it again.  The story continues.

Chandler, Gilbert, Mesa and Tempe have coped with drops in sales taxes and development revenue. The mayors said local budget tweaks won’t solve the underlying problem of an unstable state tax system.

“Most of us . . . are funded by sales tax to a large degree,” said Tempe Mayor Hugh Hallman. “And that is a very volatile sector. . . . It’s not going to get better, because the cities don’t have the opportunity to change that model. It’s going to have to be done at the state level.”

Hallman said Arizona should rely less on sales taxes and more on property taxes.

And right there is the money line.  These four mayors “new way od thinking”  is to shift the burden from our sales tax dollars to our property tax dollars.  Pardon me sirs, but isn’t that just a sideways move?  You are really just moving the problem out of my left pocket and putting it in my right pocket.  The big Red Flag here; while sales taxes are based upon a definitive transaction, property taxes are based upon an “arbitrary” number.  I know that there are “formulas” to follow, blah blah blah.  With a stroke of the pen, sorry with the click of a mouse, our property taxes can go up, based upon nothing but a finger in the wind appraisal of all of our properties.  Either way the tax burden still ends up in my mailbox, yours too.

Mesa Mayor Scott Smith said that when his city faced a $61 million budget gap last fall, officials decided it wouldn’t work just to cut jobs without overhauling operations.  “Cutting is a temporary solution, and what we’re looking for is more of a long-term solution, which means you have to change the way you do business,” he said.

Remember earlier in the post when I referenced that money line, “They warned lawmakers not to pass down those problems to cities and towns”?  Rather than come up with some actual new creative ideas, these four mayors are using the same old tired ideas, just re-wrapped for the holidays.  I have already played “three card monty” and I know how it turns out everytime.   Perhaps our elected officials could and should be looking to others for “new ideas”.  heck, you don’t even need new ideas.  Look to states that are prospering in this economy.  Again I reference Texas. No state income tax, low unemployment, a growing economy and they are in the black.  Remember when you where in school?  Didn’t you always try and sit next to the smart kid so you could copy off of him? Maybe we should send our elected officials on a field trip.  They certainly aren’t learning anything sitting here at home.  Back to the drawing board, Mr. Mayor[s].

via AZCentral.


  1. Papatodd falls into the same trap many others do when they prop up Texas as the poster child. Others have pointed it out but I’ll repeat it. Texas has a small natural resource that is sometimes in demand called oil. Strangely enough, when you charge lots of money for the rights to pump this oil, it magically makes financial struggles a little easier to handle.

    I’m open to hear your ideas Papatodd on how you would reform our tax structure.

  2. Roger,
    Very simple, CUT TAXES EVERYWHERE. Allo fthem, personal, corporate, cut them all. tax cuts work everytime they are tried. GWB, RR and JFK did them too.

  3. nightcrawler says

    Sales tax as the name implies relies on consumer transactions: car sales, restauants, hotels, new appliances etc.. A poor economy will in fact reduce the revenue of this type of taxation. The only constant would be sales of food and even that is subject to the winds of relocation.

    The only way to stablize these revenues is to base them a tangible and predictable source such as homeownership. For those who rent, landlords will pass along the increase to the tenants. It is not unreasonable for city executives to want a consistent and most importantly predictable cash stream.

    City services such as water, garbage, fire and police protection are a must for the good of us all. It does matter what shells we move around to pay for them, in the end they must be paid and that is the bottom line, ideology notwithstanding.

  4. So what’s fair with property taxes now?

    See the price of homes? People are stuck with mortgages that were based on current markets at the time – a boom, and now have homes that can’t sell for 3/4 or 2/3rds or less of what they bought them for. Their debt exceeds the current market value.
    SO, what happens when one throws on a higher property tax?
    And on which price will the tax be calculated? On the expired boom price? Or the new deflated market value? The inclination will be to fantasize and use the higher, bubble price, because on the calculator it’ll theoretically bring in more money. But, can stretched out homeowners afford ANY increase right now?
    The national unemployment is over 10% and it’s higher than that in regions, and is expected to worsen. The fewer people employed, the less tax collected, the fewer business, the less tax collected. Businesses to survive now are laying off employees, cutting expenses and eliminating any extraneous, non-core services. The rational response for government is to do the same, to cut non-core services, reduce payroll and other expenses and scale back, but the irrational reaction is to cling to the status-quo, and demand more money from a source which doesn’t have it.

  5. Reform property taxes now before they go up yet again next year after going up this year despite valuations going down 10-50%.

    Visit Prop13Arizona dot com

    Prop13Arizona dot com is a constitutional initiative to permanently reform how property tax works in Arizona, changing it from the single most complex system in the nation to the single simplest, reducing tax rates, capping tax increases and eliminating additional taxes arising from current loopholes such as bonding add-ons and overrides.

  6. I agree papatodd. Can you cite me examples where governments have faced deficits and were able to get out of by cutting taxes?

  7. Texas has both a higher state sales tax and higher property taxes than Arizona.

  8. You should come to Mesa sometime papatodd. We don’t have a primary property tax. The largest city in the nation without one. Has that created a tidal wave of businesses flocking to Mesa? Not really. Saying we won’t charge taxes doesn’t magically fix the problem.

    You might have missed Mayor Smith’s point. Mesa didn’t just cut. They restructured entire departments, use TRV’s for medical cals instead of sending big trucks. Went to 4 day work weeks and much more.

    Mesa is too reliant on sales taxes. You can’t have all of your eggs in one basket or you run into the problems we are seeig now. Arizona needs to start working on reforms after we get out of the disaster we are in.

  9. Papatodd your three presidents cited as cutting taxes and it working is not very persuasuve..

    Yes reagan cut taxes in 81 big time. Then things went so bad he RAISED them in 83 and 84. Once he raised taxes things began to turn around and then he went on to a landslide victory. So that seems to be the opposite.

    With GWB we have had 7 years of lower taxes under bush what did it get us? How did it work? It was a quick patch over the real problem in 2001 so things are even worse.

    So how does it work everytime again?

  10. Try this then:


    In each of the last three cuts in marginal tax rates, revenues received by the U.S. Treasury have increased. Coolidge cut tax rates in the 1920s, Kennedy cut marginal tax rates in the 1960s, and Reagan cut them in the 1980s.

    Under Coolidge, marginal tax rates were cut from the top rate of 73% to 24%. The economy rewarded this policy by expanding 59% from 1921 to 1929. Revenues received by the federal treasury increased from $719 million in 1921 to more than $1.1 billion 1929. That’s a 61% increase (there was zero inflation in this period). Growth averaged more than six percent annually. We are currently growing at 2.5%.

    Under Kennedy, marginal tax rates were cut from a top rate of 91% to 70%. In real dollar terms, the economy grew by 42%, an average of 5 percent a year from 1961 to 1965. Tax revenue to the U.S. Treasury increased by 62%. Adjusted for inflation, they rose by one-third.

    Under Reagan, marginal tax rates were cut from a top of 70% to 28%. Revenues (from all taxes) to the U.S. Treasury nearly doubled. According to the Budget of the U.S. Government, FY 1997, Office of Management and Budget. Revenues increased from roughly $500 billion in 1980 to $1.1 trillion in 1990.

  11. Look at papatodd’s examples – all are *marginal* income tax rates approaching or well over 75% with drops of 20, 30 and even 40 percentage points. This is not the case in Arizona of the rest of the country at this time and really have no bearing on the current situation. In fact at lower levels most economic models actually predict less revenue when taxes are lowered, only in these extreme examples does it even possibly work the way pappatodd, and that isn’t even a sure thing.

  12. Papatodd can you please explain how any of that helps us in AZ this year. Also can you address the fact that Mesa hasn’t had a property tax yet haven’t reaped significant business relo benefits.

    Regan is my hero but I admit that his tax cuts don’t necessarily count since he soonafter had to raise taxes dramatically.

  13. Government is perfectly capable of getting OUT of plenty of services the private sector can handle, with competition and private sector employment instead of government payroll, but that common sense option is being resisted.

    Businesses are cutting back. On what logical basis does government insist on status quo, even raising taxes of any sort, when people are losing work and their homes?

    Many universities and colleges are also in la-la land, many with tuition increases planned for the coming year despite double-digit unemployment now. They seem to expect that more government loans will enable students to continue to pay higher tuition, but the rational public response to a weak job market, job losses and financial uncertainty is to go to cheaper colleges, or forgo colleges because the average public will not take on more debt if they believe they will be unable to repay it. And the availability of government student loans is based on taxes, and with double-digit unemployment, tax revenues are falling, as unemployment payments demands are rising. Unlike the private sector which promotes a growing economic pie with new industry, business and job creation, the government budget pie is fixed, limited by the total tax intake. If the private sector stops growing or shrinks, the tax intake follows. In the case of colleges, more money to student loans means less money for the unemployed, who need to eat and pay their bills this week, this month. Which one takes priority?
    Obama is promising more economic depression. This is the beginning of worse.

  14. I;m going to go back to comment#1. Roger says that Texas is doing OK because it has that great natural resource OIL and that makes all the difference. I beg to differ. Here is a tale of two states. Texas vs. California. While Texas does have oil, so does Ca. As a matter of fact California probably has more natural resources than Texas. Oil, agriculture, tourism, etc. yet even with all those natural resources, Cali is a friggin’ DISASTER. So is it really about resources? I think not. And to the rest of you nay-sayers, I guess your proposal is to continue to have your income,property, utility, etc taxes to be raised? And somehow magically that will fix our problems?
    I find it humorous that even though I gave factual evidence that tax cuts works, those facts are dismissed with “Well it won’t work here because……” Fine sit at home and watch Survivor and pay more taxes and ignore the concept that if you had more money in your paycheck, you could go get that home project dome or buy that new TV or put on that addition or or or or. All of which would stimulate all the economys, local state national. But I’m the crazy one. Roger Johnny, Todd, what are YOUR ideas and solutions? Got any? OR are you just gonna sit there and bitch about my ideas? Waiting for your intellectual answer.

  15. And if you think that I’m a lone wolf here, you might want to read this story.

    To Create Jobs, Cut Taxes and Spending

  16. Papa
    The overall royalties that Texas extracts are far larger than CA. I lived there for 5 years so have a personal knowledge. Along with funding their University system, royalties also pay for roads and other infrastructure.

    Your examples are not wrong, just not applicable because tax rates cannot be cut to the extent your examples were, they aren’t high enough. The Reagan example is actually a perfect example of how big tax cuts are not the answer. Reagan cut taxes and soon-after was forced to raise taxes a high higher clip then almost any other president when compared to GDP and inflation.

    My thoughts? Temporary tax now (3-4 years) ending in off year so it is harder to renew and expiring by law. Dedicate it to education or other basic services. Follow it up with a tax cut/reform such as was proposed last year. Make it beneficial for companies to relocate/focus it on business taxes.

    Texas has something CA and AZ doesn’t. A breaking mechanism that prevents the state budget from growing faster than underlying economic growth.

  17. Papatodd,

    The idea of go buy a bigscreen tv and save the economy was tried before, that is exactly what some republicans called bushes tax cuts. It didn’t do anything! In fact it made things worse!

    My solution is simple you need to temporarily increase taxes now. Just how reagan did in 83 and 84. We have the highest unemployment since guess when… 1983… It worked then after tax cuts failed I would be willing to bet it works now.

    Now the increases would only be temporary. And you can attack me for being too left with this idea but its just what reagan did so I guess I am just as far left as him which I am more than ok with

  18. Johnny,

    Please get your facts straight on Reagan. The ONLY tax increase he agreed to was the closing of loopholes in the 1986 Tax reform act which didn’t take effect until 1987. The great recovery in 1983-1984 was entirely due to the tax cuts AND the lowering of interest rates from a peak of 21%.
    Tax cuts will not fix our current fiscal crisis because the money has already been spent. We have no choice but to make drastic cuts, but tax cuts will make our recovery stronger. Arizona is 4th highest in the nation in commercial property taxes. That would be a great place to start.
    As for Mesa, perhaps if the city office actually tried to HELP businesses succeed instead of doing everything in their power to block new businesses from starting up it might encourage a few new businesses to move there!
    Mayor Smith is trying to make changes, but internal bureaucracies are difficult to change.

  19. Dutch,

    You are just straight wrong….

    One year after his massive tax cut, Reagan agreed to a tax increase to reduce the deficit that restored fully one-third of the previous year’s reduction. (In a bizarre bit of self-deception, Reagan persuaded himself that $100 billion tax hike–the largest since World War II–was actually “tax reform” that closed loopholes in his earlier cut and therefore didn’t count as raising taxes.)

    Faced with looming deficits, Reagan raised taxes again in 1983 with a gasoline tax and once more in 1984, this time by $50 billion over three years, mainly through closing tax loopholes for business.

    So really no tax hikes?

  20. Sorry I should have cited the article I got this from, its a Washington Monthly article written around Reagan’s passing.


  21. pappatodd is like someone who, becoming healthier after reducing caloric intake from 3600 per day to 1200 per day, thinks they can be even more healthy if they go down to 400.

    look, the answer is simple and frankly inevitable, barring some massive second stimulus, they are going to have to cut parts of the budget and raise taxes. what gets cut and where the taxes get raised are going to have to be debated. this continued dickering around is going to in the end mean actually higher taxes than if they would have figured this out last January.

  22. UH OH! It’s not even next year…
    from DRUDGE thru BREITBART:
    Dramatic Footage: Near Riots at UCLA Over Proposed 32% Tuition Hike

    LOS ANGELES (AP) – Hundreds of protesters chanted, marched and took over a building Thursday on the UCLA campus, where University of California regents were scheduled to vote on a 32 percent student fee increase.
    The UC Board of Regents is considering boosting undergraduate fees—the equivalent of tuition—by $2,500 by summer 2010
    Over 10% unemployment and rising, higher than that in many places, and the PhDs at the university have ONE solution to their problem: RAISE TUITION. 32% !!!!!

    Food courts, massage, saunas, luxury dorm options, shen fui, yoga, student life recreation monuments, no expense spared, coffee shops, soaring atriums, $10,000- $50,000, $100,000 guest speakers, campus bus systems for mass transit instead of private vehicles, green promotional programs … an ivory tower unto itself, where everyone is 18-29, a sort of open air mall Logan’s Run world.
    Nope, everything is essential!

  23. Yes Todd, you are right. Politicians act irresponsibly for years and the solution is to always, always, always raise taxes. They are responsible for this mess and the burden always falls on the tax payer. They are NEVER held accountable for the that which THEY DO. I should be more like you, Todd. I’ll just happily pay more taxes for the rest of my life, smiling all the way way. Got to go the store now, time to buy some more KY jelly. Congress is in session.

  24. papatodd – Arizona has been lowering taxes for 30 years. What are you talking about?

  25. The video of the mayors discussing this is on the Arizona Republic’s website. Before anyone criticizes them based on the analysis here, they should watch the video. Looking for a more stable tax base with changes made to the confusing current tax formulas makes a lot of sense. I don’t think the analysis by papatodd was very good based on what I heard coming directly from the discussion. People should judge for themselves.

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