Arizona, We have a spending problem

Byron Schlomach, Ph.D.

Arizona, We have a spending problem
by Byron Schlomach, Ph.D.

Whether personal, organizational, or governmental, when dealing with finances, it’s often a good idea to back up and look at the big picture. Accordingly, the figure below shows Arizona’s General Fund expenditures and revenues from 1993 through 2008 (the latest year available).

In the 1990s, revenue growth was even and steady despite the fact that tax cuts became effective yearly. At the end of that decade, though, expenditures took an uptick and surpluses disappeared. Since then, Arizona has been on a wild ride. During the three years after the double-whammy of the tech bubble bursting and 9/11 spending accelerated right along with revenues. Source: Joint Legislative Budget Committee

For the last three budget years, state spending has exceeded state revenue. Even as lawmakers began to understand our true fiscal picture, there was a failure to put on the brakes on spending.

Arizona has been hit hard by the national business cycle. The worst thing the state’s policymakers could do now is amplify the negative effects with a tax increase. Tax increases discourage the private investment and risk-taking that we need to build wealth and restore a vibrant economy.

Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.

 


Comments

  1. That chart looks backwards. Are they sure they don’t have those two lines mislabeled?

  2. If one adjusts for inflation and population growth the increase is 1.3% per year for the time Mr. Schlomach is talking about. If one also compares this relative to the state’s economic growth, it has actually decreased.

  3. Veritas Vincit says

    Ah the swan song of Janet Napolitano. Spending your way to prosperity with un-sustainable programs.

    todd, what period of time are you adjusting for inflation and at what rate? Ditto for your growth assumptions. Last question, how are you measuring the ‘state’s economic growth’ (and over what period of time)?

    Nice macro statements; how about the data input? Anyone remember GIGO?

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