Way to hit it Johnny! (Kavanagh that is)…

“We believe that we can solve this budget without raising taxes.  That is what we as Republicans are … [State Representative John Kavanagh as reported by Arizona Republic]

Stay on point and don’t back down!

Now it seems there’s a small matter of about $500 million give or take a couple of thousand that’s become a sticky wicket for the legislature.  As I’m reading it, there appear to be 3 options.  The first, being the Governor’s is to introduce a *temporary* tax.  As any economics student will tell you, raising taxes in an economy like ours isn’t a good idea.

There are other options we’ve heard about, one uses the $210 million dollars in impact fees currently being hoarded by various state cities and towns. (link provided to Forbes AP article).   While technically a fee levied by a government entity isn’t the same as a tax, that’s only a technicality and can be overcome.

Amid the cries of poverty, who knew they had a piggy bank this size?  Which, now makes things interesting.  In one corner of the ring is the Home Builders Association of Central Arizona, a powerful special interest group that sees no reason why the legislature cannot simply expropriate the piggy bank.  And facing the existing champion of special interest money is the Arizona League of Cities and Towns, a powerful special interest group in its own right who views their self interest as paramount regarding this piggy bank.

Guess who else has been hoarding a private piggy bank?

It turns out, that despite the teachers protesting possible budget cuts (what do they know), there may be upwards of $300,000,000 being held by various school districts.  However, according to Rich Crandall (former president of the Mesa Unified School District Board) the schools might have at best, $100 million dollars.

Well Surprise, surprise … surprise

Two hoarded away sources of idle money, each attached to a very powerful special interest more concerned with their own empires, than perhaps they are with the State of Arizona overall.  Sure sounds that way.

But I recall, and maybe you do too, reading about Arizona receiving $1 billion dollars in Federal Stimulus funds and $837 million of it earmarked for education.

Meanwhile, Veritas congratulates Representative Kavanagh and directs readers to today’s Cap Times article with more details.

To Raise Taxes, or not to Raise Taxes … that IS the question.

update: If the Cap Times link does not work, you can find the article this way:

goto Google News and use [“john Kavanagh” Arizona] in the search field and it should be the first citation.  From there click and it goes right in.  I just tested it.


Comments

  1. So tell me now, how cant it “technically” be overcome?
    Much of this money has already been earmarked for projects that are underway or deep in the planning process. Most of it is tied to development agreements the require the city to perform. If the money isn’t there, guess what they have to do to make it up, RAISE UTILITY FEES. This is a backdoor tax and a way for legislators to try and skirt their responsibility. Yet another dumb idea.
    Just because we don’t call water rates taxes doesn’t mean we’re not raising taxes.

  2. William R. says

    While I’m not advocating these sweeps, I am aware that some of these *earmarked* funds are awaiting federal matching funds that will never materialize. And, if a project is still *deep in the planning process* it can always be put on the shelf until the economy changes.

    For example, that civic artwork in Glendale that was posted a while back. $54,000 for artwork? That’s someone’s salary sitting waiting for the pigeons do poop on.

    Want to find more money? How much annually is collected through the ACC’s RES surcharge? Why not cancel that (or put it on *temporary* hold and allow the revenues not collected to revert back into the state’s economy? That could result in more retail and in turn generate more sales tax without a hike.

  3. Grumpy Gus says

    Stealing money to solve a budget shortfall is not solution, or at least not a Republican one. The point of a budget is to decide what money goes where, and if there’s no money, there’s no where. The state is still living beyond its means, and any federal stimulus is just enabling the insanity.

    Now William suggests we just take the tariff that APS charges its customers to fund clean energy and put that money into the general fund. That’s a great idea, especially to those of us on SRP! Too bad it’s only about $12 million, or $1.32 a month. Spend that on retail, and the state collects about six cents, or about $600,000 in sales tax revenue for the state. Oh, don’t bother.

    William, I need to know where you got your economics degree so I know what school to avoid.

  4. You forgot another hoarding: Maricopa County has over $1 Billion they’ve managed to “save” because of “good fiscal management.” It sounds more like we’ve been overtaxed. Maricopa County–like the schools–are laying off people while they hoard taxpayer money. And the county is even worse. They are building an unnecessary court building for $340 Million.

  5. SonoranSam says

    You seem to be operating on the assumption that this is “hidden” money that is used as a slush fund….in fact, it’s money that comes from buyers of new homes, and it’s earmarked for use on infrastructure in new communities.

    Let me give you an example. A few years ago I bought a new home in an area that badly needed a road widening. At least some of the work was done before I was forced to sell the house because of a change in employment locations.

    Now let’s say that the road never was widened because someone at the Capital.

    This is money – and in most cases it’s thousands of dollars – that is coming out of my pocket, and some politician suddenly decides there’s a better use for it, and now I’ll have to just muddle along with congested roads – even though I paid my fair share of the widening costs?

    Can you understand why I wouldn’t think that’s such a good deal? Do you understand why I’d come a gunnin’ for any Legislator who supported this misappropriation of MY money????

  6. But SonoranSam, we’re standing on our principles and would never propose a tax increase because that takes money from your pocket. Just because the city will have to charge you more doesn’t mean WE passed a tax increase.

    Oh, you mean that’s not how it works?

  7. Veritas Vincit says

    If this is a collective family unit and, someone has been keeping some mad money on the side and the family falls on hard times; what should that family member do who’s been setting aside their allowance?

    On the other hand, if this state is a confederation of independent interests then by all means each interest should hold onto what’s theirs.

    Its like someone saying “go raise their taxes but leave my funds alone!”

    Bottom line: Where do all these various monies originate from in the first place? Remember, government, education, none of these agencies produces anything … everything they have is taken from the productive sector of the economic family.

  8. So if a city manages their money and doesn’t overspend, but has money for projects that they are trying to implement to improve the quality of life, that makes them vulnerable to a legislature that wants to offload their bad decisions and bad management? I don’t think so. Cities should be held responsible by their citizens for their actions. Let the Legislators stand up and take responsibility for theirs….All of these strategies are efforts by our Republican majority to avoid responsibility.

  9. I’m not sure the AZ Republicans are trying to shirk their responsibility as much as not raise taxes or fire people at the low ebb of the economic cycle. To the degree that they keep taxes low, our state’s economic recovery will be swift(er).

    It sounds a bit like their moving their money from one savings account to another, and then to a checking account, a gigantic and expensive shell game. Eventually, they’ll find the $$$ under a shell. Just takes time.

    Importantly, though, our taxes are not being raised.

  10. they’re — not their. Sorry.

  11. Veritas Vincit says

    First off Jack, its not all *their* money is it? Secondly your remark, “… a legislature that wants to offload their bad decisions and bad management” is not quite accurate.

    The state of our budget can be put at the feet of one woman – and she’s skipped town when the birds came home to roost.

    I know of several (7) cities with a monetary stockpile intended for specific projects – and those projects are pending federal matching funds. When a project goes unfunded the money remains until the next grant cycle in the hopes they’ll win the grant lottery. Without matching funds, that money sits there until some councilpersons decide to raid it for their own pet projects … kinda like questionable art work in a public plaza might be a recent example.

    Kudos Kristen!! Veritas applauds you for your understanding of basic economics!! If you run for office, let us know! (seriously)

  12. Vincent,

    By this logic the Feds. will be coming and sweeping the states funds very soon. I’m sure that you won’t complain at all. It’s a gimmick that doesn’t solve long term spending problems. Gimmicks from J Nap helped get us into this mess.

    Just because the bully on the playground can steal a kid’s lunch money doesn’t make it right.

  13. Kristen, you obviously didn’t read the very first post, didn’t understand it, or have been lulled into the party line. Impact fees are collected from developers for a reason- to fund new infrastructure. If that money is no longer there, you either don’t have new infrastructure to keep up with growth, or you have to raise fees to cover the shortfall. If I pay more money on my water bill because of the legislature, how is that any different than a tax increase?
    Veritas, you are more than welcome to answer this question also.
    Impact fees CANNOT pay for art projects and other things. Its uses are set by law.

  14. Veritas Vincit says

    Jeff, don’t look for the fed to sweep state funds anytime soon, they have this private bank set up to print all the paper money they need.

    Jeff, by your logic I guess posting #7 isn’t a model you’re used to? Is the state a “bully on the playground” or, the “head of the household”?

    Here’s the deal, all incorporated cities within the state are political franchises of the state. They are not independent entities.

    Roger, agreed. However, many of the projects with funds set-aside are awaiting federal matching funds which may or may not materialize. So, rather than let $210 million sit idle, perhaps it can be used to solve a problem created by a former governor?

  15. The amount set aside for Federal funds is a tiny portion of the $210 Million and again the fees are collected and must be spent in a way dictated by state law. The ironic thing that NO ONE has acknowledged is that this is in turn a tax increase.

    Until ’08-’09 Nappy had quite a bit of Republican support for the budgets also by the way. We had plenty of chances to enact some real reform.

  16. Veritas Vincit says

    Roger, “… Nappy had quite a bit of Republican support for the budgets also by the way. We had plenty of chances to enact some real reform.”

    Agreed.

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