Governor Janet Napolitano may have cinched her reelection later this year by reaching a tax cut deal with the Republican-dominated legislature.
After months of rancorous debate, an agreement was finally sealed last week, greased by a state budget surplus expected to exceed $1 billion -- meaning there were enough goodies to pass out to both sides to make a compromise easy to swallow. Arizona's income tax will fall from 5.04% to 4.54%, and property taxes will also be cut under the legislative bargain.
For weeks, Ms. Napolitano argued that the tax cuts were unaffordable given the state's spending needs. Her case was destroyed by the Arizona Republic's Robert Robb, dean of the state's political reporters, who wrote: "The state budget debate has revealed two things about spenders: (1) their appetite is insatiable; and (2) they cheat in public argumentation." He pointed out that even the Republican budget proposal funneled $1 billion into additional spending, while offering only $500 million in tax cuts.
Special credit for winning the tax-cut fight goes to the Arizona Free Enterprise Club and its president Steve Voeller. The Club single-handedly revised the income tax cuts when even the Chamber of Commerce balked and then steered Republicans away from rebates and other tax gimmicks in favor of growth-stimulating rate reductions.
But it's not all good fiscal news from the state capitol. Governor Napolitano insisted on laundry baskets of new spending in exchange for the tax cuts, and that's what she got. There's more money for teacher pay, all-day kindergarten, a high-tech corporate welfare slush fund and other giveaways. All told, spending will rise about 19% in a single year.
Stephen Moore is an editorial writer for the Wall Street Journal and a Goldwater Institute senior fellow. A version of this article appeared on Opinion Journal.