Rollercoaster Ride

Posted on February 20, 2008 | Author: Tom Jenney
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Arizona's recent budget history looks a lot like a rollercoaster. During years with strong economic growth, policymakers allow spending to shoot up to unsustainably high levels. Then, during economic slowdowns, when tax revenues fall off, state spending goes crashing downward.

Arizona's budget really got out of control in 2006 and 2007, when the size of state government as a portion of the state economy exceeded 6.5 percent levels of spending not seen since the early 1990s.

Since 2002, the Arizona Federation of Taxpayers, the Goldwater Institute, and others have urged the state government to adopt a state spending limit based on population growth and inflation. Instead, the state budgets have grown at rates that were not only faster than population plus inflation, but also significantly faster than the growth of the state economy, as measured by personal income.

The good news is that Arizona does have a constitutional spending limit. The bad news is that the limit 7.41 percent of state personal income is too high to provide meaningful restraints on state spending.

This session, some legislators have introduced a bill that would allow Arizona voters in November to reduce the states spending limit from 7.41 percent to 6.4 percent of the state economy. Last Tuesday, the bill passed the House Appropriations Committee.

The 6.4 percent proposal is fiscally responsible: it allows state government to grow, but only as fast as the state economy. Lowering the limit to 6.4 percent would not stop Arizona's budget rollercoaster, but it would at least slow it down.

Tom Jenney is state director of the Arizona chapter of Americans for Prosperity, and an occasional contributor to the Goldwater Institute.

Learn More

Goldwater Institute: Dollars and Sense: How Arizona's Spending Choices Affect Our Future

Goldwater Institute: A Comparison of State Spending Growth Under Arizona Governors

Goldwater Institute: A Taxpayer's Bill of Rights: A Natural Fit in the Arizona Constitution

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