Goldwater Institute

Today the U.S. Supreme Court will hear arguments in a case with huge ramifications for Arizona—and for federalism.

Shelby County, Alabama is challenging the constitutionality of section 5 of the Voting Rights Act, which was designed to bring into line states and local governments that were likely to resist the Voting Rights Act.

The provision requires those jurisdictions to seek advance approval from the Justice Department for any action that even tangentially affects voting—from municipal annexations to changing the location of polling places and the hours of Motor Vehicle Division offices. The requirements are costly, burdensome, and deeply intrusive.

Initially, section 5 applied mainly to deep-South jurisdictions. But in 1975, the law was expanded to include “language minorities,” and Arizona was brought into the section 5 penalty box.

Section 5 was intended to be a temporary emergency measure. But despite the emergency having long receded (and having never existed in Arizona), Congress in 2006 extended it for another 25 years.

Most members of Arizona’s congressional delegation, including Republicans, voted for the extension. No Arizona official had the political courage to take it on until Arizona Attorney General Tom Horne in 2011 filed a constitutional challenge, which is on ice until the Supreme Court decision.

If section 5 is struck down, core Voting Rights Act protections, such as access to the ballot, will remain intact. But the presumption that certain specified states are guilty of voting rights abuses until proven innocent will be reversed. It is long past time for Arizona to be released from the purgatory imposed upon it by the federal government.

Learn more:

The Wall Street Journal: Why Is Arizona in the Jim Crow Penalty Box?

Goldwater Institute: Time to Stand Up To the Feds on Voting Rights

This week, the Arizona House of Representatives will vote on a bill (HB 2531) to start shifting the state’s tax code in a more pro-investment direction. It’s not a new proposal to cherry-pick winners in the economy. It’s not a new tax credit to favor one industry over another.

Instead, it’s a simple and powerful tax reform called “instant expensing.” It allows all businesses to write-off up to $500,000 of the investment they make in their company in the year in which they make it.

To see why this is important, consider how the current system works. An owner of a small business may need to buy or rent office furniture, buy some new computers (or even some used ones), or invest in manufacturing technologies like a 3-D printer. Under current law, you’d have to write-off that investment on your taxes over a long period of time – sometimes too long for you to recoup your investment.

With the reform proposed in HB 2531, that business could instead write off up to $500,000 of that investment in the year in which they make it. Based on national data, this should allow virtually all small- and medium-sized businesses in Arizona to expense all of the new investment they make each year.

There’s something else that makes enacting this reform important for Arizona: 21 states, including our neighbors New Mexico, Colorado, and Utah, already have this law on the books. This reform – which basically conforms Arizona law to the Internal Revenue Code’s “Section 179” rules – is vital to make Arizona at least as competitive as our neighbors.

Policymakers across the U.S. have begun to realize the importance of taking the tax burden off of investment and the growth of small- and medium-sized businesses – which, together, are the largest job creators in most states – and the capital investment that those firms make. It’s an important step that Arizona should take too.

Learn more:

Goldwater Institute: Investing in Arizona: How the Legislature Can Get Arizona’s Economy Moving Again by Reducing Barriers to Investment and Job Creation

Arizona State Legislature: HB 2531

University of Kansas School of Business: A Primer on Expensing

"Two roads diverged in a yellow wood" is how Robert Frost opens his famous poem about choosing the "road not taken," and Arizona is now staring down two different paths when it comes to the future of education funding. Let’s hope state leaders take the less-traveled road because the regularly-traveled one is a road to nowhere.

The regularly-traveled path is to increase funding for schools and ask for nothing in return. Last fall, state voters soundly defeated a proposition that would have burdened Arizona with a significant tax increase that wasn’t guaranteed to increase classroom funding or teacher pay and would have shelled out funds for all sorts of special interest projects. This wasn’t the first time voters had been faced with such a proposition (the third in the last decade, in case you’re counting), so if history is any guide, we may see such a smorgasbord of education funding increases and special interest projects sometime again.

Arizona should steer clear of this path and reward schools based on student achievement. SB 1444 would create an incentive funding program for school districts and charter schools. Under the bill, sponsored by Sen. Kimberly Yee, schools can earn up to $500 per pupil for high scores or significantly improved scores on the state test.

While not perfect, this method rewards schools for student success, the direction in which we should be moving in the first place.

Arizona still needs to improve the A-F grading system for schools because those grades and performance funding are closely related. In the 2011-12 school year, more schools earned an “A” on their state report card, but a Department of Education analysis found that only 7 percent of Arizona high school seniors in 2012 earned scores on a college admissions test that indicated they would earn a C or better in college classes. Giving a school an A that is graduating students who barely have a chance in college is a disservice to students and their parents. For SB 1444 to adequately serve students, we must continue to refine our school grading process.

But if Arizona leaders are to deal with school funding at all, they should at least focus the funding on student achievement and not the well-worn path of throwing money at schools.

Learn more:

Arizona State Legislature: SB 1444

Office of Janice K. Brewer: Executive Budget Recommendation Power Point

Arizona Republic: More Arizona schools earn an A from state

Bartleby.com: The Road Not Taken, by Robert Frost

I recently wrote about reasons the Arizona legislature should reject efforts to expand Medicaid as part of the implementation of the federal health care law. The governor’s office took umbrage with the points I made, and after carefully reviewing their response, my conclusion remains that expanding the program is a bad idea.

The governor’s office says the expansion will only add 57,000 people to the Medicaid rolls, but this ignores the fact that Arizona rolled back its previously generous Medicaid coverage during the recession and can only be forced to restore our previous levels if we agree to the expansion. So in fact, by 2016, the Obamacare-suggested expansion means we will add back everyone that was previously eligible but frozen out of the program and the newly eligible population. That would add a total of 450,000 to Arizona’s Medicaid rolls. Already one-in-five Arizonans receives free health care through Medicaid; adding another half-a-million people into the program could financially wreak the state in the future.

An over-stated, oft-repeated industry statistic that uncompensated care represents a $2,000 per family hidden “tax” is also being used as a justification for this entitlement expansion. But the simple math on this figure doesn’t work out. The latest statistics put uncompensated care at about 6.1 percent of health care costs. If this percentage amounted to $2,000 per family, total health care costs per family in Arizona would be $33,000. And that would mean total health spending in Arizona is $82 billion a year, or about one-third of the Arizona’s GDP. Health care is not one-third of Arizona’s GDP.

The governor’s office is also justifying the expansion by claiming a rule change in the program that predates Obamacare requires the state to do it or we will risk losing all of our Medicaid funds. But this is simply not true. When the US Supreme Court ruled on the legality of the health care law last summer, they explicitly said the federal government cannot require states to expand programs at the risk of losing funding for previous coverage requirements. This rule change clearly violates the intent of last summer’s ruling, and would not likely hold up in court in light of the Supreme Court decision.

I certainly understand the lure of additional federal money flowing into the state, but expanding Medicaid is a bad idea for Arizona when all the facts are considered.

Learn more:

Goldwater Institute: Expanded Medicaid, Shrinking Wallets

Kaiser Family Foundation: Medicaid Enrollment: June 2011 Data Snapshot

Cato Institute: The PPACA’s Health Insurance Exchanges and Medicaid Expansion