No government has ever spent its way to prosperity. Our proposals help governments be fiscally responsible so citizens can be prosperous.
To: Governor Jan Brewer
From: Arizona taxpayers
Subject: Fiscal and Economic Reality
Over the last two years, you have laid out a vision that government, through tax subsidies, will pursue certain high-skilled industries for the state and make sure these industries will have the workforce they need with funding for education. That’s a laudable goal, but there’s an overwhelming problem with this vision: The numbers do not add up.
The good news is the Arizona Legislature, with the cooperation of Governor Jan Brewer, has passed a balanced budget for the first time since 2007. State lawmakers deserve credit for making some difficult decisions to reduce spending by more than $1 billion.
Governments facing a financial pinch generally have five options. They can print money, borrow, raise taxes, cut spending, or spend fund balances. State governments cannot print money, so were down to four choices. Because a two-thirds vote is required for the Arizona legislature to raise taxes, practically speaking, that alternative should also be taken off the table.
Congress approved $8 billion for President Obama's high-speed rail program without ever asking what the total cost would be, how to pay for it, or who would ride the trains. The dismal answers to these questions reveal much about American politics.
State estimates indicate Obama's plan will cost around $90 billion, or about $1,000 for every federal income taxpayer. Since 17 states, including Arizona, aren't even in the plan, a truly national network would cost far more.
Dr. Phil likes to ask, "How's that working out for you?" We can only reply, "Not very well."
This decade, Arizona lawmakers cast aside the frugality of the 1990s. Since 2000, spending on Arizona's Medicaid system has risen 132 percent, and soaring annual interest payments are up 213 percent. Spending on the Department of Economic Security, the states welfare agency, has almost doubled, from $404 million in fiscal year 2003 to $796 million in fiscal year 2008.
Despite this spending, poverty rates have been heading in the wrong direction.
The state budget deficit is an opportunity in disguise. The pressure of a multibillion dollar shortfall might enable reforms we wouldn't have the courage for otherwise.
Governor Janet Napolitano, although often cited for her skill in avoiding tax hikes, recently unveiled a couple of particularly bad ideas for revenue enhancement. First, she wants to expand photo radar on state highways to generate $90 million of deficit reduction.
With the TIME Initiative off the November ballot, its time to rethink transportation policy in Arizona. TIME proposed an 18 percent sales tax increase to pay for roads, rail, and other loosely transportation-related projects. The proposal was put together following the classic coalition formula--it became less about getting the right thing done than getting something passed.
Like most other states, Arizona is facing a perfect storm in transportation. Our growing demand for roads is outstripping the supply, creating ever more gridlock. And there's barely enough funding to maintain existing roads, much less build the new ones needed to handle our rapid growth. Lastly, the fuel tax-our primary funding mechanism-has run out of gas, with increasing vehicle fuel efficiency steadily eroding its revenue-generating power.
Without new funding sources, we'll face L.A.-style gridlock, and our economic competitiveness will suffer.
The local Super Bowl Host Committee shoveled out about $17 million for the weeklong Super Bowl party in Phoenix and Glendale. The private sector, including the Fort McDowell Yavapai Nation and the Thunderbirds charity funded over 80 percent of these Super expenses.
"In the long run, we are all dead," John Maynard Keynes once quipped. An influential British economist, Keynes used the line to dodge the problematic long-term implications of his policy proposals. His analysis of the Great Depression redefined economics in the 1930s and asserted that increased government spending during a downturn could revive the economy.
President Barack Obama and congressional Democrats have dug up the dead economist's convenient justification for deficit spending in defense of their bloated stimulus legislation.