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Phoenix-The Arizona House version of the Budget Stabilization Act (HCR 2011) was defeated yesterday by a vote of 34 to 26. A total of 14 House Republicans voted against it, along with 20 Democrats. The bill, which was modeled on Colorado's Taxpayer's Bill of Rights, would have submitted to voters a referendum limiting general fund budget growth to the rate of population growth plus inflation.
Last Friday, the Goldwater Institute held a forum called the Road to Recovery, focused on Arizona's tax and budget policies. As they like to say in Scottsdale, everyone who is anyone was there.
Fortunately, those in attendance were the best thinkers and policymakers I could have dreamed of. I was stunned by the quality and quantity of ideas pouring forth from the panels.
Goldwater President Darcy Olsen opened the pow-wow with a joke. If you want to get somewhere, like Arizona wants to get to prosperity, you use a roadmap. If you're female, that is.
Arizona's budget mess may be headed for a titanic ballot battle in 2004.
Gov. Janet Napolitano is pretty clearly maneuvering for a sizable tax increase, although she is loath to admit it.
Her indictment of fiscal policy in the 1990s leaves no other logical conclusion than that she believes state government is substantially underfunded. More importantly, her budget proposes a level of expenditures that could only be sustained through a large tax increase.
President Harry Truman had a sign on his desk that read, "The buck stops here." Governor Janet Naplitano's desk sports a coffee mug with Harry Truman's face, but she apparently pays no heed to his famous motto. Instead, her guiding philosophy seems to be: "The buck stops anywhere but here."
Georganna Meyer remembers the first scary signs.
"It was the spring of 2001. We started to see (income tax) withholding receipts decline, then decline again and again," said Meyer, chief economist at the Department of Revenue.
"That never happens in Arizona."
Never, that is, until the Great Budget Bust of 2001, which shut down Arizona's Booming '90s, tossed thousands out of jobs and spawned deep state budget deficits that continue to cripple government.
Gov.-elect Janet Napolitano has proposed a commission to undertake a "comprehensive performance review" to solve Arizona's continuing budget crisis. The review committee would be composed of economic experts and business leaders and tasked with finding $300 million in savings. Despite the old saw that good reforms tend to die in committee, there is reason to believe that a committee is a good idea.
There is a tendency to view Arizona's budget problem in isolation, as though the state got into this mess by pursuing uniquely wrongheaded fiscal policies.
Although it's small comfort, a recent study by the Cato Institute demonstrates that Arizona has a lot of company: Most states screwed up in pretty much the same way.
Moreover, the problem wasn't, as commonly alleged, excessive tax cutting. Pretty clearly, it was a lack of spending restraint, particularly toward the end of the 1990s.
With Arizona's budget deficit estimated to exceed $400 million by January, Governor Hull is expected to convene a special legislative session. Think of that session as a fiscal version of Dante's Inferno, where legislative pilgrims are made to face the consequences of their own gluttony and greed.
Asked how he would fix the state's $1 billion deficit, Matt Salmon promised not to raise taxes, but declined to specify the state programs he would cut.
Betsey Bayless, his closest Republican rival, offered several budget-cutting specifics in a plan that would rely on economic growth spurred by a cut to the business personal property tax.
Attorney General Janet Napolitano, the leading Democrat, suggested several ways to save money, but offered no overall estimate as to whether the cuts would add up to $1 billion.
Phoenix, AZ-Citing a Harvard study and a Census Bureau report, Goldwater Institute economist Robert Franciosi offers a challenge to what he calls "the local mythology that Washington is shortchanging Arizona on federal pork."