Monday, January 08, 2007

The circus has come back to town.

The Legislature is back, and as we all know, that could make for hours of taxpayer-subsidized disgust and entertainment. As the session progresses, expect commentary here.

For now, in case you missed it, pasted below is the Arizona Federation of Taxpayers's wishlist:

Make Taxes, Spending Limit Priorities
By Chad Kirkpatrick and Tom Jenney

(A version of this op-ed appeared in the East
Valley Tribune on Sunday, December 31.)

The Arizona Federation of Taxpayers believes these
issues should be the Legislature's top priorities:

Income Tax Elimination

We propose replacing Arizona's personal and
corporate income taxes with a low, broad-based
retail sales tax (no higher than five percent). This
reform has been discussed in Arizona for at least
three years now (see the Goldwater-Roubik study (
for model projections), and was a gubernatorial
campaign issue. Elimination of the state's income
taxes (including the volatile, job-killing corporate
income tax) in favor of a consumption tax would be
single most effective measure Arizona could take in
an effort to encourage growth on a vibrant,
diversified economic base.

Update Arizona's Spending Limit

Since the last recession, Arizona's general fund has
seen average annual spending increases of 12
percent. If allowed to continue growing at that rate,
by 2009 the state budget will hit the state's current
spending limit, which is 7.41 percent of personal
income. The current spending trendline threatens
to return Arizona to the big-government days of the
1980s. A related problem with rapid budget increases
during a boom time is that they are inevitably
followed by painful budget cuts in the succeeding
recession-a cycle that turns the state budget into a
scary rollercoaster ride. Faced with making painful
budget cuts, many of our politicians will want to
cave in and raise taxes. Tax increases would
complete the return to the policies of the 1980s,
when Arizona was not a competitive state, taxwise.
To prevent those developments, AFT urges Arizona
legislators to update Arizona's current spending limit,
adjusting it down from 7.41 to no higher than 6.5
percent of personal income. 6.5 is a moderate limit--
every budget from FY2000 to FY2006 would have

At the same time, Arizona should continue to explore
the possibility of limiting state budget growth to the
rate of growth of population plus inflation. Combined
with the rainy day fund, this reform would help to
reduce the extreme highs and lows of the budget
cycle, while ensuring that the private economy grows
more quickly than the governmental sector.

Property Tax Limits

An explosive issue in 2006, property tax reform will
reignite in 2007, when tax levies are applied to the
2006 assessed values. Property tax reform is very
popular-especially Prop 13-style caps on assessed
value growth-but property tax reform is also very
complicated (due to educational equalization and the
nature of the formulae), and often involves shifting
tax burdens between different property classes and
from property taxpayers to income and sales
taxpayers. AFT urges legislators to look at all factors
in the property tax equation: 1) capping assessed
value growth; 2) reducing rates; and, 3) tightening
levy limits for all categories of taxation.

School Choice

Because education is the state's largest budget item,
school choice is a key fiscal policy initiative. Further,
school choice is the only proven means of improving
student performance and creating the human capital
necessary for the future of the Arizona economy.
Four decades of evidence shows the utter failure of
increased government expenditures in improving
student performance. To expand the menu of choices
available to students and parents, AFT urges
legislators to create a universal voucher system,
expand the state's scholarship tax credits, and
create a tax credit for parents who home-school
their children.

Health Care

Rather than continuing to tinker in a piecemeal way
with health insurance reforms, and rather than roping
yet more Arizonans into the semi-socialist
Medicaid/AHCCCS system, Arizona should open itself
unilaterally to the interstate private health insurance
market. Arizona health insurance consumers should
be allowed to buy into any private health plan
certified by any government in the 50 states. By
increasing competition fiftyfold, we will greatly
increase the ability of the uninsured to find
economical and portable insurance plans that meet
their specific needs. U.S. Rep. John Shadegg has
recommended implementing a similar reform at the
congressional level, but that is unlikely to make any
progress in the current Congress, so Arizona should
lead the way.

--Chad Kirkpatrick is chairman, and Tom Jenney is
executive director, of the Arizona Federation of
Taxpayers, a state chapter of Americans for

(The note continues:)

And for starters...
Incremental Tax Cuts

How about eliminating Arizona's income taxes
and not replacing them with any new
revenue sources? AFT projections show that Arizona
could easily phase out its income taxes by five
percent per year over the next 18 years. The catch?
The Legislature and Governor would have to reduce
General Fund spending growth to the rate of growth
of population plus inflation--a generous rate of
growth for government. For starters, we should
continue the good work begun last year with the
Taxpayer Appreciation and Investment Act, which is
cutting the state's personal income taxes by ten
percent over two years.


No Taxpayer Money for Lobbyists

Arizona's government agencies not only get to spend
your hard-earned money: they also get to use some
of that money to pay lobbyists to pressure the
Legislature for more money! The solution is
to prohibit public funds from going to lobbyists. Even
without taxpayer-funded lobbying, legislative
hearings on spending bills are tilted heavily in favor of
the proponents of increased spending. For a given
program, dozens of recipients of government funding
may show up to testify in favor of increased
spending, while taxpayers are lucky to have a single
lobbyist (such as one from AFT or the Arizona Free
Enterprise Club) testifying against the program.

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