Arizona Education Network

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The Senate Appropriations committee is scheduled to vote tomorrow (Wednesday July 29) on a budget that appears to include deeper cuts to K-12 education than the plan Governor Jan Brewer vetoed earlier in the month.

Nevertheless, the legislature and the Governor’s office have indicated that a budget deal may be in sight, and Governor Jan Brewer stated that she’s hoping for a plan that would “garner her signature” by the end of this week.

A summary of the proposed budget plan:

- A three year spending freeze for the general fund at $10.2 billion.  This freeze would be maintained regardless of any enrollment growth in schools, senior services, etc.

(More) Cuts to Education

- No 2% Prop 301 mandated spending increase for K-12 education ($102 million/year).  This is a base level funding item that is voter protected and was allocated in the July 6^th temporary state budget.  We are unclear how this item can legally be stricken from the budget.
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- In addition, the legislature wants a ballot proposal to suspend the Voter Protection Act…and all the spending measures (like Prop 301) that were approved by the majority of voters in the state. If successful, the suspension of the Voter Protection act could heavily impact other education and healthcare revenue.

- Reduction of $175 million in soft capital (like textbooks, technology and library resources; items that are used by students)

- No funding for the ‘excess utilities’ ($80 million/year+, real cost of school gas/electric/water)

- Further reductions to Career Ladder (-5% to 5.5% per district)

- Permanent repeal of the State Equalization Tax for Education ($250 million/year)

–”An additional $1 billion in spending cuts” (no specifics yet where this will come from, though this quote comes right from the Legislative Majority’s press release)

Tax Cuts

–$400 million in permanent corporate and individual tax reductions, though the only proposed individual tax cut is for the wealthiest tier.  The Corporate Tax rate would fall to approximately 4.9%; the Top Individual Rate would fall to 4.2%.

Governor’s Proposed Sales Tax

–Temporary sales tax increase sent to the ballot, but not in the form originally proposed. The revised plan calls for the following increases: 1-cent in 2010, 3/4 cent in 2011, 1/2 cent in 2012.  While budget projections for this compromised bill have not been released, the Governor has stated in the past that a 1-cent tax would raise approximately $1 billion in additional revenue per year.

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Your AEN Team strongly urges you to contact your Senator, Representatives and Governor Brewer TODAY to ask them to VOTE NO on this proposed budget. . The Senate Appropriations committee is expected to meet on Wednesday, so please do not delay ~ send a quick message to your elected officials today! . Governor Jan Brewer:  (800) 253-0883  www.azgovernor.gov . If you know which legislative district you live in, click  here to find the contact information for you representatives.  If you do not know your district and are unsure who represents you, please visit http://www.votesmart.org/ – just enter your zip code for a full list of your government representatives.

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Your Questions Answered – Rapido Budget Edition

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This budget proposal is literally hot off the presses…your AEN reps (and, we suspect, many legislative members) have not had access to the full copy yet.

We will continue to update this page tomorrow as we receive more information. In the meantime, we are working to answer some of the questions we have already received from AEN members…

Question: Why is our legislative leadership proposing large tax cuts when our state is currently running an almost four billion dollar deficit?

Many members of our state legislature, including Senate President Robert Burns and Speaker Kirk Adams, have signed a “no tax pledge” provided by a Washington DC special interest group.  Although this signed oath runs counter to our Arizona Constitution (Article 9, Section 1 states that the “power of taxation will never be surrendered, suspended or contracted away”), it is nonetheless considered to be a focal policy point and a driving factor in our current fiscal crisis.

Sen. Burns defended the tax cuts in an interview with Capitol Media’s Howard Fischer today:  “It all comes around to the old economic development theory that if we can get our corporate income tax more competitive, we can attract businesses in here who will provide high-paying jobs, broaden the tax base, and we’ll end up with more money,” he said.

When Sen. Burns “brushed aside questions of whether it is a good idea to lock in future tax cuts now, years before knowing what the state’s finances will look like in 2012”, Fischer pointed out that:

“any move to delay or repeal those tax cuts, even before they take effect, constitutionally requires a two-thirds vote…and not a single plan to ‘hike’ taxes has ever gathered that super-majority margin.”

In other words – once the tax cuts are approved, they are likely here to stay regardless of the economic situation we find ourselves in next year.

Question: Is Arizona’s current corporate tax rate uncompetitive?

Ah…trick question!  Your AEN reps all agree that taxes are like beauty…it depends upon the eye of the beholder

Here are some facts to consider, however:

1.  Arizona’s corporate tax rates have declined from 9.3% in 1990 to 6.98% today. The proposed tax cut would bring the level down to “approximately” 4.9%.

2.  The ALEC-Laffer State Economic Competitiveness Index (2007) ranked Arizona as 2^nd in overall competitiveness, based on 16 economic factors including tax rates and overall tax burdens.  They also ranked our marginal corporate tax rates as 23^rd in the nation (1^st being the most competitive in both categories).

3.  The Tax Foundation’s 2009 Property Tax Index ranks Arizona’s corporate property tax to be 4^th out of 50 (1^st being most favorable for business).

4.  In terms of individual income taxes, ALEC (American Legislative Exchange Council) reports that Arizona’s personal income tax rates have dropped by -31.60% between 1990 and 2007. The Tax Foundation concurs, and ranks our state-local tax burden as 41^st out of 50 states (1^st being the highest burden).

5.  Our top tier personal income tax rate has dropped from 7.00% in 1990 to 4.54% today. The proposed cut would lower this rate to 4.2%.

Question: What does Governor Brewer think of the latest budget proposal?

In an interview with the Arizona Capitol Times on Monday, Brewer indicated that she “liked what she had seen so far” from the legislative leaders and that “They gave me an indication of what they believe they can do to get the budget out, and I said that that sounded okay to me, and that we would take their presentation and review it, analyze it and that we would get back together later today and decide exactly what it is that I agreed with and what I didn’t agree with.”

Question: Does this budget proposal have bi-partisan support?

No.  Not even close.  There had been reports of bi-partisan meetings this week, but this budget deal was apparently hatched in separate meetings.

During the session today, many members of both parties appeared to be taken off guard by a motion to waive the public notification requirement for committee meetings. (It passed).  When Sen. Russell Pearce (LD 18) announced that the Appropriations meeting “will be meeting sometime soon”, fellow Senator – and fellow Appropriations member – Senator Rebecca Rios (LD 23) registered her surprise since she had not even been notified of any potential meeting of her committee this week.

Question: Does the legislature have to meet a deadline to get the proposed sales tax and Voter Protection Act suspension on the ballot?

Yes.  July 31^st is the recognized deadline to authorize a November 3^rd special election.  (Though, that said, this doesn’t seem to be our year for making deadlines…)

There is also another deadline relevant to this proposed legislation:  the State Equalization Tax will appear on fall property tax bills if it is not repealed by mid-August.

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FIND OUT MORE:

 

Arizona Lawmakers may vote on budget solution today (Mary Jo Pitzl), Arizona Republic, July 29, 2009

Brewer, legislators near deal on budget (Daniel Scarpinato), Arizona Daily Star, July 29, 2009

GOP tries to ram budget through; Dems cry foul (Dennis Welch), Arizona Guardian, July 28, 2009.

Governor, GOP leaders finalizing tax deal (Howard Fischer), East Valley Tribune, July 28, 2009
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Brewer optimistic as budget negotiations continue(Jermy Duda), AZ Capitol Times, July 28, 2009
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Ariz. Lawmakers mounting new push on state budget (Paul Davenport), FOX 11 News, July 28, 2009
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As sales-tax plan gathers support, questions linger(Mary Jo Pitzl), Arizona Republic July 28, 2009
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Brewer still insists on sales tax hike but says budget deal is near(Dennis Welch), Arizona Guardian, July 28, 2009
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Special session resumes at Capitol (AP), Sierra Vista Herald, July 27, 2009
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Arizona Gov. Jan Brewer ‘willing to discuss any option’ to close budget deficit(Mike Sunnucks), Phoenix Business Journal, July 27, 2009
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Arizona budget could be catastrophe (Bud Foster), KOLD13 News, July 15, 2009

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Tags: Arizona budget, Arizona corporate tax, arizona education, Arizona K-12 education, Arizona Legislature, Arizona State Equalization Tax, Arizona tax cuts, AZ education, bob burns, Contact Governor Brewer, Governor Jan Brewer, Voter Protection Act

This entry was posted on Tuesday, July 28th, 2009 at 11:01 PM and is filed under Education and AZs Future, News, School Performance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.