The much-anticipated FY2018 Arizona state budget was dropped this week. On Tuesday, just before 5 p.m. both the Republican and Democratic Appropriations Committees heard the JLBC review of the Republican budget. Thus begins the mysterious whirlwind of the Arizona budget finalization process, which is scheduled to end in the wee hours of Friday morning.
As a citizen, I always scratched my head as to why the Arizona budget is always passed in the middle of the night. Obviously, the suspicion is that there is something the majority party wants to pass, and it doesn’t want you to know or to be there when it happens. There’s an element of that, for sure, because we have seen some scary stuff passed in the middle of the night by Republicans– like the voter suppression omnibus bill and blowing the doors off of campaign finance by dramatically boosting campaign limits. The majority party schedules the third day of the budget process just after midnight because they don’t want their members to go home between the debates in the Committee of the Whole (COW) and the 3rd Reading vote. If members go home, someone could say, “What are you thinking?” and change votes.
Check out the budgetary known knowns, known unknowns, and the unknown unknowns below.
Known Knowns: Our Mortgage Is Upside Down
The known knowns of our economic situation are in the proposed budget (JLBC slides here) which gives the state’s income and expenses and in the “Revenue Impact of Arizona’s Tax Expenditures” report, which lists statutory tax giveaways (table above and report here). When you compare these two, you’ll see that Arizona government is giving away more money ($13.7 billion) in tax credits, tax cuts, tax subtractions, and other statutory “tax expenditures” (AKA giveaways) than we are spending on state services and infrastructure ($9.8 billion for FY2018). Many of these tax giveaways have no sunset date and will continue to drain revenue from state coffers far into the foreseeable future (unless the statutes that enable the giveaways are repealed in the future).
This is what happens when you cut taxes every year and proportionally shrink government to starve the state to “balance” the budget. Yes, Arizona’s budget is “balanced”– $9.6 billion in projected revenue and $9.8 billion in projected expenditures, but when you look at how much potential income is not collected from big corporations or is given back to them, Arizona is “upside down” on its mortgage. The biggest line item in the table above is $12.3 billion is Transaction Privilege and Use Tax Expenditures (AKA, sales tax or TPT) that has been not collected, has been discounted, or has been given back. Why are we doing this? So far, trickle down economics hasn’t work. When your’e in a hole, stop digging.
Unknown Knowns: How Much More Will We Give Away?
In the early 1980s, Arizona had only five tax breaks in statute; today we have 331 tax breaks in statute. Am I the only one in the Arizona Legislature who thinks we should stop this gravy train? Fortunately, no, I’m not the only one who thinks we should be helping school children and families before big corporations.
This year in the Arizona House, a group of Libertarians and Progressives have stopped every single corporate welfare bill. Now as we approach sine die and the budget battle on the floor, at least one of those bills (HB2492) is coming back as a Zombie striker bill SB1416. HB2492 would have helped only the largest employers in Arizona– those with 2000 or more employees– and would have given away millions of dollars into the future in multiple ways. SB1416 is a scaled back corporate welfare bill that is not as generous as HB2492 but still gives away millions of dollars into the future.
In public, business leaders have repeatedly told the Arizona Legislature that we should allocate more money to education because an educated workforce is more important than more tax cuts. In the hallways and closed door meetings at the capitol, lobbyists and lawmakers are still cutting the tax cut deals for big corporations. It’s time for big business to forego tax cuts if they really want a better K-12 education/university system and a better transportation system. A bill to review all of the tax giveaways passed both houses of the Legislature this year but was vetoed by the governor.
It’s time to review those tax giveaways and eliminate some of them in order to bring more money into the state budget.
Unknown Knowns: Will the Teachers Get Their Due?
The current version of the FY2018 budget continues to ignore public education (which has been chronically underfunded) and includes a measly 1% raise for teachers. Our teachers are the worst paid in the country. In fact, they need 7% just to move up to #49 in the country. They are leaving Arizona classrooms in droves because of poor pay, lack of respect, and a government that is antagonistic to public education (at best).
The Democrats are fighting for at least a 4% raise for teachers to stop the classroom exodus. Is this enough? No– but it is far better than the governor’s insulting 0.4% raise. We have the money, Arizona. We just have to stop giving it away.
God help us. (Maybe that should be the prayer in the wee hours of Friday morning.)