On Sunday, March 1, 2020, I was the keynote speaker at a South Tucson community forum on tax giveaways (specifically the GPLETs), gentrification, housing, and poverty. The following is my speech.
Thank you all for coming, and I especially want to thank Brian Flagg of Casa Maria for organizing this.
You may know me as a Legislator now, but old friends in the audience also know me as a political blogger with Blog for Arizona.
Gentrification, Rio Nuevo, incentivizing development with tax giveaways, corporate welfare… these are topics that I have been researching and writing about for more than 10 years.
During that 10-year time frame, I have also been advocating for public banking as a way to self-fund infrastructure projects, tackle student debt and spur economic development through low-interest loans—not giveaways. Public banking is based upon a public private partnership between a state bank and local community banks and small local businesses—like those represented by Local First.
The major problem with public banking is that you have to trust the government to make the system work for everyone—not just for the corporations and the wealthy, as out current system works. After almost four years in the Legislature, I trust the Arizona government far less than I did before. The belly of the beast is not a pretty site.
So… where does that leave us?
As a blogger, I theorized that layers of tax breaks—beyond Rio Nuevo– were fueling the development in the city core.
Do you remember when Molly McKasson lost the mayoral race to Bob Walkup in 1999? She was successfully painted as an old hippie chick who wasn’t ready to lead. Walkup was the successful Raytheon exec who would run Tucson like a business.
McKasson was quoted in the newspaper as saying, “It’s too bad that Tucson has decided to put all of its eggs in the developers’ basket.”
She was spot on!
Twenty years later, downtown is gleaming with new buildings, and everyone in power points to the new buildings as a sign of success downtown.
There are multiple reasons why Arizona has an affordable housing crisis. Chronically low wages; years of under-funding social safety net programs; high student loan, credit card or medical debt; and aggressive evictions have forced far too many Arizonans to live with housing insecurity.
Wages in Arizona are 85% of the national average. Only 6% of Arizonans who are eligible for Temporary Assistance for Needy Families (TANF) actually get it. In Pima County, the eviction rate is 30 per day– that’s roughly 1000 per month.
To use a medical analogy, HB2732 (affordable house tax credits) treats the symptoms of the affordable housing crisis– not the disease. The disease is poverty.
Should the Arizona Legislature help Microsoft pay its APS bills?
Tuesday was a light day at the Capital. There was no floor action, but I had time to catch up with colleagues and sign some of their bills. I wanted to tell you about the conversation I had with two Microsoft lobbyists about the tax break that Microsoft wants.
You may remember my blog post on Powers For The People (back in December) about the tax review committee that I was on, due to my membership on the Ways and Means Committee. One of the income tax credits that we reviewed was for an Apple international data center to be built with renewable energy in Mesa. At the time, Apple was offered a TPT (sales tax) break also, but the committee reviewed only the income tax break.
The lobbyists were in my office because Microsoft wants the TPT tax break that was offered to Apple. I told them that I really don’t support tax giveaways to multinational corporations. ￼Period. I don’t support any tax giveaways when ~68% of Arizona women aren’t getting first trimester prenatal care, and that is contributing to AHCCCS wasting $2-4 billion dollars on premature births (Not to mention the long-term health effects of prematurity.) When thousands of Arizona mothers and their children are living in poverty with food and housing insecurity, why would I prioritize a tax break for one of the most successful corporations in the US?
The lobbyist told me that the reason Microsoft needed a TPT tax break because “electricity is too expensive in the state of Arizona.” Microsoft doesn’t want to pay sales tax on electricity for this giant data center. International data centers take a use a lot of electricity because it is a building full of servers and cooled to ~65 degrees. This particular tax break is related to data centers built with renewable (solar) energy, which will already lower their energy cost significantly.
For years, Democrats in the Legislature have been calling for a review of the tax credits and the other tax giveaways. The goal of the review process is to recommend continuation, amendment or repeal of tax credits.
Decades of “business friendly” bipartisan votes in the Legislature to reduce income taxes and boost the economy have left us with $661 million in income tax credits claimed (AKA lost revenue) and more than $1.6 billion in unclaimed tax credits, ready to be cashed in, according to David Lujan, executive director of the Center for Economic Progress. This is not sustainable.
For the first time since 2014, the Joint Legislative Committee to Review Income Tax Credits met on Dec. 19, 2019. This was an historic day, and I was proud to be part of it.
According to statute, this committee is supposed to meet before the end of each calendar year and review tax credits that were passed in designated years. For this meeting, we reviewed tax credits that were passed in years ending in four and nine. We reviewed three tax credits that were recommended for elimination in 2014 (motion made by then Rep. J.D. Mesnard), but no action was taken by the Legislature to actually repeal them. Two of those– Healthy Forest Tax Credit and the Agriculture Pollution Control Tax Credit– were again recommended for elimination at 2019 meeting because they have been mostly unused for years. Income tax credits that are not used for more than four fiscal years are supposed to disappear, but somehow they hang around in the code, even Senator and Committee Chair J.D. Mesnard complained about this at the meeting. The majority voted to continue the other tax credits with additional performance measures attached in some cases. (For the recorded, I voted to repeal all of them. Read on and learn why.)
Where do the mayoral candidates stand on affordable housing, low-income housing, and homelessness?
I think that’s a great question, and I hope to find the answers at the upcoming Mayor and Ward 1 City Council Candidate Forum on Saturday, June 22. The event will be held at El Rio Center, from 12 noon – 2:30 p.m. and will moderated by Nancy Montoya from Arizona Public Media. According to the Blog for Arizona Calendar, the three Democrats running for Mayor and the four running for Romero’s Ward 1 seat are expected to participate.
What is the state of housing in Arizona?
Arizona’s Housing Crisis: Has the Legislature Done Its Part?
As rents and evictions increase, housing has become a huge issue across Arizona. Housing– like prison reform and charter school reform– got a lot of lip service in the Arizona Legislature in 2019. During the session, there were many opportunities to tackle the housing crisis in a meaningful way, but those bills died.
On a high note, the Legislature allocated $10 million for the Housing Trust Fund in the FY2020 budget, which begins in a few weeks. The Housing Trust Fund used to be $40 million per year until the Tea Party Reign of Terror swept the funds and left only ~$2.5 million in it. (Of course, back then, tax cuts were far more important than helping people keep roofs over their heads.)
The Arizona Legislature waited until the last moment to tackle two big issues– the Drought Contingency Plan (DCP) and tax conformity. We voted on both of these on January 31, 2019. The DCP, which was negotiated in advance, cleared the Legislature with 100% voting for passage. In contrast, the tax conformity vote sparked much drama and debate. Legislative Republicans dug in their heels over revenue-neutral tax conformity and insisted on a tax cut to benefit the richest Arizonans, while Governor Doug Ducey and the Democrats argued for fiscal responsibility and full tax conformity.
In the end, 100% of Republican Legislators bucked the governor’s wishes and passed a $150-200 tax cut. Ducey promptly vetoed SB1143 the next day and blasted Legislators on Twitter. Now we are at a standstill, due to infighting in the Republican Party. What side will win? Ideology or fiscal responsibility?
There’s nothing like waiting until the last minute to make a decision. Today, the Drought Contingency Plan, tax conformity and the first Ethics Committee Meeting related to the complaints against Rep. David Stringer. As usual, you can watch all of the floor and committee action on azleg.gov by clicking on the Capitol TV link.
#RedForEd lifted the veil from our eyes and put the issue of corporate tax giveaways front and center in the fight to restore public education funding in Arizona.
As many of you are aware, the Arizona Legislature is giving away more than $13 billion in taxes every year and using only $10 billion to run the state. It is not sound fiscal policy to use accounting gimmicks and 50 fund transfers to “balance” the budget. It is no surprise that the state owes K-12 education around $1 billion. Thanks to scheduled corporate tax cuts passed by the Tea Party*, beginning in 2011, Arizona’s corporations got to keep an extra $1 billion in 2017. These corporate tax cuts continue through 2019, even though we can’t afford them.
As a result of the anger and frustration that many Tucsonans feel about the Arizona Legislature’s performance, the Stop Thief! Let’s Restore Fair Taxes Community Forum drew a standing room only crowd of diverse participants. The event was hosted by the Pima Area Labor Federation (PALF) and Progressive Democrats of America (PDA Tucson), with support from many other unions and community groups.
Heart-felt testimonies from current high school students, who explained how school budget cuts have impacted their lives and their schools, opened the forum.
LD9 Rep. Randy Friese gave a detailed presentation on tax revenue and how it has been siphoned off by special interest groups and corporate tax cuts for decades. (Video after the jump.)
My talk focused on specific tax giveaway votes in the 53rd Legislature. focused specific tax giveaway bills and the drama that swirled around the bills that passed and the ones that failed. (Video after the jump.) Excluding any votes related to budget appropriations, all of the tax giveaway votes in the 53rd Legislature were bipartisan— with Democrats and Republicans on both sides.
The Legislature’s mindset on tax giveaways shifted from January 2017– when two Progressive Democrats made a pact to vote against every tax giveaway until the schools were fully funded– to budget night in May 2018. The Progressive viewpoint was: If the state “can’t afford” to fully fund K-12 public education (due to self-imposed austerity), then we “can’t afford” to give away or excuse any more taxes until the schools are on stable footing and fully funded. Thanks to the #RedForEd movement, on budget night 2018, hundreds of teachers, parents, and supporters filled the House gallery and the Capitol lawn and demanded that public education take priority over corporate tax cuts.
As I mentioned in my talk, a thorough tax giveaway review bill and several tax reform or repeal bills were proposed in the Legislature in 2018. Unfortunately, due to the gamesmanship at the Capitol, these bills were not heard because they were proposed by Democrats: Senator Steve Farley and Reps. Mark Cardenas, Randy Friese, and Pamela Powers Hannley.
It’s time to review all of the tax cuts, tax exemptions, tax credits, tax subtractions, and other tax loopholes. Some of these tax giveaways benefit narrow interests– to the detriment of the general fund and the general public. We must determine which tax exemptions benefit the people of Arizona (like the TPT exemptions for food and prescription drugs); which ones benefit special interest groups (like gold bullion enthusiasts); which ones benefit individual corporations (like the infamous four-inch pipe); which ones we are effective and affordable; and how we can spark economic development without breaking our budget and starving all of our educational institutions, as we are now.
Several people told me that they felt hopeful after my talk because so many costly tax giveaways were stopped on a bipartisan vote. If fact, all of the tax giveaway votes were bipartisan— with Democrats and Republicans on both sides. This is why it is important to ask every candidate in the 2018 election what their stance is on tax giveaways, the #RedForEd movement, the Invest In Ed Citizens Initiative (to secure long-term funding for K-12), and the Outlaw Dirty Money Citizens Initiative. Will these candidates fight for the people or will they “take the money and run”?
LD9 House incumbents– Dr. Randy Friese and I– will be the featured speakers at the Stop Thief community forum on tax giveaways on July 31 at the IBEW Hall.
As many of you are aware, Arizona is upside down on its mortgage. Thanks to years of Republican tax cuts, our state gives away more than $13 billion in taxes and spends just $10 billion to run the state. For years, the people of Arizona believed the lie that our state is broke. Now the veil has been lifted. The people realize that our state has plenty of revenue. The problem is that the majority of our Legislators vote to give the money away–rather than spend it on much-needed services– like public education.
Austerity is a lie. Arizona has the money to fund public education. The problem is: the Legislature gives our taxes away. It’s time to end crony capitalism in Arizona.
When the Arizona budget comes up short because of the tax giveaways, loopholes, and sweetheart deals, Republicans cut funds from K-12 education, the universities, the community colleges, healthcare, and environmental protections. OR they suggest raising sales tax to fill in the budget gaps caused by tax cuts for the rich and for the corporations. (Unfortunately, some Democrats go along with more tax cuts for the powerful and more sales tax for the rest of us.)
The Arizona Legislature should be funding the People’s To-Do List– education, healthcare, infrastructure, and safety and security– not the corporate wish list.
I won’t be downtown for the birthday party because I am giving a talk on the Equal Rights Amendment on Saturday night in Tubac, but I hope you all will check out the festivities and the live music on the streetcar and along the route. Here are a few photos and a video from opening day.