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Temporary sales tax hike might not be temporary after all

Opponents of Proposition 100, who warned that the 1-cent sales tax increase wouldn’t truly be temporary, are watching their predictions come true.

Education groups and other organizations are preparing to ask voters to make permanent the temporary sales tax they approved two years ago. After months of planning, the groups formed a campaign committee and are preparing to file a ballot measure for the November election.

Despite constitutional language in the proposition guaranteeing that the tax hike would expire in 2013, opponents warned that no tax hike is truly temporary because the beneficiaries would inevitably push to make it permanent.

Tom Jenney, Arizona director for the anti-tax group Americans for Prosperity, said the proposed ballot measure “absolutely” validates the warnings of Prop. 100’s opponents, which went unheeded during the 2010 campaign.

“We always believed that the Prop. 100 tax would expire. The question was, how much pressure would there be to replace it? And clearly there is a lot of pressure to do so, just as we predicted,” Jenney said. “Everything we said about the sales tax has been borne out.”

Farrell Quinlan, head of the Arizona chapter of the National Federation of Independent Business, said he and other members of the anti-Prop. 100 campaign always warned that the people who benefitted from the temporary tax hike — which Gov. Jan Brewer said was needed to bridge a massive budget shortfall — would be loath to see the tax increase expire.

“I think it goes to their credibility and it’s something that we were told it was supposed to be a three-year temporary tax,” Quinlan said. “At what point do we take them at their word? Apparently, we shouldn’t.”

The temporary nature of the sales tax increase was one of the cornerstones of the Prop. 100 campaign. The word ‘temporary’ appeared about 100 times in the yes-on-100 arguments in the 2010 publicity pamphlet for the special election.

Some of those arguments were put forward by the same groups that are now pushing for a permanent 1-cent sales tax increase. The Arizona Education Network is spearheading the campaign for the new sales tax increase, and has been in talks with the Associated General Contractors and universities, most of whom reminded voters in 2010 that the tax hike would only last three years, long enough to get Arizona out of its budget crunch.

“We see this temporary penny bump in the state’s sales tax as a must,” the contractors association wrote in support of Prop. 100. “This tax will provide the temporary relief that our state needs to weather this storm.”

By comparison, Valley Business Owners (and Concerned Citizens,) Inc. warned in its ballot argument, “No tax is ever temporary.”

Representatives from the AEN and AGC did not return messages to the Arizona Capitol Times.

Some Prop. 100 opponents say they never believed that the “spending lobby,” as some anti-tax advocates refer to the organizations that backed the tax hike, intended for the sales tax increase to be temporary.

Tim Lawless, a lobbyist for the National Association of Industrial and Office Properties, said even organizations that aren’t behind the new ballot measure, such as the health care industry, will benefit simply by pumping more money into the state’s general fund.

So far, many Prop. 100 backers who aren’t part of the new proposal are hesitant to take a position. Arizona Chamber of Commerce and Industry spokesman Garrick Taylor, whose organization was one of the leading advocates of Prop. 100, said the chamber isn’t associated with the new proposal and won’t take a position until it sees the language of the proposed ballot measure.

Likewise, Brewer, who led the charge for Prop. 100 and spent nearly the first year and a half of her governorship fighting to put it on the ballot, is staying neutral on the as-yet unseen proposal as well. Brewer spokesman Matthew Benson said the new proposal is completely separate from Prop. 100.

“Obviously, the governor can’t control what an outside citizens group chooses to do. The governor’s commitment was that Proposition 100 would expire after three years, and it will,” Benson said.

Many of the Prop. 100 opponents say they believe Brewer was sincere when she vowed that the tax hike would be temporary. Lawless said he’s heard high-level Brewer staffers say the governor doesn’t see a need for the tax hike to be renewed.

But Sen. Ron Gould, a staunch conservative who walked out of a March 2009 speech by the governor when she first proposed a temporary tax hike, said the onus is on Brewer to oppose the new ballot measure, which he referred to as the “hijacking of Prop. 100.”

“It still hangs on the governor’s head. The reason that tax is there is because the governor wanted a tax hike,” said Gould, R-Lake Havasu City. “If she wants to keep to her word that this was a temporary tax, then she should work as hard to oppose this tax as she did to pass the original Prop. 100 tax.”

Even some opponents of Prop. 100 say its temporary nature likely had little effect on the outcome of the special election, when about 64 percent of voters approved Prop. 100.

Lawless said voters were probably swayed more by the warnings of massive budget cuts to come if Prop. 100 didn’t pump nearly $1 billion per year into the general fund. The anemic opposition campaign raised about $1,000 compared to more than $2.3 million for the Yes on 100 campaign.

He also predicted that the new sales tax proposal would pass as well due to a combination of a well-funded campaign, a lack of organized opposition and legitimate concerns about the coming funding cliff in fiscal year 2014. That’s when Prop. 100 is set to expire, the federal health care overhaul will increase Medicaid costs and a series of tax cuts begin to go into effect.

“I expect a much closer election but I don’t expect the outcome to be any different,” Lawless said.

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