As she continued touting her five-point economic recovery proposal on a statewide tour, Gov. Jan Brewer said she is discouraged by the uncompromising opposition among some legislators to her proposal for a temporary tax increase.
At a March 18 speech at Mesa Community College, Brewer told the audience that Arizona will not be able to “turn the corner” on its economic problems for many years unless the Legislature approves all five points of her plan, which includes the tax hike proposal that has rankled many of her fellow Republicans. Following the speech, she said she has not gotten as much of a commitment as she would have liked from lawmakers on her controversial fifth point.
“It’s a little discouraging to hear people just absolutely say no, no, no, hell no. Why don’t they kind of take a deep breath and tell me why≠ We have looked at the problem. We have seen the issues. There are not a whole lot of ways that you’re going to solve it unless you go in and you implement the kinds of things that I have proposed,” Brewer said.
Brewer said that the fiscal 2010 budget, which is facing a shortfall of at least $3 billion, probably cannot be balanced without a temporary tax increase, unless the Legislature is willing to make $2 billion in cuts. In her five-point plan, she asked for $1 billion in cuts and $1 billion in revenue from a temporary tax increase.
Despite the vocal opposition of members of her own party, the governor expressed hope that lawmakers would warm toward the notion of raising taxes for two or three years.
“I know the process well enough that they need time to kind of stir it up, talk about it, whatever they do in order to come to some kind of conclusion,” said Brewer, who spent 14 years in the Legislature. “I would hope that eventually, once they can get this all in their heads and they really start seeing what they’re faced with, that they will come around.”
Opposition to the tax hike began the moment Brewer proposed it. Sen. Ron Gould, a Republican from Lake Havasu City, and Rep. Carl Seel, a Republican from Anthem, walked out in protest when she first pitched the idea publicly before a joint session of the Legislature on March 5. In the weeks since then, many conservative Republicans have suggested securitizing Arizona Lottery revenues and tobacco settlement money, selling state assets and even borrowing money, but they have continued to reject the a tax increase.
In the days following the unveiling of Brewer’s five-point plan, the governor and members of her administration frequently presented the temporary tax increase proposal as a last resort, to be used only if the budget could not be balanced by spending cuts and federal stimulus dollars alone.
Following a speech in Casa Grande in which she told an audience member that a tax increase is the only way to solve the budget crisis, Brewer said she misspoke, and that she still viewed raising taxes as a last resort.
But Brewer has given the same speech nearly a dozen times as she travels the state to drum up support, telling each audience, “I do not propose these steps lightly, and you would not hear me utter these words if I didn’t firmly and confidently believe that that is what is absolutely necessary at this time.”
Following Brewer’s speech at Mesa Community College, House Speaker Kirk Adams said he believes the fiscal 2010 and 2011 budgets can be balanced without raising taxes. Adams, a Republican from Mesa, also warned against crafting a budget based on the assumption that voters would approve $1 billion in tax revenues before an election is even held.
“That’s fraught with peril on its own, both in terms of mechanically how do you do that, when do you do it, and what happens if it doesn’t pass≠ How do you pass a budget contingent upon a major statewide election that’s asking people to raise their taxes in a time of what’s being referred to as the great recession≠” Adams posed.
Others have raised concerns that any ballot measures regarding a temporary tax increase or an overhaul of the 1998 Voter Protection Act — another of the governor’s five points — could fail, leaving the state short of revenue that it had been counting on to fix the budget.
At a speech before the County Supervisors Association of Arizona on March 19, two county supervisors suggested that an easing of the Voter Protection Act might be more palatable to voters if it were temporary. Brewer said it was something that she would consider.
“If the Legislature or the people were to determine that they would be willing to let that money be used for our core services for a short period of time, and then after we got ourselves turned around, to return it, that seems fair to me. I don’t have a problem with that,” Brewer said.
One area in which Brewer and Adams agreed was that Arizona likely will face further spending cuts in K-12 and higher education. When asked by an audience member at the Mesa speech what kind of assurances she could make that there would be no more education cuts, Brewer responded that such cuts were likely as lawmakers continued to pore over the looming fiscal 2010 budget deficit.
“Assurance is one thing, and doing what is necessary is another thing,” Brewer told the audience member. “Unfortunately, we probably are going to see some more reductions in K-12 and higher education in the state of Arizona. … But I, like you, agree that we’ve got a $3 billion deficit. It all cannot come out of education.”
Another point of agreement between Brewer and most legislators is on the need to use as much federal stimulus money as possible, as long as it doesn’t require the creation of new government programs or long-term financial commitments by the state. Brewer has applied to the White House for money from the American Recovery and Reinvestment Act. Arizona is eligible for about $4.2 billion in stimulus money.
At Brewer’s request, the Legislature has already approved a $40 million appropriation to replace funding that was cut from a Department of Economic Security program that provides children’s day care for the working poor. The appropriation makes Arizona eligible for about $50 million in stimulus money for the program, which will be used to replace the new funding that was approved by lawmakers. Brewer also recently signed off on $350 million in highway projects that will be funded with stimulus money.
Those two portions of the stimulus money required swift action on the part of the state, but the rest is in limbo while the Legislature and the Governor’s Office try to determine what strings are attached to the myriad other ARRA funding sources. Office of Strategic Planning and Budgeting staff recently traveled to Washington, D.C., to discuss the stimulus package with White House officials and federal agency staff, and federal officials are now in Arizona to continue those discussions, but it still unclear how much of the money the state will ultimately receive.
Brewer spokesman Paul Senseman said the Governor’s Office is still waiting for information that would provide insight on the strings that are attached to portions of the stimulus money. Brewer has not yet determined whether she will reject parts of the stimulus money to avoid long-term financial commitments, he said.
“Those guidelines are going to be another two or three weeks … before the federal agencies would have those out to the states,” Senseman said.
Adams said some portions of the funding, such as the education money Arizona is eligible for, are fairly straightforward, while others, such as money for unemployment insurance, are causing a great deal of handwringing at the Capitol. Several U.S. governors, such as Louisiana’s Bobby Jindal and South Carolina’s Mark Sanford, have rejected the unemployment money outright o
ver provisions that they say will require their states to continue increased funding for the program long after the stimulus dollars run out.
Adams stopped short, however, of saying he wanted Brewer to reject the unemployment insurance money as well.
“It’s not the Legislature’s decision. The governor is the only one who can apply for those dollars,” he said.
Senseman said Brewer has not made a decision regarding the unemployment insurance money, and that her office is still studying the issue.