Several otherwise conservative legislators are thinking very hard about capitulating to Gov. Jan Brewer’s scheme to put on the ballot an 18-percent increase in Arizona’s sales tax rate.

Those legislators have argued they could wring more spending reductions out of the governor by allowing the sales tax referendum to go to the ballot. But with the education and health budgets that passed this month, conservatives appear to have given up on significant spending reductions. So, those legislators are left to argue that if the “Brewer Tax” goes to the ballot, it will probably fail, thereby giving the Legislature a “mandate” to cut spending.

There are several grave problems with that argument.

For starters, the sales tax might actually win at the ballot. In a low-turnout election, the sky-is-falling propaganda from public employee unions and other spending interests could be persuasive.
If the sales tax does win at the ballot, Arizona will set itself up for fiscal distress. In the short run – assuming that the “Brewer Tax” is actually temporary – we will merely ignore a billion-dollar structural deficit until the year 2012. We also will do damage to our economy at a time when we’re already hurting. The San Francisco Federal Reserve office has estimated that a dollar taken from the private sector for government spending reduces economic activity anywhere from 60 cents to $2.30.

In the longer run, by resorting to a tax increase and by failing to reduce spending, we will tell potential investors, businesses, workers, and retirees that Arizona is the next California: We are stuck in a cycle in which the government spends too much money in boom years, goes into deficit crises, raises taxes to keep government spending at high levels, and then repeats the process until it hits bankruptcy.

Even if the sales tax fails at the ballot, voters are not likely to give politicians a mandate to cut spending. Voters are often schizophrenic on fiscal issues. Even if they shoot down a sales tax in 2009, they could easily turn around in 2010 and punish legislators who vote for large spending cuts in popular programs.

Further, even with a “mandate,” Brewer and a majority of legislators may prove unwilling to cut much spending – especially because cutting spending will be harder to do in January, when the fiscal year is already half over and the money is half spent.

If conservatives keep the sales tax off the ballot, that will force state government to an earlier reckoning. Revenues will soon fall short of paying for the bloated education and health budgets that passed this month, and the Legislature will have to go back to work, perhaps as soon as September. But it’s better to start cutting in September than to wait until January.

As a matter of political prudence, given the Tea Party fervor brewing among the grassroots in Arizona, legislators should avoid a tax referendum like the plague. Grassroots activists know that the job of a conservative legislator is to stop bad legislation, not punt the ball to voters. And if the governor can muster a majority of legislators to refer her tax hike to the ballot, shrewd legislators would do well to keep their names off the bill.

If necessary, the Arizona chapter of Americans for Prosperity will work hard to defeat the “Brewer Tax” at the ballot.

– Tom Jenney is Arizona director for Americans for Prosperity (www.aztaxpayers.org ).