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Arizona has enough wealth to meet its needs — with new revenue

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We need about $1 billion more in sustainable revenue to meet the needs of educators and school capital in Arizona, and there is a growing consensus in both parties that we need to find new revenue.

Last week, Rep. Noel Campbell, R-Prescott, bravely stood up on the floor of the House and proclaimed just that. He said that it is high time that we all make the tough choices to find the money to meet the needs of our state. I disagree with his proposed solution – it’s another increase to our already overburdened sales tax – but I respect his courage.

Had Campbell, or any Arizona Republican, made such a strong statement 15 years ago, he would have lost his job in a New York minute. Times have changed and here’s why:

Rep. Ken Clark

Rep. Ken Clark

Contrary to the protests of some of his fellow members, we need to understand one important fact – Arizona has enough wealth to meet its financial obligations.

We can absolutely find new revenue without causing economic distress to our state’s economy. The accompanying charts make it clear that the old tropes about our economy tanking from enhanced revenue simply do not hold water.

First, we need to understand how we got here. The Legislature has cut taxes in this state for 27 of the last 28 years.

I believe that most of those tax cuts have gone to very wealthy individuals and out-of-state companies, which drains dollars from our local economy.

Second, our state budgets have shrunk over the years in relation to our state’s wealth. We have the wealth to pay for our priorities – not only education, but also infrastructure and general well-being of our citizens.

In 1995, our budget represented 5 percent of Arizona Personal Income. At that same time, our state’s Gross Domestic Product was about $130 billion.

Now, our state’s GDP is just over $300 billion, but our state budget represents just 3.2 percent of Arizona Personal Income.

A Republican friend of mine said to me when I showed him this information that this is a good thing, that we are doing more with less. We know that is simply not true. We are doing less with less. That’s what the Red For Ed movement is all about.

As a state, we owe our educators about $1 billion just to get them to 2008 funding levels.

We have cut higher education funding by 40 percent since 2008.

We owe our school construction and maintenance more than $2 billion by formula since the year 2000.

And we need at least $260 million a year for the next decade just to maintain our current roads and bridges.

We have seen a 75 percent increase in homelessness in Phoenix over the last three years, according to the Central Arizona Shelter Service. Arizona has the wealth to meet its needs.

And what would we get for that investment? A strong, competitive education system and social safety network will attract more businesses to our state. We will ensure that we have an educated and healthy workforce. Arizona is a young, growing state. We will be able to address crucial infrastructure needs.

What does it take for us to get from here to there? It takes members of both parties to do just what Rep. Campbell did – lead. We need to tell you the truth, rather than shifting money around, just reeling from crisis to crisis putting out fires (with one hand tied behind our back).

I’m happy to see the conversation finally turning to revenue. I hope that you will join me to keep the pressure on your representatives to do what needs to be done.

— Rep. Ken Clark, D-Phoenix, sits on the House Appropriations Committee.

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The views expressed in guest commentaries are those of the author and are not the views of the Arizona Capitol Times.

4 comments

  1. As educators march for better pay in Arizona, legislators must grapple with budget troubles. Arizona could find an unexpected windfall, however, if it repealed a long-standing “water’s edge” limitation on the proportion of a corporation’s profits that can be taxed by the state.

    Multinational corporations have become aggressive in stripping profits out of the U.S. and placing them in tax havens. Repealing the water’s edge limitation would mean taxing a percentage of worldwide corporate profit based on the percentage of sales in Arizona.

    Multinationals have long enjoyed an unfair tax advantage over domestic corporations due to the water’s edge limitation. Repealing it could increase Arizona tax revenue by about $150 million a year—all derived from tax-avoiding multinationals. The state should take a serious look at ending water’s edge to gain much-needed revenues for Arizona’s schools.

  2. Education is for everyone and everyone needs to be a stakeholder. Education is expensive, and it should be. It is time for a statewide sales tax that may only be spent on education salaries (not administrative salaries) to close the gap. Pay teachers for longevity and for performance as well. Good teachers should simply make more money than bad teachers (and do not be naïve, there are some baaaaaad teachers out there that have probably chosen the incorrect career). Pushing the extra costs onto a certain segment of the population because of perceived affordability or strength or any other reason is fundamentally unfair. Everyone pays sales tax. Sanjeev and Bill’s posts above should be celebrated.

  3. By the way, the state is also going to need additional revenue for the public safety retirement mess the legislature created and pushed back onto local governments. A significant percentage of local budgets are paying this unfunded mandate mess and local governments cannot fix it because it is a matter of statewide concern. Promises have been made, the legislature must find a way to keep its promises without simply raising taxes on local economies, which is exactly what the legislature did when it declared this issue a matter of statewide concern.

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