Proposition 126 would severely limit Arizona lawmakers’ ability to modernize the tax code to a 21st century model. In fact, it reduces our options to design a low tax state with the resources we need to enhance the success of our foundation.
If passed, Proposition 126 would negatively impact Arizona’s public education system. The Classroom Site Fund, which contributes to the salaries of thousands of classroom teachers, will see its revenues cut by one-third, or $250 million annually, starting in July 2021. The universities and community colleges also stand to lose critical funds. These funds come from a portion of the sales tax that are considered services and would be exempted from taxation if Proposition 126 passes.
Arizona increasingly relies on sales taxes to fund education, both K-12 and post-secondary. If Proposition 126 passes, the sales tax base will continue to shrink, meaning less revenue for education. More and more of Arizona’s economy is becoming service-based, especially with many transactions now taking place online. Proposition 126 will tie the legislature’s hands from being able to proportionally tax these services in the future, will give certain industries special protections from taxation at the expense of others, and ultimately will not enhance educational outcomes.
If another economic downturn occurs, the legislature and our governor will need all options on the table to deal with whatever budget shortfalls occur. Proposition 126 will needlessly take options off the table. With fewer options, that would mean that lawmakers would likely have to cut its way out of the budget crisis. Our state went through this in 2009 when the Great Recession led to Arizona’s public schools, universities and community colleges experiencing the worst cuts to state funding in the country. It was then that a temporary sales tax helped our state recover some of the funds lost during the Great Recession.
Our lawmakers need to have every tool available to them when planning for the future. We cannot afford to limit their ability to make choices related to critical funding for our state’s education system. Proposition 126 would do just that.
Michael M. Crow is president of Arizona State University
The views expressed in guest commentaries are those of the author and are not the views of the Arizona Capitol Times.
The views expressed in this piece are those of the author in his personal capacity.