Rural Republican proposes tax increase for public education

Republican Sen. Sylvia Allen wants voters to approve a sales tax hike to boost funding for K-12 schools and higher education.

Voters already approved the 0.6-cent sales tax for education in 2000, a levy that generated more than $700 million in the previous fiscal year. Allen, a Snowflake Republican, wants voters to boost that tax by 0.4 cents, up to a full penny once the original tax expires in 2021.

Doing so would generate a total of nearly $1.1 billion annually, dollars earmarked for education spending.

“As chair of the Senate Education Committee, my vision is for a revenue stream that allows everyone to participate, supports local control and provides long-term funding for Arizona’s classrooms, university students and community colleges,” Allen wrote in an Arizona Republic op-ed announcing her proposal.

“Most importantly, it is a revenue stream that is passed by Arizona voters at the ballot box,” she added.

That means the tax would be voter protected. Measures approved at the ballot cannot be altered by Arizona lawmakers, except by a three-fourths majority vote, a rarity in Arizona politics on issues as controversial as taxation.

It’s also a rarity that a conservative lawmakers such as Allen, who like most in the Republican Party have expressed opposition to new or higher taxes, would propose a tax hike at all.

Chuck Essigs, a lobbyist for the Arizona Association of School Business Officials, said it’s a sign the debate on school funding has shifted. Instead of arguing over whether new revenues are needed for education, now the debate is over how much and what the impact could be.

“Now, we’re talking about, is this increase something that can really change how K-12 operates? It changes the focus of the discussion to what’s the best way of doing it,” Essigs said.

If voters agree to boost the tax, there are some strings attached. Allen’s proposal would simplify the way Proposition 301, the original sales tax as approved by voters nearly two decades ago, earmarks dollars for education.

Gone would be the 10 separate funding requirements for how those dollars must be spent. Allen’s proposal consolidates those “buckets” into three distribution streams: One for K-12 schools, which would receive 73 percent of the revenues; one for universities, who’d be due 22 percent of the revenues; and another for community colleges and tribal schools, which receive the remaining 5 percent.

That doesn’t mean the areas of need addressed by certain “buckets” would go unfunded. Instead, Allen wants to give local school districts the authority to spend money as needed on school safety, accountability efforts, and school resource officers.

Those dollars could also be spent on full-day kindergarten programs, according to Allen’s proposal, all under new spending authorities within the Classroom Site Fund.

For K-12 schools, Allen estimates a penny tax would generate $800 million. That’s roughly $260 million more than the amount now earmarked for K-12 schools through Prop. 301, according to legislative budget estimates.

Arizona’s three public universities would receive roughly $250 million, with the dollars earmarked for making in-state tuition as close to free as possible in accordance with the Arizona Constitution. That’s a steep funding boost over the roughly $80 million the universities now receive to cover technology and research expenses.

The remaining 5 percent, or $50 million, would be split. Community colleges would receive 90 percent, or roughly $40 million, while 10 percent, or $10 million, would go to tribes operating community colleges or workforce development programs.

The timing is ripe for such a proposal, Allen wrote, thanks to Arizona’s “steadily improved” economy. But it’s also a necessary alternative to tax hikes such as the levy imposed by the Invest in Ed initiative, a failed ballot measure that sought to raise income taxes to better fund K-12 schools, Allen wrote.

That measure was barred from the ballot after the Arizona Supreme Court ruled in August that the proposal’s language didn’t accurately represent the new tax burden on certain taxpayers.

Allen wrote she’s confident that Invest in Ed’s backers will return in 2020 with “a more accurately worded, yet equally flawed proposal” that would damage Arizona’s economy.

“By increasing the 0.6 cent to a full penny, we provide an increase to education, yet we still protect the economy and the taxpayer by not adding another new income tax on businesses,” she wrote. “This is a winning compromise.”

Allen’s plan could build on the momentum built by lawmakers in 2018, when Republicans and Democrats took a rare vote on taxes to extend the current 0.6-cent sales tax set to expire in 2021. That measure, backed by Republican Sen. Kate Brophy McGee and former Rep. Doug Coleman, extends the tax until 2041.

Technically, Allen’s measure would repeal the tax extension. Instead an extended tax, the new 1-cent tax would begin in 2021, when the old Prop. 301 expires.

Brophy McGee, a Phoenix Republican who’s advocated for a “new Prop. 301” in addition to the extension she helped shepard through the Legislature a year ago, said she’s also in favor of referring a Prop. 301 tax hike to voters in 2020, and thinks a penny is doable. But in meetings with education groups she’s conducted over the summer, Brophy McGee said there could be opposition to consolidating the funding “buckets” because some areas of education spending would see larger proportional increases than others. 

Nonetheless, the fact that another Republican proposed a tax hike is a welcome change at the Capitol, Brophy McGee said.

“For someone to propose an increase in a tax, which is needed, is significant,” she said. “I don’t know what we’re gonna wind up with, but it’s given me a lot of hope.”