Tax-hike plan from conservative changes school-funding debate

Ben Giles//January 11, 2019

Tax-hike plan from conservative changes school-funding debate

Ben Giles//January 11, 2019

Sen. Sylvia Allen (Photo by Evan Wyloge/Arizona Capitol Times)
Sen. Sylvia Allen (Photo by Evan Wyloge/Arizona Capitol Times)

Pigs aren’t flying.

But it’s probably worth another look out the window, just to check, now that a conservative Republican proposed raising taxes in Arizona.

Sen. Sylvia Allen, the typically anti-tax lawmaker from Snowflake, sponsored legislation asking voters to raise a 0.6-cent sales tax earmarked for education to a full penny. So, too, will Sen. Kate Brophy McGee, a Phoenix Republican who also sees a penny sales tax as the best solution to provide new revenues for education, particularly K-12 schools devastated by recession-era cuts to funding.

That Brophy McGee, considered a moderate Republican by Arizona’s right-leaning standards, would propose a tax hike is less surprising.

That Allen would do the same is a shock to some, though a welcome one.

After all, it was less than two years ago that Allen penned an op-ed in The Arizona Republic asking, when it comes to funding education, “when is it ever enough?” Voters don’t want higher taxes, she wrote, and the state already spends more than half its budget on education.

Allen acknowledged it’s strange she now sponsors a tax hike. She told the Arizona Capitol Times that while she’s been irked by the constant drumbeat for more school funding, she’s admitting it’s needed, and she’s known that for a long time. She has contemplated a sales tax hike for more than three years, but never felt like that effort would garner enough support.

Allen’s assessment isn’t wrong. It took a Herculean effort in 2018, spearheaded by Brophy McGee and former GOP Rep. Doug Coleman, for lawmakers to vote for just an extension of the 0.6-cent sales tax, which generates more than $700 million annually for K-12 schools, universities, community colleges and workforce development programs.

Known as Proposition 301, the tax was due to expire in June 2021. Most lawmakers, Allen among them, voted to continue charging the tax another two decades, after most Republicans spent years resisting the effort, or at least delaying a decision on whether to extend it.

That was then, this is now, Allen said, and now is the time to ask the people to raise the sales tax once more.

“And that’s because I believe the economy can do it,” Allen told the Capitol Times. “It wasn’t that we didn’t need more money. The question was, can the people give us more money? … It’s not me not giving you more money. It’s me going to the people and asking them to give more money.”

Her proposal, if approved by the Legislature, would send the question of a tax hike to the ballot in 2020. And if approved by voters, the higher tax rate would take effect in July 2021, immediately after the original voter-approved sales tax expires at the end of June that same year.

“I will admit, (education) can use it,” Allen said.

Chuck Essigs
Chuck Essigs

That’s music to the ears of education advocates like Chuck Essigs, among those guilty of drawing Allen’s ire for beating the drum for new revenues for education. As the lobbyist for the Arizona Association of School Business Officials, Essigs sees Allen’s proposal as a significant shift in the debate over education funding, particularly for K-12 schools.

Instead of arguing that more funding is necessary, the discussion, led in part by a staunch conservative like Allen, now focuses on what amount of new revenue is enough for schools.

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

Sen. David Bradley, a Democrat from Tucson and the next Senate minority leader, agreed it’s significant that someone from the staunch conservative wing of the Republican Party is proposing a tax increase. He attributed the change to the 2018 election, when Democrats gained seats in the House of Representatives and won key races for statewide offices.

“Hopefully they’re getting the message that people want to see this done differently,” Bradley said. “And let’s do it differently.”

Bradley appears to have a key ally in that effort: Prescott Republican Sen. Karen Fann, who on January 14 will be sworn in as the next Senate president.

“I support sending a penny to the ballot in 2020 to increase funding for our children’s education,” Fann said at an education-themed luncheon January 10, where she credited Allen and Brophy McGee for their efforts.

That statement draws Fann in stark contrast to previous GOP leaders who closely toed the party’s anti-tax line.

Fann told the Capitol Times she’s “so proud of Senator Allen for stepping up and wanting to take this challenge on,” adding that new revenues would help ensure that promises made, such as teacher pay raises, are kept. And while some lawmakers and voters are averse to any new taxes – Fann herself described taxes as “higher than they should be” – she also said the reality is vital government functions need better funding.

That Allen, who Fann described as an “extremely conservative Republican,” got out in front of the issue is a game-changer, Fann said.

“Nine times out of ten, if there’s something that has anything to do with raising taxes, she has always been a ‘no’ on that because she is conservative,” Fann said. “Education is very dear to her heart … (Allen) understands that there just isn’t enough money to fund the basic necessities in education.”

Boosting the sales tax is not without its obstacles, Fann said. Some voters will reject a tax increase, and so will their legislators. Others will say it’s not sufficient, and taxes should be raised even more.

“We’re already hearing those rumblings,” Fann said.

Then there’s Gov. Doug Ducey, who in his inaugural address promised to reject calls to raise taxes.

By referring the tax hike to voters, Allen’s plan bypasses the governor, but that’s not to say Ducey won’t campaign against the measure in 2020. As state treasurer, Ducey was a key cog against efforts in 2012 to permanently renew a 1-cent sales tax for education and other issues.

And Ducey has warned business leaders keen on boosting education funding – who in the past have floated ideas similar to Allen’s – against referring a tax hike to the ballot.

Allen’s proposal may also face competition from her own caucus. Brophy McGee, one of two Republicans who helped shepherd the Prop. 301 extension through the Legislature in 2018, has spent her legislative break meeting with various education interests and advocating for a “new Prop. 301” on top of the extended tax.

Sen. Kate Brophy McGee (R-Phoenix)
Sen. Kate Brophy McGee (R-Phoenix)

Brophy McGee said she’s drafting her own legislation to hike the sales tax. Both proposals bear the same fundamental change: The senators want voters to decide whether to increase the tax to a penny.

Where they may differ is how the money should be spent.

Allen’s plan would consolidate the distribution of those Prop. 301 dollars, leaving community colleges and universities with a larger proportion of funding than they now receive under existing rules. Based on conversations she’s had with education leaders, Brophy McGee said some interests would oppose Allen’s plan if it meant their share of Prop. 301 funding shrinks.

For example, Arizona State University President Michael Crow said he’s supportive in concept of Allen’s proposal, which would ease the tuition burden for Arizona residents attending public universities. But he also told the Capitol Times he’s in favor of ensuring continued funding for research and technology, for which Prop. 301 now earmarks roughly $80 million. Allen’s plan sweeps those funds away.

Nonetheless, the fact that another Republican proposed a tax hike is a welcome change at the Capitol, Brophy McGee said. And she’s confident that Allen’s proposal can be merged with the input she’s received from education interests.

“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.”