Monday, April 14, 2008

Goldwater Institute: Only the Governor can prevent a tax increase

The Buck Should, Quite Literally, Stop Here

by Byron Schlomach, Ph.D.

On Tuesday, the Senate barely passed a bill that would permanently repeal the County Equalization Tax (CET) on property. Unfortunately, a gubernatorial veto is very likely.

In 2006, when the state was swimming in surplus funds, the tax was suspended for three years. The CET was one of the finance streams that flowed to schools. Since then, other state money has made up the difference to schools.

Today, analysts for the legislature estimate the CET is worth about $250 million and that when it goes back into effect in 2009, the rate will be about 39 cents for $100 of assessed value. For a $250,000 house, that's about $100 per year. For a $1 million commercial property, it's more than $800 per year.

The governor and some members of the legislature have described these amounts as trivial, implying that their cost would only require the sacrifice of the occasional latte.

Rather than trivializing a tax increase, our public servants would do better to recognize that if state spending hadn't grown so fast if it had only kept up with population growth and inflation since 2002 -- we would have a surplus of $500 million today instead of a massive deficit.

That's a lot of lattes.

Dr. Byron Schlomach is the director of the center for economic prosperity at the Goldwater Institute.

Goldwater Institute: When a Latte's a Lot

Goldwater Institute: Budget Shortfall

Arizona State Legislature: HB 2220

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