Tuesday, May 6, 2008

AZ's fiscal-policy poker game

Voters can trump spending
By Tom Jenney
Arizona Republic
Monday, May 5, 2008

You play the hand you’ve been dealt, and in this year’s fiscal-policy poker game, fiscal conservatives in Arizona have a lot of bad cards.

Instead of an ace in the executive branch of state government, fiscal conservatives have a two.

Back in the fall, when Fiscal Year (FY) 2008 revenues began falling below the revenues for FY 2007, a fiscally conservative Governor would have made modest reductions in agency spending to bring expenditures in line with revenue. Instead, Gov. Janet Napolitano continued to spend FY 2008 money as if there were no shortage of revenue. She also failed to call the Legislature into a mid-year special session to correct the over-optimistic FY 2008 budget passed in June.

For the FY 2009 budget, Napolitano will likely continue doing what she has done for the last five years, which is to bargain shrewdly so as to maximize government spending. According to her budget office, state government spending now takes up 7.01 percent of the state’s economy—the biggest slice for government since 1980.

Napolitano’s deficit plan involves financing current spending levels with huge amounts of (unconstitutional) debt. And with her recent veto of House Bill 2220, she has promoted the fiction that a property tax increase is necessary to close the budget deficit.

Instead of an ace in the judicial branch, fiscal conservatives have a three. The Arizona Supreme Court in past years has refused to enforce the constitutional prohibition on state debt, and it is unlikely to start doing so now.

A third ace would be a solid majority of fiscal conservatives in the Legislature, but instead, fiscal conservatives have a seven (in other words, less than half). Most of the time, they do not have the votes to get fiscally conservative bills onto the Governor’s desk, or to send those bills to the ballot via referenda (a move that bypasses the Governor’s veto pen).

With a solid majority of fiscal conservatives in the Legislature, Arizona would not have overspent during the last five years, and we would not have the largest budget deficit in the nation. In any case, a fiscally conservative majority (with some cooperation from the Governor) would make short work of current deficits, holding FY 2008 and FY 2009 spending constant at FY 2007 levels ($9.8 billion). Modest transfers of cash from the Rainy Day Fund could easily balance those budgets—without accounting gimmicks, and without taking on debt.

Although most of Arizona’s fiscally profligate legislators are Democrats, this is not a strictly partisan problem. In the recent Senate battle over HB 2220, Republicans Carolyn Allen of Scottsdale and Tom O’Halleran of Prescott voted to increase property taxes, while Democrat Ken Cheuvront of Phoenix provided the 16th vote to get tax relief out of the Senate. In the House, Democrat Mark DeSimone crossed party lines to vote for property tax relief, while Republicans Pete Hershberger and Jennifer Burns chose to snub homeowners and businesses.

A fourth ace would be legislative leadership strong enough to bargain hard with the Governor and put petty bills on hold until the budget crisis is resolved. Individually, some of our legislative leaders are face cards, but collectively, they’re more like a six—easily beaten by the Queen of Spending.

The only good card fiscal conservatives hold this year is the wild card of grassroots taxpayer activism. Taxpayer activists must work hard to push to balance the FY 2009 budget without tax increases, accounting gimmicks or debt, put strong property tax and budget reforms on the November ballot, and support fiscally conservative candidates in September and November. If they do those things, the grassroots wild card could turn out to be the missing ace fiscal conservatives need to play a winning hand this year.

The stakes of the fiscal-policy poker match are high. Arizona can choose the path of strong economic growth and prosperity, or it can slide into high-tax, high-spending sluggishness. Grassroots taxpayer activists will decide.

--Tom Jenney is the Arizona director of Americans for Prosperity (www.aztaxpayers.org)

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