Whether personal, organizational, or governmental, when dealing with finances, it's often a good idea to back up and look at the big picture. Accordingly, the figure below shows Arizona's General Fund expenditures and revenues from 1993 through 2008 (the latest year available).
In the 1990s, revenue growth was even and steady despite the fact that tax cuts became effective yearly. At the end of that decade, though, expenditures took an uptick and surpluses disappeared. Since then, Arizona has been on a wild ride. During the three years after the double-whammy of the tech bubble bursting and 9/11 spending accelerated right along with revenues.
Source: Joint Legislative Budget Committee
For the last three budget years, state spending has exceeded state revenue. Even as lawmakers began to understand our true fiscal picture, there was a failure to put on the brakes on spending.
Arizona has been hit hard by the national business cycle. The worst thing the state's policymakers could do now is amplify the negative effects with a tax increase. Tax increases discourage the private investment and risk-taking that we need to build wealth and restore a vibrant economy.
Byron Schlomach, Ph.D, is director of economic policy at the Goldwater Institute.