Tuesday, January 10, 2012

Goldwater Institute: It's time to square up the state's debt

by Nick Dranias

Governor Jan Brewer has declared that one of her priorities in the coming session is to pay down the state’s debt. The idea, mirrored by leadership proposals in the state house and senate, is both timely and refreshingly frank.
 By any straight-face test, the state has continuously violated the Arizona Constitution’s mandate that current-year expenses be funded largely on a “pay as you go” cash basis — not through debt. Now that the state anticipates as much as $650 million in surplus tax revenue, it is time to square Arizona’s fiscal policy with the state constitution.
 Enabled by legal precedents that embraced fiscal gamesmanship decades ago, the state has long skirted the Arizona Constitution’s $350,000 debt limit using a variety of budget tricks. Officials have sold and leased-back buildings, used credit lines and warrants to cover huge gaps between spending and revenue, and rolled-over liabilities from one budget year into the next.
While last year’s budget was relatively gimmick-free, hundreds of millions of dollars of past fiscal gimmickry remain on the books.
An unretired debt is a tax on future generations. Our state’s founders largely banned debt to protect those voiceless future generations from taxation without representation.
Arizona’s “pay-as-you-go” constitutional policy properly imposes political accountability on current politicians for their fiscal choices. For this reason, constitutionalists, tax hawks and fiscal responsibility mavens should agree with Governor Brewer and legislative leadership: Use the surplus to retire the state’s unconstitutional debt.

Nick Dranias holds the Clarence J. and Katherine P. Duncan Chair for Constitutional Government and is director of the Joseph and Dorothy Donnelly Moller Center for Constitutional Government at the Goldwater Institute.

Learn More:
Arizona Republic: Plans for Arizona's budget vary

Goldwater Institute: Living Debt Free: Restoring Arizona’s Commitment to its Constitutional Debt Limit

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