by Jim Nintzel
The Children's Action Alliance responds to the tax-cut plan devised behind closed doors that's flying through the Legislature. Would that lawmakers could act as swiftly to find $5 million to restore transplant funding as they can to find $500 million for tax breaks.
Late yesterday, Governor Brewer called a special session so the Arizona legislature could quickly approve a package of corporate tax breaks that fails to balance cuts with revenues, and risks education in our state. SB 1001 and HB 2001 would cut corporate taxes and reduce revenue which will result in greater cuts to education. Governor Brewer and legislative leaders have already called for additional cuts to education, even though elementary and high schools have already sustained an 18% per student cut in funding under the Brewer Administration.
Today, the House of Representatives rushed HB 2001 through committees and caucus; Senate leadership pushed SB 1001 (their version of the House bill) through their committees. CAA anticipates that legislative leaders will continue to push the corporate tax cuts package (under the misnomer "The Jobs Bill") through final votes tomorrow. The Governor is expected to sign the bill.
CAA President and CEO Dana Wolfe Naimark testified today against SB 1001 and HB 2001 before the House Ways and Means Committee, and Senate Commerce and Education Committee. “Economists disagree about many things but there are two things upon which they all agree,” said Naimark. “First, high quality education is necessary for economic success. And second, Arizona has not engaged in a balanced fiscal strategy of cuts and revenue, focusing only on severe budget cuts.
“SB 1001 and HB 2001 go in the wrong direction on both counts. These bills continue to focus only on cuts without balancing the other side with revenues. And every dollar of these corporate tax cuts will drain dollars from K-12 education, universities and community colleges.
“Governor Brewer recognizes the link between taxes and education. When the temporary sales tax was being considered last year, her own Office of Strategic
Planning and Budgeting calculated the cost to each school if that tax vote failed. Now, less than a year later, Governor Brewer is supporting a corporate tax cut that would have a similar effect.
“These bills are not a blue print for improving Arizona. There’s no plan to repay debt and no plan to improve math and science education, core curriculum for our future economic growth. This plan is unbalanced and unaccountable, and Children’s Action Alliance urges legislators to oppose these bills.”
CAA will continue to keep you informed as updates are available. Stay tuned...
Here's CAA rundown of the tax-cut plan:
SB 1001 enacts multiple tax breaks for corporations beginning in FY 12 when Governor Brewer claims Arizona has no available revenues for health care coverage, school building repair, or keeping per student education funding even with inflation. This unaffordable proposal will deepen Arizona's structural deficit and add to the state's instability.
Economists agree that Arizona can never be competitive for economic development without a skilled workforce and quality education. Yet, this one-sided, unbalanced plan would continue to dismantle public education, one tax cut at a time.
Arizona ranks dead last in funding per student in the nation. Arizona has the second worst class sizes in the nation. Arizona’s NAEP student achievement scores in reading, writing, and math are near the bottom while Arizona’s dropout rate is among the highest in the nation.
K-12 public education has been cut by $1.6 billion over the last three years, alone. • The tax cuts in SB 1001 and HB 2001 would grow to more than $500 million by FY 2018,
compounding the loss of the temporary sales tax of nearly $1 billion in FY 2014.
SB 1001 and HB 2001 purport to be a long-term blueprint for economic growth. But where's the blueprint to repay our state debt or pay back the school rollovers? Where's the blueprint to sustain per student spending or improve reading, science and math? Where's the blueprint to provide businesses the high achieving workforce they demand? Where's the blueprint to balance the budget even next year when the state is ordered not to violate the voter mandate for AHCCCS health care coverage?
In 2010, the Arizona legislature passed a "Plan B" budget with $400 million additional cuts to public education that would be enacted if the temporary sales tax, Proposition 100, did not pass. The Governor's Office of Strategic Planning and Budgeting calculated what a $400 million cut would mean in per student budget cuts in each school district in the state. That is a taste of what would happen to schools if SB 1001 becomes law and the tax cuts go into effect as the temporary sales tax expires. The cuts per student range from $368 in Eloy and Glendale Elementary School Districts, to $420 in the Scottsdale Unified School District to $807 in the Canon Elementary School District in Black Canyon City to $1,955 in the Walnut Grove Elementary District in Yavapai County.
The bills include tax giveaways in corporate income taxes and business property taxes that have no accountability for creating jobs. Less than 15% of the tax cuts are tied at all to creating new jobs — the other 85% - over $1 billion over the next 7 years — will be given away whether or not a single job is created.
How many jobs will be created with these tax cuts? How many jobs will be slashed? Where is the accountability for voters?
The last big corporate income tax give away, known as the single sales factor, was enacted in 2005. How many jobs did it create? How much investment was spurred? Which companies got the tax cuts and which companies did not? How many national headquarters located here because of the tax cut? Despite requirements in the law, information is unavailable about capital investments or progress reports. Why are we discussing an expansion of this tax cut without an accounting of the results?
"Arizona’s structural deficit predates the current recession and is largely the result of policy- induced revenue reductions. Beginning in FY 1993, the state implemented tax cuts in every year through FY 2002, and again from FYs 2005 through 2010. Adjusting for inflation, population growth, and real per capita economic growth, the cumulative impact climbs to $2.9 billion. What is certain is that the current fiscal crisis will continue to have lasting and damaging ramifications unless the state takes prompt, sober steps to address it." (Structurally Unbalanced: Cyclical and Structural Deficits in Arizona, Morrison Institute for Public Policy, by Matthew Murray, January 2011.)
An analysis by the Center on Budget and Policy Priorities found no positive link between large tax breaks made in the 1990s and later economic success. In fact, the big tax-cutting states generally faced larger deficits, more downgrading of their credit ratings, and lower job growth than other states that were more cautious about tax cuts. (Center on Budget and Policy Priorities, Tax Cuts and Continued Consequences: States That Cut Taxes Still Lag Behind, Brian Filipowich and Nicholas Johnson, December 2006.)
An analysis by the Office of the University Economist at Arizona State University found no noticeable effect on Arizona’s economic growth from either state tax increases or tax cuts during the last 30 years. (W.P. Carey School of Business, Arizona State University, Public Finance in Arizona Volume II: Concepts and Issues, a Report from the Office of the University Economist, Dennis Hoffman and Tom R. Rex, December 2008.)
SB 1001 and H.B. 2001 are unaffordable, unproven, unaccountable, unbalanced plans that dismantle public education