Governor Ducey has learned a thing or two from recent history.  President George Bush promised no new taxes, saying, “READ MY LIPS …” New taxes were needed.  This certainly played a role in losing his re-election bid to Bill Clinton.

No new taxes, balanced budget … those are Ducey’s things.  They sound wonderful, I’d highly consider voting for someone who did both of those, especially a president!  But let’s look just under the surface.

The short-story:  Arizona is growing.  If the state does not provide additional funding for public services like health care, transportation, police and fire, and education, then local communities and municipalities must do so to care for their residents.  

Here’s how it works for education. Other things like fire stations and police departments work in a similar fashion.  Education is 18% of the state budget, which is around $10 billion a year.  It is well documented how that leaves public education in Arizona, ranking 51st in working conditions for teachers in the US (including Washington DC).  

To keep buildings maintained and busses running, schools must ask their local communities to help bridge the gap in the form of bonds and overrides.  These create extra costs themselves and are additional layers of government which are inefficient.  

Bonds are essentially loans that the community pays for with property taxes.  It costs money to run the election for the bond, to manage the bond money, pay back the bond, and then of course the interest the bond earns.  Bonds cannot be used to pay teachers or staff.

The amount of money a school can spend is set by the state.  An override is a locally voter approved measure that will allow a school to spend up to 15% more than the limit set by the state (this is a simplification of how overrides work, but this is the basic idea).  Schools rely heavily on these measures to keep programs running.

All of this is just for education, not fire departments, police departments, or other public services.

Nobody wants to pay more taxes, especially if the money is wasted, right?  It is nice to live in a state with corporate and personal tax rates that are friendly (low).  But, our local and state sales taxes are high, 6th highest in the nation!  In addition, almost 8% of the tax (sales and property) we collect goes to pay interest (see bonds above).

A dollar only goes so far.  The governor has had many things in place that essentially rob Peter to pay Paul, but it appears that gig is up.  A new tax on vehicle registration, technically called a fee, had to be introduced to help pay for transportation, roads, and highway patrol because neither Peter or Paul had any money left to spare.

Here is the kicker … Arizona forgave over $13 billion in corporate taxes in 2017 through tax exemptions and other programs!  But does that entice corporations to move to Arizona? One of the key features sought by companies like Amazon, who is looking to open a second headquarters, is a good public education system.  Both Tucson and Phoenix were removed from the list of potential cities because of the state of public education in Arizona.

 

To summarize, $10 billion isn’t enough money to pay for public services.  Local municipalities go into debt with bonds and have to raise local taxes to pay for those bonds.  A significant portion of the additional money raised by these taxes pays for the interest on those bonds.  

Local communities are scrambling to keep up with growth and service the public while the governor is handing out corporate tax exemptions that far exceed the state’s budget.  The claim is that businesses will be attracted to Arizona. Yet, without a quality public education system, Arizona’s appeal is knocked down several pegs.

Arizona’s corporate tax rate of 4.9% is the 9th lowest in the United States.  

Our state budget might be balanced, but our state is in debt.  

The governor isn’t raising taxes, or even collecting them from corporations.

I’m just a math teacher, I don’t know much about economies.  But this solution seems almost too obvious to state. Why not collect $10 billion of those tax exemptions and double the state budget.  We could build a quality public education system, better infrastructure for growth, and a state of the art health-care program (to attract our main commodity, snow-birds).