The Wrong Time and the Wrong People Tapped to Solve State’s Spending Addiction

PHOENIX –Governor Jan Brewer this week admitted she wants to raise taxes as part of the solution to the huge budget deficit former Gov. Janet Napolitano dumped on taxpayers on her way to Washington, D.C. The tax increases are part of Brewer’s 5-point plan to tackle this financial disaster.

Brewer released a “long-term, sustainable 5-point plan” as the foundation for her FY2010 budget proposal. 

Assessments estimate the state’s general fund budget deficit could reach the staggering figure of $4 billion – due to overspending during Napolitano’s 6-year reign of fiscal mismanagement. The Arizona Constitution requires a balanced state budget by June 30th of each year. Napolitano played fast and loose accounting games to slide around that throughout her tenure.

Brewer’s five-point plan calls for:

1) Structural Budget Reform

Changes to the Budget Stabilization Fund (or “Rainy Day Fund”), extending revenue forecasts beyond the current budget cycle, increasing fiscal year ending cash balances, and reducing the rate of spending growth.

2) Improve Proposition 105 – The Voter Protection Act

The governor proposes that the legislature approve a 2010 voter referendum requiring that any initiative or referendum measure that passed between 1998 and 2004 which require state spending would be subject to a vote of the people to ensure that the measure provided for an increased source of revenues – independent of, and with no detrimental impact on – the General Fund.

3) Spending Cuts

The governor is calling for $1 billion in spending cuts – $400 million for FY 2009 and $600 million for FY 2010), while protecting critical funding to education,

health care, and public safety.

4) Temporary Tax Increase

A temporary tax increase of one percent for 36 months in the state’s current sales tax. This proposal would not expand the current sales tax to service industries.

5) Tax Reductions for Economic Growth

The governor is calling for a state tax structure “that promotes job growth and

sustainability, capital formation, investment in Arizona and revenue stability.” The first step in providing tax relief to Arizona homeowners and businesses would be the phased repeal of the State equalization tax, with permanent repeal occurring proportionately over a three-year period beginning in FY 2010.

Gov. Brewer, who is risking re-election chances with the mere suggestion of a tax increase, said: “Unfortunately, after considering every option, and after performing a painstaking assessment of our real economic situation, a temporary tax increase is necessary to bridge the gap between fiscal crisis and recovery,” Governor Brewer stated.”

This is the wrong time to raise taxes. People are hurting.

The citizens are the wrong target to solve the state’s budget problems. The state needs to bear the responsibility of the problems it created by massive over-spending.  Rather than increase taxes for 36 months, the state needs to cut or privatize non-essential services for 36 months or more.

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