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Arizona Chamber calls tax increase to balance budget a last resort

PHOENIX – Arizona’s biggest business lobby says it would consider a temporary tax increase to help balance the state budget but only after exhausting other options that could include expanding off-reservation gambling.

Also, any temporary tax increase should be coupled with a comprehensive package of tax cuts that would take effect on a delayed basis, the Arizona Chamber of Commerce and Industry said in a position paper released Friday.

“We haven’t signed off on any tax increase proposal,” chamber President Glenn Hammer said.

The position paper said the chamber wants tax cuts that stimulate accumulation of capital and creation of jobs. Those would include reductions in business property and corporate income taxes as well as individual income taxes on capital gains, it said.

Republican Gov. Jan Brewer has proposed a temporary tax increase to raise $1 billion to help close a projected $3 billion budget shortfall in the next state budget. Brewer’s package also includes $1 billion in spending cuts and use of $1 billion of federal stimulus money.

Republican legislative leaders have balked at a tax increase, saying it would damage the economy. They prefer using alternatives such as asset sales and borrowing to finish closing the budget gap.

Brewer has said the lawmakers are resorting to “funny math,” but the chamber said “other temporary and permanent revenue enhancing streams should be evaluated on a case-by-case basis” to compare short-term benefits with long-term costs.

A revenue idea worth studying is whether the state should expand off-reservation gambling by letting racetracks have slot machines in order to net hundreds of millions of dollars of additional state revenue, the chamber said.

Currently, only tribal casinos can have slots in Arizona, producing about $100 million of revenue for the state. That money, under a voter-approved law, is dedicated to specific purposes.

“Given the size of the deficit and given the desire of many to figure out a way to balance the budget without raising taxes, (off-reservation gambling) is one of the proposals that is now out there and is under consideration,” Hamer said. “Options like this simply deserve consideration.”

Rep. Andy Tobin, R-Paulden, declined to comment on his gambling expansion idea, but House Majority Leader John McComish, R-Phoenix, said has little backing now and would be opposed by many GOP social conservatives.

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