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State tax cuts: some matters to consider

Citizen Staff Writer

The Legislature has been in session for more than two months, and it appears talks finally are turning to a budget for the fiscal year that begins July 1.

Money has been tight for the past several years, causing contentious debate about where cuts should be made to accommodate growth-driven increases in resources for education, prisons, social programs and other areas.

This year, money is plentiful – and so is the debate. A revenue surplus of at least $1.1 billion is forecast, leading to talk of large tax cuts.

We are not, of course, opposed to cutting taxes. But before cuts are made, legislators must take a look at Arizona’s long-term needs.

Carol Kamin, executive director of the Children’s Action Alliance, accurately noted, “Voters want decent education, they want health care, they want clean air, they want transportation. They say it over and over again, but the Legislature is not listening.”

Clearly, those needs must be examined before cuts are discussed. But, this being an election year, legislators want to give money back to taxpayers. With that in mind, several factors must be considered:

• Cuts should not be so deep that they harm the state’s ability to survive a downturn. That has occurred in the recent past.

• Much of the surplus is from one-time occurrences, such as the rapid run-up in real estate prices. Tax cuts that treat these increases as permanent would hurt the state’s revenue base.

• Tax cuts should be focused. Cuts should be made in areas that provide the best long-term stimulus to the economy.

There are two factions in the Legislature: One favors $400 million in personal and corporate income tax cuts over two years; the other favors a one-year, $200 million cut in property taxes to cushion a tax increase that might follow a leap in property valuations this year.

But there is a key problem with both. Because they would be distributed so widely, the impact would be negligible.

The Legislature would be wise to consider tax-cut proposals from Gov. Janet Napolitano. Included are a credit for small businesses that provide health insurance to their employees, lower auto license fees for cars that get high gasoline mileage and expanded tax credits for businesses that conduct research and development in and for Arizona.

All would stimulate the economy in ways that a broad tax cut could not.

This budget surplus must be used in a targeted manner – not as tax cuts spread across the state so thinly that they would be all but meaningless.

Any such cuts must come only after critical state needs are addressed.

Border pollution

A federal grant to the University of Arizona to study the border environment is a badly needed initiative.

The $1.7 million grant from the Environmental Protection Agency will pay for a center to help study and clean pollution along the border.

That makes eminent sense. Borders are a unique part of the environment where ecosystems often are overlooked. Fences and other barriers are designed to deter people, but pollution crosses back and forth largely unchecked.

The grant will help develop equal environmental expertise on both sides of the border. And that is needed.

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