GOP gubernatorial candidates discuss state economy at forum - East Valley Tribune: Politics

GOP gubernatorial candidates discuss state economy at forum

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Posted: Wednesday, August 20, 2014 9:26 am

Republican gubernatorial hopefuls all promised Tuesday night to help the state's economic recovery but were divided on the question of how best to do that.

Christine Jones said the key is running the state more like a business. Ken Bennett said eliminating the state income tax will provide the necessary impetus, replacing lost revenues with a broad-based sales tax. Scott Smith said what he hears from companies is they want to be sure they can find qualified, trained workers in Arizona. Andrew Thomas said none of that matters unless and until Arizona seals the border, calling it “the elephant in the room.”

“If we do not deal with that problem, we're just whistling ‘Dixie’ and pretending we can solve that problem when almost $3 billion a year is being earmarked not for these (state) funds but for dealing with the consequences of illegal immigration,” he said.

Frank Riggs did not disagree, but he said there is a “perception problem ... that somehow we as Arizonans are intolerant.”

“I think we can secure the border and also show tolerance, inclusiveness,” Riggs said.

Tuesday's forum in front of several hundred city and town officials meeting here was the last chance for the GOP gubernatorial hopefuls, as a group, to make their bid for votes before Tuesday's primary.

Doug Ducey did not attend.

Spokeswoman Melissa DeLaney denied that was based on his presumed position as front-runner in the race, saying he had a prior commitment, but Ducey also did not attend a forum the prior night in Flagstaff, citing the same reason.

Much of Tuesday's forum focused on issues of particular concern to cities.

For example, all the candidates promised in some form that the next time the state ran into financial troubles they would not balance the budget by taking away money on which cities rely.

That particularly includes the Highway User Revenue Fund, made up of vehicle registration fees and gasoline taxes, which are supposed to be shared with cities. Gov. Jan Brewer and the Republican-controlled Legislature tapped that fund to preclude cuts elsewhere.

“This is not the state's money,” said Smith, a former Mesa mayor.

Ken Bennett agreed, saying that when he was Senate president the Legislature managed to balance the budget without tapping other funds.

“Especially in bad years, when the state thinks that things are tough for us, they're tough for all of you as well,” he said.

Jones said she found flaws in some of the decisions made in the last few years to balance the budget.

For example, Jones said she disagreed with the decision to essentially mortgage state buildings — including the House and Senate — to come up with operating cash. But she said it isn't really responsible for her and the other current candidates to second guess what had to be done in the past.

“We have to be careful about lobbing hand grenades into the stadium when we weren't part of the conversation,” Jones said. “I don't think it's helpful to sit here and criticize when we didn't have an opportunity to offer those solutions.”

Riggs agreed.

“I don't want to Monday morning quarterback,” he said.

Riggs said with future financial woes on the horizon, Arizona needs to recognize the difference between capital needs that should be paid for over a long time, by those who will use them in the future, versus ongoing expenses. He said one key to that is eliminating the current constitutional provision that limits official state debt to just $350,000.

“That was real money 102 years ago,” Riggs said, when Arizona became a state. “But it's an absurdly low figure for a state and economy our size.”

The state has found other ways to borrow money, like that mortgage of state buildings. But bonds which are backed by the “full faith and credit” of the state command lower interest rates — meaning lower costs for taxpayers.

Bennett found himself slightly on the defensive for his plan to eliminate the state income tax with questions about how he would replace those revenues.

He said if the state were to tax every transaction in its $280 billion a year economy it would take a sales tax rate of just 3.5 percent to raise the same $9 billion a year that comes now from the combination of income taxes and Arizona's current 5.6 percent tax rate on selected transactions.

Bennett said if the state chooses to have exemptions like for food, medicine and education, he said a 5 percent tax rate on everything else would balance the budget.

Bennett said one advantage of having Arizona's budget linked to sales is that revenues would track the ups and downs of the economy.

Thomas, for his part, denied he was a one-issue candidate with his focus on border security. He said that as Maricopa County attorney he was involved in other issues, including enforcement of pollution regulations and eliminating plea bargains.

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