The state’s largest business organization is trying to engineer a $250 million tax cut even as Arizona faces a potential $1 billion deficit.
Despite the red ink this fiscal year — and potential $1.7 billion gap in revenue for the next one — the Arizona Chamber of Commerce and Industry has made a repeal of the state’s special property tax levy for education its top priority for the 2008 legislative session.
The idea is being criticized by Gov. Janet Napolitano. But the political push could work — if lawmakers believe the money won’t be needed more than a year from now.
That’s because the tax is not being collected now. Instead, Napolitano and lawmakers agreed two years ago to a three-year suspension of its collection.
That, however, was when the state’s economy was red-hot and there was more money coming in than needed. In fact, that same year legislators enacted a 10 percent across-the-board cut in individual income taxes, phased in over two years.
But the governor insisted — and lawmakers agreed — to have that property tax reinstated automatically in 2009.
Technically, that means there is no need for legislative action this year: A vote to make it permanent or at least extend it could take place a year from now.
But Glenn Hamer, the chamber’s president, believes now is the time to act. And working in his favor is the fact this is an election year.
Hamer is already putting his spin on the issue, saying the failure to act would result in “the largest tax increase in Arizona history.”
And what of the deficit?
“We certainly do recognize the state is in a very difficult and challenging fiscal situation,” Hamer said, saying the chamber is encouraging the governor and lawmakers to find “ways to reduce wasteful spending.”
Pressed for what the organization considers wasteful, Hamer provided no specifics. But he insisted that there is plenty of evidence that tax cuts actually stimulate the economy.
His proof is that, in general, state revenue has continued to increase despite sharp cuts in income taxes in the 1990s.