Efforts to finally adopt a new state budget came to a screeching halt early today as several Republican senators refused to support the package.
The hang-up remains the demand by Gov. Jan Brewer to put a proposal on the ballot for a temporary hike in the state sales tax. Even a face-to-face plea by the governor to Sen. Pamela Gorman, R-Anthem, came up short, with Brewer walking back to her office after a 90-minute closed-door meeting with nothing to show for it.
“We talked about the circumstances that Arizona is in and we talked about philosophy and platform, and we talked about what was necessary to turn the state around and how we were going to get there,” the governor said.
“And I said, ‘Sen. Gorman, I need your help,’” Brewer continued. “And I felt that she listened, and I hope that she will.”
Gorman’s continued opposition, at least at this point, is a major setback for Brewer and Republican legislative leaders who have worked to pick up votes one by one.
The package, including that sales tax referral, was approved early this morning by the House. And GOP leaders gained a key victory when Sen. Jack Harper, R-Surprise, agreed to support sending the measure to the ballot in exchange for additional spending reductions in the budget.
Harper had previously been opposed not only to the tax but even to giving that option to voters.
“As long as others are driving up the spending in state government, it’s not my responsibility to provide them the revenues,” he said.
But Harper relented after getting some changes to the plan, the most significant of which is a requirement to reduce the number of state and university workers by 5 percent by February. More than 2,600 positions would have to be eliminated.
How many actual workers will lose their jobs, though, remains uncertain.
Harper said agencies can meet the goals by eliminating positions that are currently vacant. But he said that still accomplishes his goal because it prevents those slots from being filled when the economy gets better.
“Businesses are cutting their workforce by 30, 40, 50 percent,” he said, to deal with the economic slump. Now, Harper said, the state wants to raise sales taxes.
“We have to show them that we are tightening our belts in state government as well,” he said.
And the provision is worded to ensure that the jobs really do disappear: It precludes agencies from trying to make up that 5 percent cut in payroll through furloughs, where the number of workers remains the same but they all take a certain number of days off without pay.
One potential glitch is that the provision is worded in a way that it could be read to also apply to public schools. Harper said that is not his intent and the language may need to be fixed.
But even with Harper’s backing, the plan still lacks the necessary 16 votes for Senate approval.
The deal seeks to ask voters to impose a one-cent surcharge on the current 5.6 percent state sales tax for two years beginning in January, dropping back to half a cent in 2012 before disappearing entirely. Brewer said the state needs the additional revenue — estimated at up to $1 billion a year on the full penny increase — to help get through the current deficit.
If approved, the same ballot measure would cap state spending at $10.2 billion for the next three years, the level that was originally approved for last budget year before lawmakers were forced to make mid-year spending cuts.
The package included sweeteners to get votes of GOP legislators, including an immediate repeal of the state property tax that was otherwise set to return later this year and generate $250 million. It also will lower corporate income taxes by 30 percent and individual income taxes by 6.6 percent beginning in 2011, measures that together will cut state revenues by $400 million a year.
That, however, wasn’t enough to get the vote of Sen. Ron Gould, R-Lake Havasu City.
“Essentially what you’re doing with this bill is shifting corporate income tax onto the backs of consumers through the sales tax,” he said. “That’s something that I’m not willing to do.”
Other Republicans, however, were willing to make the trade-off of a vote to refer the sales tax hike to the ballot in exchange for guaranteed tax cuts. But Rep. Ray Barnes, R-Phoenix, pointed out that sending the issue to the ballot does not mean it will pass.
“I ... have confidence in the public who will ultimately determine if there actually is a tax increase,” he said.
“I agree to put it on the ballot,” Barnes continued. “I also agree to vote against it at the poll and to urge everyone I know to vote against it also.”
The plan also would send a second measure to the Nov. 3 ballot, this one seeking to give lawmakers permission to temporarily kill funding for some voter-approved programs and instead divert the money raised for them on other priorities.
The most likely targets for legislative tinkering if voters OK this second measure on the November ballot include the First Things First early childhood development program which is financed by a 2006 voter-approved 80-cent-a-pack tax hike on cigarettes, and the Clean Elections System which gets most of its money from surcharges on civil, criminal and traffic fines.
Other than the ballot measures and tax cuts, the package is virtually the same as the one lawmakers passed a month ago, only to have key provisions vetoed by Brewer because of the lack of the sales tax referral. It includes a mandate for the state to sell off $735 million worth of buildings to get the up front cash and then lease them back.
Rep. Andy Biggs, R-Gilbert, said that maneuver, a legal form of public borrowing, ignores the more than $57 million a year the state will need to pay in interest for 20 years to buy the buildings back.