No one who has taken even a quick look at the fiscal crisis confronting Gov. Jan Brewer believes that there are easy answers.
But the answers that government presents can be the right ones or the wrong ones. Increasing Arizona’s tax burden just when its families and business are feeling the greatest pinch is the wrong answer.
Though some may believe this is the responsible course, it would, in fact, do more harm than good. Instead of a billion-dollar tax increase, Arizona needs to take this crisis as an opportunity to fundamentally change our economic direction.
The effects of the economic downturn we face are being felt around the globe and those who share in the blame can be found in both parties and on Wall Street, in Washington, and beyond. But Arizona’s leaders are not mere innocent bystanders in this emergency.
While people across America are hurting, no state has been hit harder than Arizona. We face the worst relative budget deficit of any state and are now ranked 49th when it comes to job creation — trailing behind even Michigan with its collapsing auto industry.
This didn’t have to happen. We find ourselves at this point as the result of decisions made by state leaders who failed to spur the creation of the industries and jobs of the future, to diversify our economy when we had the chance, and to develop a more stable and modern tax system.
Now is not the time to compound those bad decisions by raising the tax burden on Arizona or cutting the long-term investments that we need avoid this dire situation down the road.
It is, in large part, up to Brewer, state Treasurer Dean Martin, and legislative leaders to decide whether we pull ourselves out of this recession quickly or push our state into its worst economy in history.
As a Democrat, I’ve seen my own party make the economic mistake in the past of raising taxes on the middle class at times we should be lowering them. It is just as much of a mistake for Republican leaders in Arizona to be opening the door to making that same mistake today.
Instead of passing the buck to Arizonans, state government needs to start by taking a hard look at its own operations. This goes beyond the “meat cleaver” approach of legislative leaders and the “scalpel” promised by Brewer. We need to reform Arizona’s government so that it works better, costs less, and provides 21st century services.
That means not taking the easy way out of problems by adopting a blanket policy of turning back the clock to the budget of years gone by as Brewer and Martin have proposed, but instead adopting “results-based budgeting” — a new approach that focuses not on what government spends but on the “bang” we get for those bucks.
In some areas, this will entail not just scaling back but completely eliminating some of what government does such as subsidies that go to luring business across municipal lines.
In other areas, it will mean radical reform such as refocusing the Department of Economic Security on getting people back on their feet. In still other areas, this approach will mean cutting spending we can’t afford while actually increasing investments in tradable research and development, solar tax credits and Science Foundation Arizona that create more economic growth, more jobs, and add to our tax base.
Raising taxes and blindly cutting spending have been the traditional approaches to dealing with budget deficits. If they ever did work, they no longer do.
Our state’s central challenge is that we have a General Motors-era government in a Google age — until we change that we’ll keep on having GM’s bottom line.
Andrei Cherny, a former Arizona assistant attorney general, is an economic policy expert and the president of the national public policy journal and think tank “Democracy.”