Lawmakers consider altering spending, taxes

State lawmakers took the first steps Wednesday to get permission to temporarily kill funding for some voter-approved programs, ranging from early childhood development to public funding of elections.

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The 7-5 vote of the House Appropriations Committee came over several objections, mostly from Democrats. But the future of this plan - and the entire budget package - remains unclear as Senate President Bob Burns sent his members home late Wednesday, conceding he does not yet have the votes, with some opposition from fellow Republicans to sending a sales tax hike to the ballot.

The move to let lawmakers alter voter-approved plans is part of a package negotiated between Gov. Jan Brewer and Republican legislative leaders to get the state over its current fiscal hump. Senate Majority Leader Chuck Gray, R-Mesa, said there may be better uses for the money than the ones mandated by voters.

Brewer said she has no problem with the idea, pointing out that the permission lawmakers seek is subject itself to voter approval in November.

But that ballot measure does not spell out which programs would be affected, giving lawmakers carte blanche to suspend for up to three years any previously approved voter-required program at all. That includes programs that voters enacted - and havetheir own funding sources - because lawmakers refused to enact them.

For example, when voters approved the Clean Elections Act in 1998 they imposed a 10 percent surcharge on all civil, criminal and traffic fines. Those fines, along with money donated to the program that provides public funding for candidates who agree not to take special interest funds, total $13 million, money that could instead be diverted for other programs, leaving no money for candidates.

Similarly, the 2006 First Things First program hiked tobacco taxes by 80 cents a pack to finance the early childhood programs. The $150 million a year that raises, too, could instead be used for other things.

Gray said lawmakers should be able to decide if there are other priorities they consider more important.

"You look at the programs that are lacking for funds and see if those funds could be better directed," he said.

The plan to seek OK to suspend the constitutional protections for voter-approved measures is only half of what is in HB2015. That bill also contains a second ballot measure, this one to hike the state's 5.6 percent sales tax by a penny in 2010 and 2011 and a half cent in 2012 to help fund education, health and public safety programs.

But to sweeten the deal for some tax foes, it also freezes state spending for the next three years at $10.2 billion. It also:

Permanently eliminates the currently suspended state property tax, foregoing $250 million in revenues that otherwise would come in later this year;

Cuts the corporate income tax rate by more than 30 percent beginning in 2012, a move that reduces revenues by $200 million a year;

Trims all individual income tax rates by 6.6 percent that same year, cutting revenues by another $200 million.

Those tax cuts, if approved by legislators, would take effect regardless of whether voters approve either the temporary sales tax hike or the permission to suspend mandated programs. And once approved by lawmakers, it would take a nearly politically impossible two-thirds vote to undo the tax cuts, even before they ever take effect.

Brewer, however, said there is nothing fiscally irresponsible about locking in the tax cuts now, regardless of the outcome of the tax hike vote.

"If you fail to plan, you fail," she said.

Brewer acknowledged that approval of the tax cuts would "absolutely" leave Arizona with a bigger deficit if the tax hike fails. She said that is why she believes it is "absolutely imperative" that voters approve the sales tax hike she has demanded.

But Brewer said the tax breaks in the package, some of which are a bigger benefit to business than homeowners, are justified.

"We're going to work very, very hard for economic development and to be able to grow businesses here, provide new jobs, and reward those employers here in Arizona that have stuck it out with us during the hard times," she said.