Nonprofit group examining state tax policy

Tara Jackson admitted Monday this isn’t the first time a group has tried to figure out how to end Arizona’s boom-or-bust cycle of tax collections. But Jackson, president of the Arizona Town Hall — a private, nonprofit civic organization — said if all goes according to plan, this could be the last time.

Brewer: Keep budget fix simple

Participants in the four days of meetings taking place here are examining Arizona’s tax structure in detail in an effort to figure out what changes — if any — will lead to a more stable source of revenues to keep government services coming.

“We have a serious problem with the instability of our revenue and taxes,” Jackson said.

She said the group, which includes participants from the business, civic and academic sectors, hopes to craft a proposal to revamp Arizona’s tax structure to avoid, or at least minimize, those peaks and valleys.

There actually are Arizona-specific studies on the subject.

Two decades ago, a panel named Fiscal 2000 suggested revamping the state sales tax by imposing the levy on more types of purchases — notably services that are now exempt — and lowering what was then a 5 percent tax rate.

That report sat on shelves and never resulted in any changes in the tax code.

In 2003, then Gov. Janet Napolitano, looking for solutions to the last deficit, convened a group of experts and those with a stake in the tax system to come up with their own recommendations.

That panel, known as the Citizens Finance Review Commission, also recommended including personal and professional services in the sales tax base. And panel members also suggested limiting personal and corporate income tax credits, lowering business taxes and revamping how Arizona funds new schools.

That report, too, went largely ignored as Napolitano refused to specifically recommend the changes to the Legislature, and lawmakers themselves refused to take it up.

And Jackson said prior Town Hall groups have come up with some of the same recommendations.

What makes her believe what this latest group does will be any different is that they will be looking at more than the tax structure.

“We’ll be looking at the political hurdles,” she said. Jackson said that may mean making recommendations for more basic changes in state government.

She said that might include asking voters to repeal term limits, imposed in the 1990s, as well as revamping or scrapping the system of public financing of legislative and statewide elections. Both those changes could sharply alter who gets elected.

Former state Rep. Jim Hartdegen, R-Casa Grande, who is familiar with both state revenue studies, said it’s hard to predict whether what comes out of this Town Hall will meet a different fate.

“It’s nice to take a look at it,” he said. “But if the Legislature, especially, doesn’t take a look at it, figure out maybe there are some good things involved in it, and implement those things, then it’s almost a waste of time.”

Lawmakers aren’t the only ones who need convincing that a major shift in tax policy makes sense. In her speech Monday to Town Hall participants, Gov. Jan Brewer expressed her own hesitation.

“As we prepare for the future and carefully consider all worthy tax reform options, let’s make sure we’re right,” the governor said.

She said there are all sorts of “marvelous plans, proposals and suggestions to re-engineer the tax code.”

“What if it’s wrong?” she asked.

“What if the timing is bad?” the governor continued. “What if, for Arizona, the theory is flawed?”

Brewer said that before she supports a complex change in the state tax system, she wants some evidence it will really work to stimulate the economy.

“I’m not about to design and build and experimental tax model for Arizona,” the governor said.

Hartdegen said hesitation by elected officials is only part of the problem. He said the real opposition could come from lobbyists for every special interest group that might be the subject of an expanded sales tax base.

He said any plan like this “would enhance the salaries of lobbyists for the next couple of years.”