Years of overspending combined with a down economy has finally caught up with Arizona, in a big way. We face unprecedented budget deficits, and now the state wants to sell the Capitol building and lease it back to generate cash!
Now the story has gone national, at the top of the Drudge Report, which guarantees it will be discussed on every conservative radio talk show today. Rush Limbaugh just mentioned it, noting that the person who ran Arizona into the ground financially is Janet Napolitano, now our Director of Homeland Security.
Limbaugh points out that our national government is headed the same direction, and wonders if Napolitano will have to sell the Homeland Security buildings or if President Obama will have to sell the White House.
Meanwhile in Arizona, as Arizona Republic columnist Bob Robb has been pointing out incessantly, not even a sales tax increase — which will cost more jobs and further wound a crippled economy — will come close to bridging the gap between revenue and expenditures.
The problem with the federal government and state government is not that we are taxed too little, but that we spend too much. It was the problem in 2006 when I was running for Governor, but nobody wanted to listen because we were living in boom times and the solution to every state problem was to spend more money.
Bob Robb’s caution in today’s column is a must-read:
Arizona expects to have $7.1 billion in general-fund revenues next year. Through their various machinations, Gov. Jan Brewer and the Legislature have managed to enact a budget that authorizes spending of $10.8 billion.
Gov. Brewer says that the state needs more money. Many people agree. But even if her sales-tax increase was enacted and the state property tax allowed to come back, the state would still only have $8.35 billion in revenue.
There are some things the state can do to partially and temporarily fill the gap with federal funds, borrowing, and stealing money from other accounts and local governments.
But here’s the harsh reality: Even if the five-point plan Brewer incessantly cites were enacted immediately and entirely, as an immaculate conception, there still would be a yawning gulf between expenditures and revenues.
That’s why she’s nuts to be vetoing any budget cuts the Legislature can muster the political will to enact. Under any realistic scenario, including enacting Brewer’s sales-tax increase, even larger cuts than the Legislature has managed so far will be necessary.
Why? Because there is no money.
What it takes before politicians accept that there is no money was well-illustrated recently in California.
In 2008, California had $105 billion in general-fund revenue. Next year, it expects to have just $83 billion.
The governor and state Legislature enacted some tax increases last year and asked voters to approve more this May. Voters said no.
The state ran out of money, literally. It started issuing IOUs. But it wasn’t until the banks said they would no longer accept the IOUs that the politicians finally accepted that there was no money and enacted significant budget cuts to bring expenses more in line with revenues.
I suspect such a day looms in Arizona’s future.
When I ran for Governor in 2006 I proposed a top-to-bottom review of state spending, involving every state agency, to determine: 1) is there a constitutional basis for this government expenditure, 2) is this something that only government can do, and 3) is the money being spent efficiently and actually producing the desired outcome?
Even in the midst of this crisis, there has been no significant effort to eliminate wasteful government spending and archaic agencies or programs, while fulfilling our constitutionally mandated commitment to public education. (We can actually save money by enacting significant education reforms that expand charter schools and parental choice.) We may never have a better opportunity than now to make state government more efficient — and instead we are talking about a tax increase that will barely make a dent in the deficit. Not only is this bad public policy, it is bad politics — further confusing the voters of our state by undermining the historic Republican commitment to limited government and low taxes.
So with government revenue dramatically down, our state government is spending more money. And in the midst of bankruptcies, foreclosures and job layoffs — we are proposing to increase taxes on Arizona families and businesses who are already hanging by a thread. This is madness.