As parents we often encourage our children to do better. Typically, that is a hard message to deliver – we love our kids and we want to encourage them, but we cannot be overly enthusiastic or negative about mediocre work. I can remember many times be it on homework, chores, grades, or sports where I would say, “Good job, but do you think you could have done better?”
I think it is important that we ask the same question about our state.
A few weeks back, I spotted this article in “The Economist.” The piece caused me to recollect on some policy choices that Arizona has made over the past few years and reflect on some of the choices we are about to make this year.
Last year, we fielded a survey of 500 high efficacy Arizona voters, balanced for a general election turnout in 2016 the following question:
Arizona’s Permanent Endowment Trust Fund has grown from $1 billion in 2000 to over $5 billion dollars in 2014. Under the constitution, the annual distribution from the funds to the state budget is limited to 2.5%. Would you support an amendment to our State Constitution to permit that up to $2 Billion dollars of the permanent trust endowment fund be brought forward to pay for current and future needs in K-12 and university education?
61.2% Total Support
27.0% Total Oppose
11.8% Don’t know, Refused
As we know now, Governor Ducey and the Legislature have forwarded a proposal to that Arizona voters are considering now. Prop. 123 promises $3.5 billion in funding for schools and other public institutions. They are asking us to approve taking about $2.2 billion of the total $3.5 billion in this funding from the State Land Trust over the next ten years to avoid further litigation. That comes out to about $220 million a year for the next 10 years.
So, the question before us is do we support Prop 123 or, as we often say to our kids, could we do better?
Sometime within the next few weeks, our Legislature will pass and our Governor will sign a new budget for the coming fiscal year. Most sources indicate that this new budget will include approximately $30 million in new tax cuts. Even if the new budget did not include any new tax cuts, previous legislative action will bring forth corporate tax cuts for the FY17 of $194 million, $279 million in FY18 and $346 million in FY19. Altogether, that’s a total of $819 million in tax cuts over the next three years already in place, or $849 million if you include this year’s proposal.
Many well respected economists have pointed out, corporations around the world are sitting on large sums of capital. Lest we not forget that Arizona, itself, is sitting on a large pot of capital. Today, Arizona’s “Rainy Day Fund” balance is sitting at $460 million.
So with $849 million in pre-programmed corporate tax cuts and $460 million in the “rainy day fund,” is it the right policy choice to take from our trust account when the State has over $1.3 billion in capital available to invest in our most important asset – the human capital we call Arizona students?
Prop 123 has received similar criticism from a number of former State Treasurers who claim, in part, that the proposal raids future revenues for our kids’ education to pay for current obligations and it only lasts ten years – creating a funding cliff about the time most legislators and our Governor will no longer be in office.
So as you ponder your own vote on 123 ask yourself – Could we do better?
Could we delay some tax cuts further? Could we use current revenues in the rainy day fund more wisely? Is there a better proposal to reform the State Land Trust to put more money in, so we can take more money out?
For me, I have answered that question, but it is worth asking as early ballots arrive this week: “Could we do better?”