PHOENIX - Proponents of a dedicated 1-cent state sales tax add-on, mainly to fund education, say the estimated $1 billion it would raise annually is needed because the Legislature has so short-changed education in recent years, even in the face of new mandates.
For example, organizer Ann-Eve Pedersen said at a news conference Tuesday, the state will soon require that students read at a third-grade level before being promoted to fourth grade. But she complained the Republican-controlled Legislature shorted the $50 million request to fund the requirement by $10 million and refused to promise ongoing finances.
But even with the dire need for education funding, backers of the tax defended setting aside 10 percent of money that would be raised for road construction. Current projections put the roads share at about $100 million a year.
Pedersen said the funding is justified. She said economists like Dennis Hoffman of Arizona State University say the "two main things" the state needs to be competitive are investments in education and transportation infrastructure.
"If you want the economy to really rebound and be healthy, that's where you make your two primary investments," she said.
In a separate interview, Hoffman said while both education and transportation are important, there are other crucial factors, including energy, water supply and an advanced telecommunications network, and he would not specifically list education and infrastructure as the top two. As far as the proposition goes, Hoffman said he is not taking a position.
Pedersen also cited a statement by economist Lee McPheters in the Arizona Capitol Times earlier this year that "having the most incentives or the lowest taxes is not as important to Arizona's economic future as having strong education and transportation infrastructure." McPheters is director of the JP Morgan Chase Economic Outlook Center at ASU's W.P. Carey School of Business.
Construction companies are the largest single source of money to fund the collection of signatures and persuade voters to support the initiative. Pedersen said there is no connection between the contributions and the dedication of 10 percent of the money to roads.
More than a third of the money raised by initiative backers has come from We Build Arizona, a group of major contractor organizations, which has kicked in $357,000 of the approximately $945,000 raised to date.
That does not include $50,000 given early in the campaign by John Whiteman whose family owns Empire Southwest, a major seller and renter of construction equipment, or $25,000 from the Arizona chapter of Associated General Contractors.
Pedersen said business backing of the initiative goes even deeper, citing $50,000 from Greater Phoenix Leadership and an identical amount from the Southern Arizona Leadership Council.
She said education and roads share a common problem at the state level, in that, "The Legislature has been raiding both. They're not funding either."
Phil Oliff, a policy analyst for the Center on Budget and Policy Priorities said his study verifies the severity of the funding cuts. When inflation is taken into account Arizona has cut more state funding for education in the last five years than anywhere else. Oliff put the inflation-adjusted loss at 21.8 percent; he said the median decline for all states is closer to 9.4 percent.
For the past year, however, Oliff acknowledged current funding, when adjusted for inflation, shows no loss from last year.
The initiative, if approved, would create a permanent one-cent surcharge on the state's current 5.6 percent sales-tax rate. It is designed to take effect June 1, the day after a temporary 1-cent levy approved by voters in 2010 expires.