Group hopes to retain higher AZ sales tax

Pending initiative would provide $1B a year for schools
2012-02-19T00:00:00Z Group hopes to retain higher AZ sales taxHoward Fischer Capitol Media Services Arizona Daily Star
February 19, 2012 12:00 am  • 

PHOENIX - A group of educators and others hoping to preserve higher sales taxes took the first steps toward putting the issue on the ballot.

Quality Education and Jobs filed the necessary paperwork Friday to start raising money for the initiative fight. Ann-Eve Pedersen, president of the Arizona Education Network, is chairing the effort; former state senator George Cunningham, a Tucson Democrat, is treasurer.

But Pedersen said the group is not quite ready to roll out the measure, which is designed to generate about $1 billion a year for education. She said work is still under way to draft the final language to convince voters the higher taxes would be properly used and there would be accountability to show the funds were having results.

Time to act, though, is running out: Backers have only until June 17 to gather 172,809 valid signatures on petitions to put the issue on the November ballot.

Waiting another two years is not an option because the new levy is designed to kick in when the current one-cent temporary sales tax increase approved by voters self-destructs on May 31, 2013. Without voter approval, the expiration will send the state tax rate back to the 5.6 percent it was at the beginning of 2010.

That will reduce state revenues by about $1 billion a year, a loss that proponents believe will fall disproportionately on education.

Pedersen said she is "well aware" of the deadlines, saying she anticipates supporters will be able to start gathering signatures by the end of the month.

While voters approved the temporary sales tax hike in 2010 by nearly a 2-1 margin, the battle is expected to be more pitched this time.

For one, the 2010 fight had the backing of Gov. Jan Brewer.

She pitched it by pointing out that lawmakers also were cutting $1 billion in spending and borrowing that much to balance the budget. That, she said, made the tax increase part of a balanced plan.

And the governor also emphasized the temporary nature of the tax.

Brewer has repeatedly said she will not support extending the tax. But she has been more circumspect about whether she would support an entirely new levy, even if the amount was the same and it picked up where the old one drops off.

The initiative also could face another hurdle.

Last week the Senate Committee on Government Reform approved what amounts to a "poison pill" for any tax increase. SB 1155 says if any measure is approved after May 31, 2013, that takes the sales tax higher than it was three years earlier, the Department of Revenue is required to reduce individual income tax rates to a level to offset the additional revenues.

"I think it's important to remind people that a promise was made to the public that the sales tax increase would be temporary," Senate Majority Leader Andy Biggs told colleagues. He said the legislation would provide a "disincentive" to any move to make the current 6.6 percent tax rate permanent.

But Biggs said there's a good policy reason for discouraging a voter-approved tax increase, one that lawmakers would be unable to repeal without taking the issue back to the ballot.

"We probably need some broad-based tax reform," he said. Biggs said anything that increases the sales tax - or even keeps it at current levels - would continue the practice of "patchworking our somewhat dysfunctional tax system."

That measure now awaits a vote of the full Senate.

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