Rejection of increase in sales tax projected to cost 20K AZ jobs

2010-04-09T00:00:00Z 2014-07-08T10:59:31Z Rejection of increase in sales tax projected to cost 20K AZ jobsBecky Pallack Arizona Daily Star Arizona Daily Star
April 09, 2010 12:00 am  • 

Roughly 20,500 jobs are on the line if voters reject a proposed temporary increase in the state sales tax, a UA economist says.

The sales tax increase - Proposition 100 on the May 18 ballot - would increase the total sales tax in Tucson to 9.1 percent for three years. Statewide, it is projected to raise about $1 billion a year toward the state's $3 billion deficit.

Looking at the scenarios for jobs if Proposition 100 passes or fails, the job cuts could be more painful than the tax increase, said research economist Alberta Charney of the Economic and Business Research Center at the University of Arizona.

Here's what you need to know.

If Proposition 100 fails

The state Legislature would cut $867.5 million from education, public safety, health care and other state services, triggering a loss of $442.5 million in matching federal funds, Charney said.

About 20,500 jobs would be lost.

Affected workers would include teachers and school administrators, prison workers and health-care employees, but also workers who contract with the government in all sectors, she said.

John Kromko, president of the Pima Association of Taxpayers, called the proposed sales tax "brutal."

"What we're working on now is people not getting their houses foreclosed," he said. Homeowners are facing rising sewer bills, the city is talking about boosting its sales tax, and the county might increase property taxes, he said.

"People just can't pay, and that's what the problem is. I think we've reached the point in this recession where we have to look at the person who has no job at all," Kromko said. The retired teacher and former legislator said he doesn't believe more jobs would be lost if Proposition 100 fails.

So far, public-safety agencies and school districts have mostly cut vacant positions, he said.

The tax increase bails out state legislators from doing the hard work of cutting spending, said Byron Schlomach, an economist with the Goldwater Institute, a Phoenix-based think tank that opposes the higher tax.

"There are plenty of alternatives out there to what they have in their contingency budget, the cuts they've stated they would do if this tax increase didn't go through," Schlomach said, citing spending on arts, county fairs, shooting-range remodeling jobs and agency lobbyists.

If Proposition 100 passes

The government would have $918 million in tax revenue to spend, saving 13,100 jobs, Charney said. About 7,400 jobs would be lost, including jobs in retail and tourism, she said.

"Making sure Prop. 100 does pass and making sure these jobs are saved is extremely important," said Daniel Hernandez Jr., a Proposition 100 campaign co-chair at the Arizona Students' Association.

With a 9.5 percent state unemployment rate, "any job losses will be felt very deeply," he said.

The university system would face job cuts and additional tuition increases without the new tax revenue, Hernandez said.

A study commissioned by the Goldwater Institute in February showed a different result - that the tax increase would result in 14,400 lost private-sector jobs.

If Proposition 100 passes, prices would go up and people would buy less, resulting in more layoffs, Goldwater's Schlomach said.

Contact reporter Becky Pallack at bpallack@azstarnet.com or 807-8012.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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