Kozachik: Understanding Proposition 401

2013-10-13T00:00:00Z Kozachik: Understanding Proposition 401By Steve Kozachik Special to the Arizona Daily Star Arizona Daily Star

On Nov. 5, the Tucson mayor and council are asking city residents to approve an upward adjustment in what the city is allowed to spend on providing essential services. Adopting that adjustment makes sense.

The vast majority of us have experienced the need to cut back on our household spending during tough economic times. The same is true of the city. Since the start of the recession back in 2008, we have faced a series of annual budget deficits, the result of which has been some serious belt tightening.

While streamlining government functions, some loss of our ability to provide services to the community has resulted. Indeed, with 1,100 fewer workers now than we had in 2009, it’s natural to assume some areas cry out for increased funding so we can resume offering part of what has been reduced.

To achieve that, we will need access to all of the tax dollars we are generating through the economic development successes we’re seeing.

That’s where Proposition 401 comes in.

The amount of revenue we can put to use is set by a formula. A spending baseline was set more than 30 years ago, and it is adjusted annually based on changes in inflation and population. If our revenues exceed that spending cap in a given year, we’re prevented from using those dollars until the next fiscal year.

So far, we’ve not had to set money aside and not put it to use. But projections indicate that we may pass that tipping point in one or two fiscal years.

Back to the household analogy. Say you’re struggling to make ends meet, living from paycheck to paycheck. You’d like to upgrade that washing machine, get new tires for the car or give the kids an increase in their allowance. But the money’s simply not there. Then, your boss surprises you with a pay increase. Now you can afford all of those important wants and needs, but you learn that the raise came with a caveat: You can’t spend your new income and are still locked into spending according to your former salary level. The new money has to go into the cookie jar until next year.

When we hit the spending cap set by the formula, that will be our predicament. And that’s what Prop. 401 fixes.

The city generates income through local business activity. Sales and income taxes largely form the basis for how we provide fire, police, road maintenance, parks, neighborhood code enforcement and the rest of what you expect from us.

When business thrives, our income does, too. Our ability to offer services to the public is enhanced.

Since 2009, we have seen more than $600 million in economic development in the downtown core alone. That has added to our tax base. That’s the good news. The bad news is that those revenues are getting perilously close to our spending limit. Once we hit it, the new money goes into the cookie jar, not to resuming or expanding how we serve the needs and wants of the community.

It’s key for you to know that Prop. 401 is absolutely not a tax increase. It is very simply our saying that we want to use the money our successes are yielding, and not put it away until next year. We want to get that new washer, the new tires and give the kids an allowance increase. We want to have access to the raise the boss just gave us.

You hear a lot about growing the economic pie. We’re doing that.

The passage of Prop. 401 will allow us to use the fruit of that growth in the year it’s earned. By lifting the spending cap, we will be able to do that. It’s how we will restore services in support of the community.

Steve Kozachik is a Tucson city councilman representing Ward 6. He is running for re-election unopposed. Email him at steve.kozachik@tucsonaz.gov

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

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