PHOENIX — The Arizona Chamber of Commerce and Industry wants the state to create a “world-class education system” and have a balanced state budget.
But Glenn Hamer, the organization’s president, said his members will fight any effort in the legislative session that starts Monday to repeal some yet-to-be-implemented tax cuts approved several years ago, at a time when lawmakers thought the state’s finances would be better by now.
Instead, as lawmakers return to the Capitol, they find the state facing a $500 million budget shortfall for the current fiscal year. And next year the red ink increases to $1 billion.
Hamer has no suggestions for where lawmakers should find the money or cut expenses. But whatever is done, he said, should not disrupt Arizona’s economy, which he believes means ensuring businesses get the tax cuts they were promised in 2011 and 2012.
He said using tax cuts to recruit new employers, and then reneging, would damage the state’s reputation, because “we’ve been going around the country bragging, as we should, that we’ve reduced our level of taxation on job creators.”
In addition to cutting business income tax rates by 30 percent, lawmakers changed how multistate corporations compute their Arizona income tax liability.
Instead of a formula that bases taxes on a combination of in-state sales, company payroll and property ownership, the new law allows them to base their Arizona income — and therefore their taxes — solely on what percentage of their sales are made in Arizona.
At the same time, Hamer said a key element in the state being competitive is its university system, which he said is “extremely well run.”
He said the chamber also supports an increased emphasis on funding schools based not on pure number of students enrolled but instead on outcomes, like the number of students who graduate on time.
Yet figures from the Joint Legislative Budget Committee show that per-student state funding went from $8,027 in 2006 to $5,144 this school year. And that does not even consider inflation.
Much of that has been made up with higher tuition. But even when tuition is factored in, per-student funding, adjusted for inflation, is 10 percent less than it was in 2006.
Hamer had no recommendation for how to preserve funding for higher education, beyond saying that the state should do nothing “to disrupt Arizona’s economy.”
Hamer is less concerned with funding for the state’s K-12 system, which is at or near the bottom of all states on per-pupil funding. He said there is no evidence to link academic performance with spending, saying Arizona has “pockets of excellence” in some of its charter and traditional public schools.