Brewer says vote split on tax cuts, sales tax will break budget stalemate

Gov. Jan Brewer wants separate legislative votes on the issues of tax cuts and a sales tax referral in hopes of breaking the budget stalemate. Photo by Howard Fischer, Capitol Media Services

Gov. Jan Brewer wants separate legislative votes on the issues of tax cuts and a sales tax referral in hopes of breaking the budget stalemate. Photo by Howard Fischer, Capitol Media Services

PHOENIX -- Gov. Jan Brewer wants separate legislative votes on the issues of tax cuts and a sales tax referral in hopes of breaking the budget stalemate.

Brewer told Capitol Media Services on Thursday there is no way she can get the necessary votes in the Senate for the single measure, already approved by the House, that now includes both putting a proposed sales tax hike on the November ballot and slashing income and property taxes by $650 million.

The problem is that Sen. Carolyn Allen, R-Scottsdale, said she supports the temporary sales tax hike that Brewer insists be part of the deal but can't swallow the governor's offer to cut revenues, at least not now.

And Sens. Pamela Gorman, R-Anthem, and Ron Gould, R-Lake Havasu City, won't support the tax cut bill as it exists because they don't want to give voters the option to hike their own sales taxes.

That leaves Senate Republicans with only 15 votes for the two issues tied together, one short of what they need. And so far, not a single Democrat has been willing to support the plan.

Brewer said that probably leaves only one option: put the questions into two separate bills.

Senate President Bob Burns, R-Peoria, who hasn't been able to lasso the votes for the combined package in his 18-member caucus, said he will try to sell the idea. But Burns said he remains doubtful it will work.

"Part of the way of getting votes (for the tax referral) was to couple' the issues together, he said.

"You decouple it, you lose votes,' Burns continued. "I don't see that as a viable option.'

But even Sen. Russell Pearce, R-Mesa, one of the most vocal opponents of the proposed sales tax hike, said Thursday he can support what the Brewer is proposing. And Sen. Steve Pierce, R-Prescott, the new acting Senate majority whip, said he might be able to sell the deal.

The House already has approved a modified budget for the fiscal year that began July 1. The changes became necessary when Brewer vetoed key provisions last month after lawmakers failed to include her key demand: allowing voters to decide if they're willing to enact a three-year increase in state sales taxes to help offset the sharply declining state revenues and minimize spending cuts.

But the House plan, which gathered only 32 votes -- just one more than necessary -- came only after GOP leaders structured the package so members who don't support a sales tax referral could say they also were voting for tax cuts.

That's because the same bill that sends the sales tax measure to the ballot also would immediately repeal the state property tax.

That levy, suspended for three years in 2006, raises about $250 million a year. It returns automatically later this year without legislative action.

And the same bill also would cut corporate income taxes by 30 percent and individual income taxes by 6.6 percent, effective in 2011, a move that would reduce revenues another $400 million a year.

The governor said having the issues in two separate bills shouldn't change anything.

"We have a compromise deal,' she said, regardless of how many pieces are involved. "It goes as a package.'

Pearce agreed.

"I'm OK treating it all as one package,' he said. "There's so much good in here,' Pearce continued, referring to what he believes will be the economic stimulus of $650 million in tax cuts.

He said the idea would enable Allen to provide the necessary 16th vote for the sales tax referral. At the same time, he said, Gould and Gorman could now vote for the tax cut because it would be divorced from the sales tax issue.

Pearce said he has no qualms about having two separate pieces of legislation because he is convinced voters will reject Brewer's proposal to move the state sales tax to 6.6 percent for 2010 and 2011 and 6.1 percent for 2012 before returning in 2013 to the current 5.6 percent rate.

Brewer, however, said she believes voters will support the levy which, over that three-year period, years, could raise about $2.5 billion. Of that total, two thirds would be earmarked for education, with the balance for health and public safety needs.

"It's not the solution to fix all the problems,' she said, referring to the fact there is currently a $3 billion a year gap between existing tax revenues and expenditures. The package includes further spending cuts, use of stimulus money and some borrowing to bridge the gap.

Secretary of State Ken Bennett said county election officials need to know no later than Monday what lawmakers intend to put on the ballot if they want the sales tax referral to go to voters on Nov. 3. Legislative action after that, he said, would mean an election later in November or possibly December.

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