Taxing measures at Arizona Legislature

PHOENIX -- State senators voted Monday for legislation that could effectively undermine any effort by voters to hike their own sales taxes for education.

But its sponsor said it's not a "poison pill.'

SB 1155 spells out that if the state sales tax on June 1, 2013 is any higher than it was on May 31, 2010, the Department of Revenue has to cut income tax rates sufficiently to wipe out any increase in revenue. The measure gained preliminary approval on a voice vote; a final roll-call vote, set for later today, would send the legislation to the House.

On a separate front, the Senate gave final approval to a proposed constitutional amendment that would put an eight-year limit on any and all voter-approved spending mandates or tax hikes.

But SCR 1031 is even broader than that. It is retroactive, meaning even the program approved as far back as 1998 would have to be reauthorized.

Sen. Frank Antenori, R-Tucson, acknowledged that would require groups that successfully convinced voters to approve some measure the first time to wage a new campaign every eight years to keep it in place. But he said that does not have to be a financial hardship.

"If it's a good initiative, they shouldn't have to spend anything defending it,' Antenori said.

The tax replacement measure, pushed by Senate Majority Leader Andy Biggs, comes as several organizations are crafting a sales tax initiative for the November ballot.

Voters approved a temporary one-cent hike in sales taxes in 2010 as part of a plan to balance the budget. Gov. Jan Brewer, who championed the levy, said the alternative was even deeper cuts in education and public safety.

That additional tax self-destructs at the end of May 2013. The yet-to-be-launched initiative campaign is designed to keep the rate at 6.6 percent, with the approximately $1 billion a year it would raise earmarked specifically for education and other special purposes.

If SB 1155 becomes law, though, that $1 billion would not materialize, as income tax rates would be lowered to compensate.

Biggs said his legislation is a direct response to that initiative. And Biggs said he is opposed to anything that would permanently boost state revenues beyond what they would have been without the temporary tax hike.

He said, though, this should not be seen as a preemptive bid to thwart the will of voters.

Biggs said there might actually be people who would be more willing to vote for the initiative if they knew income taxes would drop. He said there are people who believe that sales taxes -- essentially a levy on what people buy -- is a better way to raise revenues than a tax on what people earn.

But Sen. Linda Gray, R-Glendale, said there are deeper implications to what Biggs wants.

She noted that if voters approve the sales tax hike and earmark the funds for education, the Legislature is constitutionally required to spend the revenues from the tax hike that way.

If Biggs' measure becomes law and income taxes are cut, however, those funds would come out of the other programs now being funded with that lost $1 billion, as lawmakers could not override the wording of the initiative about where the tax hike proceeds could be spent.

"We would have to go in and cut from other areas,' Gray said.

Biggs argued that is not true.

Anyway, he said, there is a way for initiative supporters to get around what he is doing. He said they can craft their measure to spell out that, if approved, it overrules any conditional tax cuts previously approved by the Legislature.

But Ann-Eve Pedersen, president of the Arizona Education Network, said it's not that simple. "Our attorneys are looking at this,' she said.

And Pedersen said she does not see Biggs' proposal as benign as he claims.

"The public is very in favor of investing in education,' she said. "It's disappointed to see legislators trying to thwart public will by pushing through a measure like this.'

Antenori, who crafted the broader measure to force re-voting of ballot measures, said it's good public policy to revisit these issues.

He agreed that the proposal would not force regular reevaluation by lawmakers of anything they approve. But Antenori said that occurs anyway, as legislators have the annual opportunity to review -- and, if necessary -- repeal state statutes.

"If you vote for an initiative, it's etched in stone,' he said. "And it cannot be undone unless somebody goes out and goes through the arduous process of getting 250,000-some odd signatures and get it on the ballot.'

That, however, is not entirely accurate: While only voters can alter or repeal what they have approved, lawmakers remain free to put questions back on the ballot with a simple majority vote of the House and Senate. In fact, that is what is being done for the upcoming election as the Republican-controlled Legislature is proposing to ask voters in November to effectively repeal the 1998 voter-approved laws allowing candidates for statewide and legislative office to obtain public funds for their campaigns.

Antenori said that is technically possible but politically difficult "because guys like you and the rest of the media criticize us for so-called undoing the will of the people by referring it back to the ballot.' Making it automatic, he said, avoids that debate.

It will not matter what Antenori and lawmakers want, though, as voters would have to approve the automatic eight-year review in November.


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