Thu, Feb. 20

Senate president says tax hike is compromise needed for spending plan

PHOENIX -- Senate President Bob Burns said Wednesday Republican lawmakers are probably going to have to give Gov. Jan Brewer the tax hike she demands to get the spending package they want.

Burns said Brewer continues to refuse to back away from her call for a one-cent hike in the state's 5.6 percent sales tax rate. He said the fact GOP lawmakers were able to craft an $8.2 billion budget for the coming year without it has not convinced her otherwise.

And Burns said that means Republicans will have to revise their plan.

"It was never completely off the table,' he said of the tax hike.

"It's always been the last item on the table,' Burns continued.

"Now we're down to the last items.'

Following meeting with the governor earlier Wednesday, Burns said there was a "tentative agreement' with the Brewer to submit her plan for a temporary tax to voters on the 2010 ballot. He later said that may have been an overstatement, saying he "used the wrong word.'

Whatever the status of the talks, a 2010 election - assuming voters approve it -- would not provide any financial relief for the coming fiscal year.

But Brewer has said -- and lawmakers acknowledge -- the economic crisis that has crippled state income and sales tax collections is likely to run into 2012, if not beyond. Potentially more significant, a tax hike that could raise $1 billion a year could kick in as the state's share of federal stimulus funds dries up.

Burns' belief that Brewer is dug in for a fight on the tax hike was backed by House Minority Leader David Lujan who had his own separate meeting Wednesday with the governor.

Lujan said Brewer told him she will need Democratic votes to get a budget more to her liking than the all-Republican plan approved last week.

"She said she told the Republicans two weeks ago that they were being stubborn and she could be just as stubborn and that she's not going to blink and that she's going to shut down state government if we can't get a budget deal,' Lujan said.

Gubernatorial press aide Paul Senseman called that a "way, way, way overgeneralization.' But he conceded that Brewer is looking at what might happen if there is no new budget when the current fiscal year runs out June 30.

"The governor is always taking steps preparing for the worst, hoping for the best,' he said. "Hopefully she will receive a budget that functions.'

Senseman would not comment about any tentative agreement, saying only Brewer will continue to meet with lawmakers to come up with a plan. "But at this point it's premature to say that anything's been finalized,' he said.

He did say Brewer does believe she needs Democratic votes to get a budget adopted.

It takes only a simple majority to refer a tax hike to the ballot. And Republicans hold a 35-25 edge in the House and an 18-12 margin in the Senate.

But several Republican legislators who have taken a pledge not to increase taxes have said that extends to even putting such a plan in front of voters. That means Brewer will need some Democratic support.

Lujan said Democrats don't like sales taxes because they put more of a burden on lower and middle-income taxpayers than their plan.

It raises more money by shifting some of the responsibility for of state aid to education to local property taxes, which are more of a burden on business than homeowners.

But Lujan said Democrats might be willing to provide the votes for Brewer's sales tax hike if they get a spending plan more to their liking.

"We'd have to look at the overall budget proposal,' he said.

"I'm not to commit one way or the other to what we'd support at this point.'

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