We can invest in roads, schools and also provide tax rebates
Arizona Republic
Mar. 29, 2006

The scissors, axes, knives, hacksaws and swords are out at the Legislature.
Revenues are surging, and it's an election year.

A lot of lawmakers, and not just on the Republican side of the aisle, are eager to tell voters: I cut your taxes.

But voters, oddly enough, aren't clamoring for tax cuts.

Or maybe that's not so odd.

Arizona is already well below the national average for income and property taxes.

Meanwhile, every Arizonan can see that we have urgent needs. A rapidly growing state, just like a growing family, has a long list of big and basic purchases.

They include transportation, education, prisons.

The state's $1.1 billion surplus is an opportunity to shore up these and other critically important services. That doesn't mean we have to give up tax relief, but it should be in the form of rebates, not permanent cuts.

In their zeal to whack taxes, legislators are overlooking some importantpoints:

Our tax rates aren't scaring off business. Otherwise a prize catch like Google wouldn't have landed in the Valley. Arizona wouldn't be the top-ranked state for new business and entrepreneurs, with Phoenix placing No. 1 among large metropolitan areas and Tucson ranking No. 2 among midsize cities. But business will be scared away by gridlocked traffic that cuts into productivity and an educational system that doesn't produce qualified workers.

Putting money back in the pockets of taxpayers is fine, but let's not shortchange our future. With revenues pouring in, this is an ideal time to make investments that will benefit the economy over the long run, such as widening interstates 10 and 17. Arizona faces heavy expenses to keep up with a growth rate that added nearly nearly a million people in the last five years. Tax cuts that are painless in good times could jeopardize our ability to build basic infrastructure when the economy turns soft. Rebates are the sensible way to give taxpayers a break.

Government spending doesn't disappear into a black hole. It recirculates through the economy just like private spending. A priority for the budget surplus, for instance, should be raising the salaries of prison guards to reduce dangerously high turnover and vacant positions. They aren't going to sit on their extra pay. They'll spend it for clothing, appliances, meals and replacing worn-out cars.

So what can Arizona do with $1.1 billion?

Under the current formula, $440 million will go into the "rainy day fund" as a buffer against future revenue downturns.

Transportation, an issue that Valley residents thought they addressed with a sales-tax extension, is suddenly looming larger than anyone expected. Development along interstates 10 and 17 is creating huge bottlenecks. Tremendous growth lies ahead in places like Pinal and Mohave counties, where the road network isn't remotely adequate.

And it will take more money just to complete currently scheduled projects. The Arizona Department of Transportation reports that construction costs have jumped 25 to 30 percent in the past 18 months.

On the education front, Arizona must continue rolling out all-day kindergarten. And whatever the final solution to the Flores lawsuit over English-language instruction, it will certainly cost more money.

Phoenix voters approved a bond issue that will help pay for a new medical school, crucial to relieving a shortage of doctors and spurring the bioscience sector. But state investments are also critical.

It would also make long-run sense to start catching up with the deferred maintenance of state buildings, including at universities, which totals $100 million or more.

Other farsighted investments with potential economic payoff could include research in solar energy or efficient water use.

Arizona's 100th birthday is in less than six years. Why not put some money into expanding or replacing our cramped and unattractive legislative buildings?

Giving a break to taxpayers should be on the to-do list, as well. But through rebates, not permanent tax cuts.

Just three years ago, Arizona was facing a budget shortfall of $1 billion. A flexible tool like a rebate is the right choice when revenues are so volatile and the state is changing so rapidly.

Legislators need to set aside the sharp blades and instead put sharp thinking into how to handle the budget surplus.