Arizona Votes for a Tax Hike

In case you missed it, Arizona voters overwhelmingly approved Proposition 100 on Tuesday, which raises the state sales tax by one percentage point for three years. A whopping two-thirds majority voted for the move, which is supposed to bring in about $900 million a year. That’s a very bitter pill for people in a conservative state with one of the lowest tax burdens in the country, and anti-tax types from outside the state are already howling.

Is this a sign that Republican voters on Main Street may be more willing to grapple with fiscal reality than Republican leaders in Washington? Not neceessarily. If anything, Arizona shows how ugly things have to get before voters will grudgingly support tax increases as well as brutal spending cuts.

In fact, there’s a widespread suspicion in Arizona that Republican Governor Jan Brewer reluctantly signed that notorious new anti-immigrant law because Republicans needed throw some red meat to conservatives and distract them from the unavoidable realities of the state’s budget plight. In other words, ugly budget problems spawn ugly political behavior — not a good omen.

Arizona’s budget crisis is one of the worst in the country, partly because it was at ground zero in the housing bust and partly because the legislature had assiduously cut taxes during the good times. Tax revenues have plunged 34 percent since 2007, and the projected budget gap for next year was about 30 percent. Gov. Brewer had already proposed chopping money for higher education by 25 percent; eliminating the state health insurance program for poor children; closing all the juvenile correction facilities; and closing half the state parks. The state had already mortgaged the state capitol and other buildings to raise $735 milion in fresh cash. And all that was based on the assumption that voters would approve the tax increase. In case voters had rejected the tax hike, the state had prepared another $826 million in “contingency” spending cuts aimed at K-12 schools, universities and other education programs.

Would Republican leaders in Washington stick to their anti-tax pledges if they faced those kinds of choices? The Wall Street Journal editorial page thinks they should. And Arizona’s two Republican US senators — McCain and Jon Kyl — both came out against the sales tax increase. But McCain and Kyl don’t actually have to fix their state’s budget calamity. Would they and other Republican in Congress be so resolute if they actually had to vote for for all those those spending cuts? I doubt it.

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About Edmund L. Andrews 37 Articles

Edmund L. Andrews spent two decades as a business and economics correspondent for The New York Times. During that time, he covered many of the nation ’s most transforming events, from the Internet and biotech revolutions to the emergence of capitalism in central Europe and Russia and the Federal Reserve under Alan Greenspan and Ben S. Bernanke. In 2009 he published BUSTED: Life Inside the Great Mortgage Meltdown (WW Norton), his own harrowingly personal account of the epic financial crisis. He has frequently appeared on major television and radio news programs, from the NewsHour with Jim Lehrer and Today to 20/20, All Things Considered, Lou Dobbs on CNN, the Colbert Show, BBC Worldwide, MSNBC and CNBC.

Ed began his affiliation with The Times in 1988 when he covered patents, telecommunications, and technology. In 1992, he joined the Washington bureau of The Times as a domestic correspondent and reported extensively on the business and politics surrounding the convergence of cable television, the Internet and broadband digital networks. In 1996, Ed became The Times’ European economics correspondent and its Frankfurt bureau chief. He returned to Washington in 2002 and became the bureau’s lead economics correspondent and The Times’ main eyes and ears on the Federal Reserve.

Prior to joining The Times, Ed worked as a magazine writer specializing in business and economics. Before that, he was an assignment editor for Cable News Network in Washington and an education and city government reporter at The Sentinel-Record in Hot Springs, Ark.

Ed graduated magna cum laude from Colgate University in 1978 with high honors in international relations. In 1981, he received a master’s degree in journalism from Northwestern University. He is married to Patricia Barreiro and has four children – Ryan, Matthew, Daniel and Emily.

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