NCPA - National Center for Policy Analysis


December 10, 2008

Professors at Arizona State University released a study that blames the state's $1.7 billion budget deficit on income and property tax cuts from the 1990's and 2006.  The researchers also state that a $1 billion tax increase would be preferable to budget cuts of the same size.

Citing the ASU study, the Tucson Citizen argued that there is a case to be made for increasing taxes.  And although she said it's "not something she'd like to see," soon-to-be-Governor Jan Brewer didn't rule out a tax increase.

As a percentage of the general fund, Arizona has the largest budget deficit in the country.  The Free Enterprise Club, a pro-growth advocacy group, has argued that the deficit was caused by state spending that far surpassed reasonable measuring sticks for budget growth:

  • The Arizona budget grew from $6.5 billion in 2004 to $10.6 billion in 2008, a 63 percent increase.
  • Over that same time period, personal income growth was 37 percent and population plus inflation growth was about 30 percent.
  • In other words, state spending grew 26 percent; as a result, the fiscal year 2009 Arizona budget deficit is $1.7 billion and growing.

If the Arizona's budget problems are not addressed soon, the 2010 budget deficit could reach $3 billion according to the non-partisan Joint Legislative Budget Committee.  This is the equivalent of $500 for every man, woman and child living in Arizona.

The message is clear, says the Free Enterprise Club: You can't grow government faster than the ability of taxpayers to pay for it and not expect budget shortfalls.

Source: Steve Voeller, "More taxes to balance the budget?" Goldwater Institute, December 9, 2008; and "No New Taxes Petition," Arizona Free Enterprise Club, December 8, 2008.

For ASU report:


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