Arizona Daily Star

February 16, 2010

We are pleased that state Senate President Bob Burns has stalled a House-passed package of tax cuts.

Burns has insisted that before tax cuts be considered in the Senate, lawmakers must fix not only the deficit in this year’s budget, but also adopt a balanced plan for the coming fiscal year, Howard Fischer of Capitol Media Services reported on Sunday.

The House has already approved the cuts, which a new study by the nonpartisan Joint Legislative Budget Committee shows will cost the state $940 million a year by the time they’re phased in, in seven years, Fischer wrote.

We’re with Burns: Let’s first find a way to make ends meet. After all, the state’s budget gap approaches $5 billion through the end of the fiscal year that begins July 1. After we’re in the black, then lawmakers could study tax reforms, cuts, etc.

Last week, the Star’s editorial board published guest opinions from five economists who are expert in the Arizona state budget.

One theme that emerged from the essays was that the state must stop expanding programs without first finding non-cyclical revenues to pay for them and must not cut taxes without making concomitant spending cuts.

For instance, Alan Maguire, president and chief economist of the Maguire Co., wrote that “the simple lesson we, as a state, must learn is that permanent spending increases must be approved only when accompanied by permanent tax-rate increases, and permanent tax reductions must be approved only with permanent spending-program reductions.”

We agree. Just as it’s financially shortsighted for an individual to buy a fancy car with six years of high payments just because of a $600 tax refund, or a win of $500 in the lottery, it’s perilous for lawmakers to do the same to the state’s finances.

The primary sponsor of the tax-cut package is House Speaker Kirk Adams. He and other House Republicans argue that cutting corporate taxes, repealing the state property tax, reducing income tax and shifting some of the burden to homeowners will spur business expansion into Arizona and create new jobs.

Adams acknowledges that the cuts the House has approved will reduce revenues, but told Fischer the JLBC study doesn’t take into account the economic impact of the business expansion he believes will follow.

Democrats argue that the Republican-controlled Legislature is simply aiming to shift the tax burden to individuals from businesses.

The long-term economic impact of such cuts is debatable, of course. And some ideologues on both sides will never budge. But it’s clear to us that the time is long past for cutting revenue without also cutting spending or finding other revenue elsewhere.

Burns, a Republican, has proved himself during this legislative session to be a hard-headed pragmatist. For instance, he helped shepherd through the Legislature the measure that will ask voters to agree to increase the sales tax in order to raise around $1 billion next fiscal year.

Burns is right on the timing of the tax-cut plan. The Legislature must clean up and balance the state’s checkbook before deciding to reduce its revenues.