Sun, Sep 07, 2008

Tucson Region

Dem legislators look at tax-cut rollback as budget-shortfall fix

By Daniel Scarpinato
ARIZONA DAILY STAR
Tucson, Arizona | Published: 11.05.2007
In the growing battle over how to fix a projected $600 million shortfall in the state budget, agency and program cuts may not be the only options on the table for lawmakers when they convene at the Capitol in January.
Some Southern Arizona Democrats say that they'll be advocating for rolling back tax cuts in order to fill the hole, a position that may prove unfeasible in a House and Senate controlled by Republicans.
Still, the Democrats are arguing that by rolling back or putting a "moratorium" on cuts in the state income tax, passed in 2006 and phased in over two years, the impact of the shortfall on government services such as child and health care would be reduced.
The cuts were anticipated to reduce state revenues by more than $320 million annually when passed.
"I don't think it's a coincidence that we cut taxes by $600 million and now we have a budget shortfall of $600 million," said Rep. Phil Lopes, House minority leader and a Tucson Democrat.
The 2006 package included a 10 percent across-the-board cut in individual income tax rates, about $80 for someone making between $40,000 and $50,000 a year.
At the time, Lopes voted against the package, saying that while the state had extra cash, it might need that money in the future.
Now Lopes, who has not consulted with his entire caucus yet about the budget, said he suspects other Democrats might be critical of letting the cuts remain in place given the state's economic downturn.
"My guess is because most of the caucus was against them (when they passed) that they might feel positive" about rolling them back, he said.
That would put Democrats at odds not only with Republicans, who said last week they want deep, permanent cuts to state programs, but also with Gov. Janet Napolitano, who has said she doesn't believe a tax increase is necessary.
Lopes said, "I think that remains to be seen" but also voiced support for Napolitano's plan, which relies on borrowing money for school construction.
"The governor's approach is eminently reasonable," he said.
State Sen. Paula Aboud, a Tucson Democrat and part of last year's budget-negotiating team, said she's finding support for targeting tax cuts in Senate Democratic circles.
She said she fears Republicans will use the budget shortfall as a way to cut programs they opposed in the first place.
"What the Republicans want to do is get back into the budget," she said. "They want to yank the whole thing."
"They want to cut government agencies . . . and they want the churches and the communities taking care of people and not let the government," she said.
Republicans have not only come out against a tax increase, but also any form of borrowing, saying the shortfall can be solved through program cuts and dipping into the state's rainy day fund. They point out that to roll back the tax cuts, Democrats would need a two-thirds majority in a body dominated by Republicans.
"It's sort of silly because of it's never going to happen," said Rep. Marian McClure, a Tucson Republican. "You really think they're going to get (the) votes to repeal those tax cuts?"
But McClure also hinted what some on both sides have stated: In a slim budget controlled by voter-mandated programs, there is little government waste to subtract.
"When you consider how little we have control over, the voters have pretty much taken care of the budgeting process," she said.
● Contact reporter Daniel Scarpinato at 307-4339 or dscarpinato@azstarnet.com.