After years in the red, the Arizona Legislature finds itself with a near-$1 billion revenue surplus. Will the good times continue to roll?
The capital gains tax rate cut, Arizona's robust construction industry and the strong real estate market all contributed to the surplus.
The continuation of good economic times depends in large part on Washington making the capital gains tax rate cuts permanent and our state economy remaining healthy. Arizona policymakers can help do their part by cutting tax rates in 2006.
When considering what to do with the surplus, the Legislature can either choose to grow the government or the private sector. In the past few years, state spending has outpaced both population growth and inflation. As Barry Goldwater said, "We want a government of compassion, leadership and restraint."
With our economy healthy, now is the time to plan thoughtfully for the future and think long term.
Arizona competes against three neighboring states - Colorado, Utah and Nevada - with lower taxes. If we want to continue attracting businesses, and thus continue to grow our economy, we must be competitive. Attracting new businesses means more jobs and more tax revenue. It's a win-win situation.
A tax cut will ensure Arizona has a very happy new year, and more happy years to come.
Noah Clarke is an economist with the Goldwater Institute.