Phoenix--Arizona is broke and business-as-usual at the Capitol over the past six years is largely to blame. For fiscal year 2010, the state faces a budget deficit some predict will reach $4 billion, or 40 percent of General Fund spending. Arizona's government is over-committed, over-spent, and over-sized for existing revenues.
Today, Governor Brewer will address a joint session of the House and Senate with her plan to rehabilitate Arizona's economy and bridge the budget gap. Rumors persist her plans include a tax increase that will be used to mitigate further education budget cuts, particularly aimed at saving all-day kindergarten. But the path to job creation and economic recovery in Arizona will not be forged by raising taxes to protect pet programs.
In the spirit of Brewer's inaugural address, when she spoke so passionately about her intention to advance the principals of freedom and liberty in Arizona, the Goldwater Institute offers "Saving with Systemic Change," 16 ideas that will solve Arizona's structural deficit and lay the foundation for a vibrant economic recovery.
"These ideas address the underlying problems of bloated government and poor planning that led us to the crisis we face today," said Darcy Olsen, president and CEO of the Goldwater Institute. "With systemic reform, we can jumpstart the local economy and put Arizona on a path to sustainable financing, no new taxes required."
"Saving with Systemic Change" includes the following recommendations:
Create Jobs by Restructuring Arizona's Tax System. Arizona could convert the existing sales tax into a broad-based sales tax on final goods and services and eliminate income taxes and create 112,000 jobs.
Outsource Civil Law Enforcement. The state could save as much as $25 million if the Legislature outsourced civil law enforcement by state agencies and the attorney general's office.
Reform Higher Education Funding. The state should lift the annual cap on the existing PEG and PFAP grant programs and offer all college-bound students access to their portion of state funding as a grant that can be redeemed at any private Arizona college or university. Moving students out of the public university system with a $1,000 or $2,000 grant to private colleges, will save the state more than $6,000 per student.
Allow the Private Sector to Pay for Highways. Public-private partnerships in which private companies design, build, operate, and maintain infrastructure in exchange for a lease and the right to collect tolls have proven themselves in Virginia, Texas, California, Indiana, Illinois, Pennsylvania, and throughout the world. With such a law on the books, capital will pour into Arizona, bringing construction jobs and building the transportation infrastructure we need.
Cap the Number of State Employees. There is no way to permanently restructure the state budget for fiscal responsibility unless personnel costs can be reduced. The Legislature should mandate that state public employees be reduced over a transitional period to no greater than one-half of 1 percent of the state's population. The state could save $100 million or more annually by following this recommendation.
Give State Employees Health Savings Accounts. HSAs are pre-tax savings accounts on which no taxes are paid as long as the funds are used to pay for health care expenses and are coupled with high-deductible health insurance plans. These accounts could give employees greater flexibility over health care decisions and save the state millions.
Read all of the ideas in "Saving with Systemic Change" online, or call (602) 462-5000 to have a copy mailed or faxed to you. The Goldwater Institute is a nonprofit public policy research and litigation organization whose work is made possible by the generosity of its supporters.