In the 2006 legislative session there was some good, some bad and some ugly. As the Goldwater Institute's just released Legislative Report Card reveals, in tax and budget policy the Senate scored a collective C and the House an F+.
The good: The legislature followed up last year's business property tax cut with a ten percent drop in personal income tax rates over two years and a three-year suspension of the 42 cent County Equalization property tax. These cuts return millions of dollars to Arizona households.
The bad: Hewlett Packard started in a garage. Google got going with barely $100,000. The legislature, however, decided to subsidize the bio-tech industry with $35 million in taxpayer funding. Great ideas and great entrepreneurs attract capital, but capital alone mostly attracts rent-seekers. Private individuals risking their own money should direct Arizona's economy.
The ugly: For the first time ever, the state's budget topped $26 billion. That's nearly $12,000 per household, an estimated 13 percent of personal income. State agencies, departments and employees are consuming Arizonans' wealth faster than we can generate it. In the past year, Arizonan's personal income grew seven percent, while total state spending grew ten percent. At this spending rate, the state could be in for another deficit as early as 2008.
Noah Clarke is an economist with the Goldwater Institute Center for Economic Prosperity.
-Joint Legislative Budget Committee: "Fiscal 2007 Appropriations Report"
- East Valley Tribune: "Spending spree must be stopped"
-Goldwater Institute: "The Tax Man and the Moving Van: Fiscal Policy and State Population Shifts"