Goldwater Institute

"Two roads diverged in a yellow wood" is how Robert Frost opens his famous poem about choosing the "road not taken," and Arizona is now staring down two different paths when it comes to the future of education funding. Let’s hope state leaders take the less-traveled road because the regularly-traveled one is a road to nowhere.

The regularly-traveled path is to increase funding for schools and ask for nothing in return. Last fall, state voters soundly defeated a proposition that would have burdened Arizona with a significant tax increase that wasn’t guaranteed to increase classroom funding or teacher pay and would have shelled out funds for all sorts of special interest projects. This wasn’t the first time voters had been faced with such a proposition (the third in the last decade, in case you’re counting), so if history is any guide, we may see such a smorgasbord of education funding increases and special interest projects sometime again.

Arizona should steer clear of this path and reward schools based on student achievement. SB 1444 would create an incentive funding program for school districts and charter schools. Under the bill, sponsored by Sen. Kimberly Yee, schools can earn up to $500 per pupil for high scores or significantly improved scores on the state test.

While not perfect, this method rewards schools for student success, the direction in which we should be moving in the first place.

Arizona still needs to improve the A-F grading system for schools because those grades and performance funding are closely related. In the 2011-12 school year, more schools earned an “A” on their state report card, but a Department of Education analysis found that only 7 percent of Arizona high school seniors in 2012 earned scores on a college admissions test that indicated they would earn a C or better in college classes. Giving a school an A that is graduating students who barely have a chance in college is a disservice to students and their parents. For SB 1444 to adequately serve students, we must continue to refine our school grading process.

But if Arizona leaders are to deal with school funding at all, they should at least focus the funding on student achievement and not the well-worn path of throwing money at schools.

Learn more:

Arizona State Legislature: SB 1444

Office of Janice K. Brewer: Executive Budget Recommendation Power Point

Arizona Republic: More Arizona schools earn an A from state

Bartleby.com: The Road Not Taken, by Robert Frost

I recently wrote about reasons the Arizona legislature should reject efforts to expand Medicaid as part of the implementation of the federal health care law. The governor’s office took umbrage with the points I made, and after carefully reviewing their response, my conclusion remains that expanding the program is a bad idea.

The governor’s office says the expansion will only add 57,000 people to the Medicaid rolls, but this ignores the fact that Arizona rolled back its previously generous Medicaid coverage during the recession and can only be forced to restore our previous levels if we agree to the expansion. So in fact, by 2016, the Obamacare-suggested expansion means we will add back everyone that was previously eligible but frozen out of the program and the newly eligible population. That would add a total of 450,000 to Arizona’s Medicaid rolls. Already one-in-five Arizonans receives free health care through Medicaid; adding another half-a-million people into the program could financially wreak the state in the future.

An over-stated, oft-repeated industry statistic that uncompensated care represents a $2,000 per family hidden “tax” is also being used as a justification for this entitlement expansion. But the simple math on this figure doesn’t work out. The latest statistics put uncompensated care at about 6.1 percent of health care costs. If this percentage amounted to $2,000 per family, total health care costs per family in Arizona would be $33,000. And that would mean total health spending in Arizona is $82 billion a year, or about one-third of the Arizona’s GDP. Health care is not one-third of Arizona’s GDP.

The governor’s office is also justifying the expansion by claiming a rule change in the program that predates Obamacare requires the state to do it or we will risk losing all of our Medicaid funds. But this is simply not true. When the US Supreme Court ruled on the legality of the health care law last summer, they explicitly said the federal government cannot require states to expand programs at the risk of losing funding for previous coverage requirements. This rule change clearly violates the intent of last summer’s ruling, and would not likely hold up in court in light of the Supreme Court decision.

I certainly understand the lure of additional federal money flowing into the state, but expanding Medicaid is a bad idea for Arizona when all the facts are considered.

Learn more:

Goldwater Institute: Expanded Medicaid, Shrinking Wallets

Kaiser Family Foundation: Medicaid Enrollment: June 2011 Data Snapshot

Cato Institute: The PPACA’s Health Insurance Exchanges and Medicaid Expansion

Last week, the Arizona House Judiciary Committee passed HB 2156, which would stop state and local governments from campaigning with taxpayer dollars. In Arizona, this practice is already supposed to be unlawful – state laws say that cities, counties, and schools can’t use public “resources” to “influenc[e] the outcomes of elections.” Unfortunately, courts have essentially read these laws to prohibit only electioneering that “unambiguously” urges a “yes” or “no” vote. As a result, government bodies often skirt the law and use public resources to broadcast one-sided messages about ballot measures.

Worse, many of these laws are virtually unenforceable against offending governments, because in many cases only the attorney general or county attorney may prosecute violations. And while school district officials can be held personally liable if they misuse public money, the law says nothing about penalties for city, county, or state officials. Most government officials who campaign with public resources have nothing to lose, so the laws provide little protection for taxpayers.

HB 2156 requires government bodies to be truly neutral with taxpayer dollars. Government may inform the public on ballot issues, but publicly sponsored forums or events must be purely educational, with an equal opportunity for the presentation of all viewpoints. The bill creates one consolidated ban that applies to all public entities and all public resources, which is the law in about a third of other states. And if HB 2156 becomes law, it will enable taxpayers to bring enforcement lawsuits when government officials campaign with public resources.

Taxpayers have urged public officials to stop campaigning with their money, but urging only goes so far. It’s time for state legislators to close the loopholes on public-resource electioneering bans.

Learn more:

Arizona State Legislature: HB 2156

Goldwater Institute: District needs schooling in election law

Arizona Republic: School projects to be built with $118M bond doubted

On Monday, Gov. Brewer released a legislative proposal to reform the state’s cumbersome and complex transaction privilege tax, commonly known as the sales tax. The plan is based on the recommendations of the governor’s Transaction Privilege Tax Simplification Task Force, convened last summer, which spent nearly six months looking to other states, hearing public comments, and receiving input from cities, towns, and state policymakers.

The plan is rightly aimed at Arizona’s long-term ability to compete economically with other states by targeting three main elements of the sales tax system:

1.) Stop multiple audits. Many cities have the ability to audit a business even if the state already has audited them on the same set of transactions. This incentive for multiple audits needs to stop, and this plan would institute a “single audit” requirement that would put Arizona on par with many states that don’t allow multiple audits.

2.) Standardize the collections of sales taxes. This reform would make the Arizona Department of Revenue the only collector of sales tax revenue in the state. This would free up resources at the local level and would eliminate confusion from businesses that are currently forced to deal with multiple tax collection bureaucracies.

3.) Goods will be taxed at the point-of-sale. The present system maintains a “prime contractor” category that requires construction companies to pay taxes to multiple jurisdictions when they buy their supplies in one tax jurisdiction but the job site is in other. The proposal eliminates that category and treats contractors like any other business and taxes their supply purchases at the point of sale.

Arizona is behind the curve on making our sales tax system simpler and saner. Getting us up to snuff with forty-six other states will finally clear a path for Arizona policymakers to enact the sorts of big-picture tax reform that can finally put us ahead of our competitor states on tax policy. Governor Brewer’s plan is a vital first-step in that very important direction and should be supported as proposed.

Learn more:

Office of Governor Brewer: Transaction Privilege Tax Simplification Task Force Final Report

Arizona State Legislature: Governor Brewer’s Proposal

Goldwater Institute: A New Tax Plan for a New Economy