Ken Bennett opposes sales tax increase
PRESCOTT - Arizona Secretary of State Ken Bennett told local Republicans Tuesday that he disagrees with Gov. Jan Brewer's proposal to ask voters for a temporary sales tax increase to boost the state budget.
He urged the governor to sign the Republican legislators' budget that is sitting on her desk. That proposal does not include the sales tax ballot question.
"I don't think the voters want to raise taxes right now," Bennett said.
Instead, the state government should do what it can to make Arizona attractive to business and bring in good-paying jobs, he said.
Brewer appointed Bennett in January to take her old job when she got the job of governor upon the resignation of Janet Napolitano. Bennett, a businessman from Prescott, was the Arizona Senate president from 2003 to 2006 when the term limits law forced him out.
"I can't believe I'm in here Aug. 25 talking about the state budget," Bennett said at Tuesday's Republican Women of Prescott luncheon at the Hotel St. Michael's. The budget year started July 1.
The first warning signs of budget problems occurred back in 2006, Bennett said as he illustrated budget fundamentals with tissue boxes that represented various blocks of spending.
As revenues began to decline, state leaders used accounting gimmicks and one-time money sources such as the state rainy day fund for ongoing expenses, so the problem snowballed in 2007-09.
"The steps you take early on in a crisis are very important," Bennett said.
Most of the budget cuts have been to the "Big 3" spending areas - K-12 education, health care and higher education, Bennett said. While $130 million sounds like a lot of money to cut from K-12, that's only about one percent of the K-12 budget, he noted.
The state can get through the next two years without a sales tax increase, with the help of federal stimulus money, Bennett said. The Republican legislators and governor's plans are only about 3 percent apart, he said.
"Either plan can get you through June 15," or all but the last two weeks of the budget year, he said.
"The long-term solution is, we've got to get revenues growing again," he said.
If the state could sell 100,000 acres of its nine million acres of trust lands at $100,000 per acre, it could increase its trust fund from $1 billion to $9 billion, Bennett said. That would produce $700 million annually in interest.
"So that is a good part of the solution in the future," he said.
Bennett answered several audience questions at the end of his talk.
He estimated that the state spends $2.5 billion on services for undocumented immigrants, including about $1 billion on education, $1 billion on health care and another $500 million on prison terms, court cases and higher education.
Legislators often have little control over money for voter-approved uses such as Proposition 204 that voters approved in 2000, Bennett said. It requires the state to use its $75 million in annual payments from tobacco company court settlements for expanded health care for the poor, and requires the state to cover the rest of the costs. That extra cost now is $500 million per year, Bennett said.
He urged voters to be careful what they approve in the future.
About 1.2 million Arizonans now get government health care, more than the total number of K-12 students, Bennett said.