Governor may ask voters to retain tax hike for schools
Ducey looks ahead to what happens after Prop. 123 money runs out
PHOENIX — Gov. Doug Ducey is finally willing to talk about keeping public schools from falling off a financial cliff after 2020.
And it involves a word at which he normally blanches: taxes.
Ducey said late Tuesday he is supportive of efforts to ask voters to extend the 0.6-cent sales tax surcharge they approved in 2000. That money, about $650 million a year at current sales, goes to fund teacher salaries.
But absent voter approval, the levy self-destructs in 2020.
At the same time, though, the rest of Proposition 301 continues in perpetuity. And the main provision of that requires the state to boost aid to schools to match inflation.
That mandate was restated just last year in Proposition 123, remains in perpetuity.
Schools are getting about $330 million a year from Prop. 123, which was pushed through by the governor. But that funding continues through only 2025.
Ducey, speaking out on the issue for the first time, said Arizona has no choice but to keep those sales tax revenues coming.
“I’ve not worked as hard as I’ve worked on Prop. 123 to get funding to K-12 education to let us fall off a cliff,” the governor said.
“So of course we’re going to work to make sure we put more money into K-12 education every year I’m governor,” he continued. And if Ducey gets reelected next year, he would remain in office through 2022.
If Proposition 301 were to go away, there would be a cliff of sorts.
Current state aid is about $5 billion a year, including the Prop. 301 money but not including federal or local funds. Using that number, if those dollars were to disappear it would amount to a 13 percent cut in state aid.
Put differently, it would reduce annual per-student aid by more than $588 to $3,940. And Arizona already is close to the bottom of all the states in the amount of dollars it puts into K-12 education.
Ducey’s comments on the extension are a bit of a shift for him. He was elected in 2014 on a vow of no new taxes.
In fact, he gained statewide publicity as treasurer when he opposed a 2012 ballot measure that would have made permanent a temporary one-cent sales tax hike pushed through by then-Gov. Jan Brewer to balance the budget and prevent more draconian cuts to K-12 education. Ducey argued at that time that the extension was, in fact, a new tax since the old one was set to expire.
But he bristled when it was pointed out that Proposition 301 also was adopted in 2000 as a temporary tax with a self-destruct date, albeit in 20 years versus three.
“This is a funding program,” he argued over reauthorizing the 0.6-cent sales tax levy; extending the temporary one-cent sales tax would have been a tax hike.
But Ducey was less sanguine about demands by some education supporters who want to give voters the option to boost the levy to a full penny. That would raise an additional $400 million a year.
About the closest the governor came to saying he might consider it was in comments that he was “negotiating” with the education community about ways to make Prop 301 better. He refused to provide specifics.
“I’m not going to negotiate Prop 301 in a parking lot,” he told reporters.
Also left in the air is when to take the issue to voters.
It could go on the ballot as early as 2018. But that’s also the same year Ducey himself is up for reelection.
And House Speaker J.D. Mesnard told Capitol Media Services there is no rush, as a 2020 election could reauthorize the levy in time to ensure there is no gap.
“I would think that a higher turnout election of 2020 would be better for the success of the measure,” he said. “But if folks think ‘18 is a better year, we can certainly have that conversation.”
It would be up to Mesnard and Senate President Steve Yarbrough to line up the votes to put the issue on the ballot.
The idea of having legislators extend the levy themselves has not even been discussed, at least in part because it would require a two-thirds vote of both the House and Senate. And while some lawmakers appear willing to refer the question to voters, they see the idea of raising taxes themselves as political suicide.
Mesnard said he thinks he could corral the votes to put the issue of maintaining the levy on the ballot.
“I think there would be a lot of support for extending it,” he said. “Expanding it, I think is going to face a bigger hurdle.”
In fact, Mesnard said the only way to put the question of boosting the tax to a full penny on the ballot would be if education groups themselves gathered the signatures in an initiative drive.
“Obviously, then we’re not involved at that point,” he said.
Whether voters would go along is an open question.
A poll conducted by an education group at the end of last year found 77 percent of those questioned saying they would support renewing the current 0.6-cent tax. But when asked about rounding that up to a full penny, support dropped to 65 percent.