Originally Published: August 6, 2018 7:27 p.m.
PHOENIX — The decision for Republicans on who to nominate for governor could depend on whose numbers they believe.
On one hand, challenger Ken Bennett says that, as Senate president, he put together a budget that cut individual income tax rates by 10 percent. Yet incumbent Doug Ducey, while vowing when first elected to cut income tax rates to “as close to zero as possible,’’ has been unable to move the needle.
But Ducey says that Bennett is at least part of the reason the state wound up deep in the financial hole when the Great Recession hit.
He accuses Bennett of working hand-in-glove with Democratic Gov. Janet Napolitano to increase state spending far beyond what was appropriate. And that, Ducey says, left Napolitano successor Jan Brewer “holding the bag’’ with a $3 billion gap between expenses and revenues as the economy tanked.
Bennett says he left office at the end of 2006, insisting Napolitano, who stayed on, inflated the budget in the following two years, before she quit to take a job in the Obama administration.
But state spending went from $6.46 billion in the first budget adopted during Bennett’s tenure as Senate president to $9.46 billion for the last one under his control, an increase of more than 46 percent.
And the last budget adopted under Napolitano actually was less than that.
Then there’s Ducey’s claim of putting $2.7 billion in new dollars into education since he was elected.
Legislative budget analysts say total state aid to education went from $4.5 billion when Ducey took office in 2015 to $5.9 billion for the new budget year that began July 1. But Ducey uses different math to justify the $2.7 billion.
He tallies the amount spent each year for the past four years of K-12 spending — including mandated inflation and student growth — and then compares each annual figure not with what was spent the prior year but what it was when he took office. And then the governor adds each of those annual differences together.
But no matter how it’s calculated, state funding is not $2.7 billion higher now than it was in 2015.
The governor is on firmer financial grounds in saying that Prop 123, approved by voters in 2016, will put $350 million a year in new dollars into classrooms for a decade.
But that doesn’t tell the whole story.
First, the money is coming from a trust account from the sale and lease of state lands, money that already belongs to schools. And as even then-state Treasurer Jeff DeWit warned, taking more money out now will mean less available later.
More to the point is how — and why — the deal happened.
Schools filed suit after state lawmakers ignored a voter-approved mandate that state aid to schools be adjusted annually to account for inflation. The Arizona Supreme Court agreed, sending the case back to a lower court to figure out how much the schools were owed.
The approval of Proposition 123 settled that lawsuit — though only for about 70 cents on the dollar of what schools said they were due.
Ducey does not dispute that state aid was illegally withheld but points out the practice started under his predecessor.
“I’ll be held accountable for the three and a half years I’ve been governor,’’ he says. And the fact remains, Ducey says, that he was able to negotiate a settlement.
“And what we turned it into, rather than more money for lawyers, was additional money for teachers,’’ the governor says.
Bennett says he managed to balance the state budget without raising taxes, something he says Ducey has not done.
The incumbent does not agree.
“I pledged to not raise taxes and I have not raised taxes,’’ he says.
Yet the state budget he negotiated with lawmakers for this year includes an increase in the cost of registering a vehicle. That will pay for the highway patrol, freeing up the other dollars that now fund that agency for the governor to spend elsewhere.
Officials of the state Department of Transportation, tasked with figuring out that cost, say they are still conducting that study. But it could end up in the neighborhood of $17 a year for each and every vehicle.
Ducey dismisses questions of how taking that much more money out of the pockets of Arizonans — more than $100 million a year — allows him to insist he has kept his “no new taxes’’ pledge.
“What I’m talking about is a fee,’’ he says. A “tax,’’ the governor notes, requires a two-thirds vote.
True. But Ducey and lawmakers got around calling it a “tax’’ by giving ADOT Director John Halikowski unilateral power to set the rate, rather than setting it themselves.
But Bennett’s hands are not entirely clean on this claim, either: The Legislature approved allowing various state agencies to impose some fee increases while he was in charge of the Senate.
If no new taxes is half of what Ducey promised on state finances when elected in 2014, the other half is that pledge to push income tax rates to as close to zero as possible.
The measures that Ducey has proposed and signed into law have only nibbled around the edges, things like indexing deductions and tax brackets to inflation. The actual tax rates remain as they were when he took office.
Pushed about what happened to that promise, the governor says voters need to be patient — and give him more time.
“I have an aspirational goal of getting our income taxes as close to zero as possible,’’ he says.
“I said to achieve that on the income tax front I would need a term or two as governor,’’ Ducey explains. “I would need a growing economy, and I would have to have a plan.’’
The way the governor figures it, he’s got two out of three.
“I’m asking for the second term in November and I think we’ll be able to improve our overall income tax situation in the state of Arizona.’’
Much of Ducey’s campaign for re-election is based on the state’s economic recovery.
Since he took office in January 2015, the state has added 232,000 private sector jobs. And the unemployment rate went from 6.4 percent to 4.7 percent.
Bennett, for his part, says Ducey is too quick to take credit.
“Thank goodness President Trump’s economy is catching fire and helping Arizona,’’ he says. But the Arizona jobless rate already had dropped to 5.2 percent by the time Trump was sworn in.
Still, Arizona’s unemployment rate remains higher than the national average. Ducey dismisses that fact as irrelevant, saying he is focused on the “labor participation rate.’’
“People that want to find a job can find a job,’’ the governor says. “And the people that have a job have a growing paycheck.’’
Ducey also insists that Arizona “has more jobs available today than people to fill them.’’
But the very definition of unemployment — and how the rate is calculated — is based on people who do not have jobs and say they are looking.
There’s one other number that figures in the campaign.
Ducey points out that in the 2014 Republican primary, Bennett came in fourth in the six-way race — eight-way if you count two write-ins.
Bennett sees the numbers a different way, pointing out Ducey got just barely more than 37 percent of the votes cast.
“Two-thirds of Republicans wanted someone else,’’ he says.
“I actually believe I give the Republican Party the best chance of winning in November.’’