Editorial: Use Gov. Ducey’s ‘rainy day’ fund to pay down state’s debt
Tax Day has come and gone, but your trepidation was warranted. Gov. Doug Ducey is one step closer to getting what he wants, while lawmakers are pressing for the state’s taxpayers and financial health.
Remember the tax code changes that President Trump signed in December 2017? Many people thought the impact would have come last year; in fact, it kicked in this year (2019, for 2018 taxes). Generally, Americans got a better federal refund – through reduced tax rates and a doubling of the standard deduction for those who don’t itemize.
But not necessarily so with state taxes. Arizona’s current system, under the 2017 changes, looks to give the state (not taxpayers) a roughly $155 million windfall. Ducey wants to put it in the “rainy day” fund; Arizona legislators wanted to alter the state tax system so taxpayers would get it.
Round one: Ducey 1, Lawmakers 0. Sadly, all legislative attempts were spurned.
Now, lawmakers want to be assured that the extra money will not only sit in a bank account. In fact, some are demanding changes in state law to ensure that taxes will be cut next year, according to Capitol Media Services.
Even better would be Senate President Karen Fann’s idea: use the windfall to pay down state debt.
Look at it this way: The Arizonans who met the April 15 Tax Day deadline used forms that assumed the state will get the extra cash; any alteration now would force the Department of Revenue to recalculate what people paid and possibly issue refunds. Instead of going back, Fann is looking forward.
The Senate Republican from Prescott wants to pay off some of the money the state borrowed during the recession to balance its books.
“We will save $50 million in interest,” she said, over the life of the bond. More immediately, Fann said, lowering the principal will lower the state’s annual debt service payment by $24 million a year.
Bottom line, this would be a benefit to everyone: “That debt service money can go into things like education, infrastructure, something else,” Fann said.
While other challenges exist in the tax code, including fixing the deductions so charities are not penalized, Fann’s idea is money-wise.
Paying down debt is something the state and every household should be doing. It is a concept we all should get behind.
In the end, the money we save could shore up education needs and decaying bridges, even fill some potholes.