Arizona Policy Choices

Balancing Acts: Tax Cuts and Public Policy in Arizona

Spend Today — Or Invest in Tomorrow?

Jim Kiser, Editorial Page Editor
The Arizona Daily Star

Arizona's tax-cut binge is irresponsible and harmful. I regret having to say that. It would be so much more fun to glory in Arizona's great prosperity. In fact, like the Republican leaders who run state government, I do benefit, personally and professionally, from the state's prosperity. Where they and I differ, however, is fundamental. There are two key differences.

First, former Governor Fife Symington appeared convinced that his tax cutting fueled the state's prosperity. I think that is absolutely backward. The prosperity made the tax cutting possible.

The truth is that neither the governor nor the legislature had much, if anything, to do with the state's prosperity, as the governors and legislatures in other states have had nothing to do with their prosperity. Arizona's economic strength is a function of a national economy that is going through an unprecedented period of moderate growth with high employment and low inflation. You can debate the causes of that national economic strength, but the consequence, as The New York Times reported in late July, is that "the nation's governors are presiding over such prosperous states these days that they find themselves with an enviable problem unheard of a few years back: What to do with all their money."

Arizona's prosperity is wonderful. But it is not unique among the states.

And it is not the result of tax cuts or of any special wisdom or virtue that we in Arizona share.

Second, the state's Republican leadership, including new Governor Jane Hull, if her early statements are an accurate indication, wants to distribute the fruits of the prosperity to those who already are the most prosperous or to put it more kindly, to those who pay the highest taxes. I think we should use the money to improve the lives and opportunities of the less fortunate and needy. Obviously, you can build a respectable intellectual case that those who pay the most should get back the most.

But equally obviously, you can build a respectable intellectual case that one function of government is to provide for the social and economic well-being of all its citizens. You can build a case, too, that investing in the lives of the needy is not "do-gooderism," but a long-term investment in improving the quality of the state's work force, reducing crime rates and reducing the social dysfunction that so frequently accompanies poverty. In this sense, tax cuts are here and in the present. They are spending today. Helping the needy is an investment in the future.

It need not be an either-or between tax cutting or investing in the needy.

But the leadership's idea of a fair balance has seemed to be 90 cents for tax cuts and 10 cents for investment. My idea tends toward the other extreme. Partly that is the result of a perhaps exaggerated sense of fairness my parents instilled in me when I was young. But it partly also is a calculated investment in what is best for Arizona.

Just look at the lives we could improve, the opportunities we could make available, and the problems (welfare, jail terms, dysfunctional lives) we could reduce by investing wisely in preschools, all-day kindergartens, health care for the poor and near poor, better mental health services, sex education programs, Child Protective Services, better school buildings, lower student/teacher ratios in the early grades.

I know this sounds like the typical liberal agenda. But liberals have adopted this typical agenda not out of ideology, but out of recognition that these social programs help solve real problems for real people.

For all their emphasis on being realistic, Arizona's political leaders, in my opinion, are not being realistic at all.

Probably the single greatest factor exacerbating Arizona's especially pernicious social problems is its exceptionally high population churn. We celebrate that Arizona is one of the nation's fastest growing states. What we too seldom see is that for every person who comes here and stays, traditionally two more have come, stuck around a while, and then left.

Every businessman or businesswoman knows what problems are created for their business by that level of customer churn. It drives up marketing costs, sales costs, distribution costs, credit costs, customer service costs, to name only a few. It does terrible things to education, one of my special interests, with some teachers seeing complete turnover of the students in their classes during the school year.

Yet Arizona government seems oblivious to the costs being imposed on the state by its population churn. That churn means Arizona should be spending more than the average on social and health programs, yet Arizona is consistently among the very lowest spending of all the states.

That is unrealistic and irresponsible.

Responsible, forward-looking leaders would not use our burgeoning resources for tax cuts. They would use them to make Arizona a better state by helping provide the needy the skills and opportunity to improve their lives.

It's a choice every conservative understands: Spend today or invest in tomorrow.


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Morrison Institute for Public Policy