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Arizona, Elections, Politics

Proposition 204 is recipe for financial disaster

Posted: October 18, 2012 at 10:47 am   /   by


Proposition 204 is bad for Arizona. Not only does it increase taxes by $1billion a year, but it requires that spending increase every year and it prohibits the Legislature from ever being able to adjust spending in several areas of the budget below 2012 or 2013 levels, whichever is greater.

If that doesn’t give voters pause for concern, consider this: The Legislature is prohibited from changing any proposition passed on the ballot except to further its cause, so if Proposition 204 passes, this $1billion tax increase is here to stay!

Proposition 204 is a permanent tax increase that will have devastating ramifications on the state’s budget and how it is developed. Simply, it is developing the budget at the ballot box. Based on estimates from the Joint Legislative Budget Committee, there are mandated inflation costs that the 1-cent tax increase will not generate enough revenue to cover. This means the general fund will have to pick up the cost of these unfunded inflation mandates which add up to as much as $556million in fiscal 2023, without providing an additional source of revenue. Further, Proposition 204 will be audited only once every five years and four of the funds receiving monies are exempt from audit. An unchangeable tax with no accountability is irresponsible and puts at risk the ability for Arizona to stay on track for a balanced budget. This is a recipe for a California-style financial disaster.

I often hear that government should be run like a business. Effective governments, like effective businesses, must constantly adjust their ideas and measures to account for changing realities. Who could or would want to run a business that is required to raise prices, increase spending every year and be prohibited from adjusting expenditures? If Proposition 204 passes, that is what will happen to Arizona’s budget. Previous ballot measures have already significantly impacted the state’s budget and if Proposition 204 passes, it is estimated the Legislature will have access to less than 30 percent of the state’s general fund to fund the remaining functions of state government.

Proposition 204 is being sold as a mechanism to invest in schoolchildren and their teachers. However, more than $500million will be spent every year with no required increase in student performance or class size reduction. The remaining money raised by the tax increase is to be spent in a variety of ways, including transportation projects and to fund the design of environmentally sensitive projects and transportation-related wildlife improvement projects.

The proponents of Proposition 204 claim it is about strengthening the economy and job creation, yet the Arizona Chamber of Commerce and Industry is opposed. Further, the League of Arizona Cities and Towns is opposed because they are concerned it will make it difficult for cities and towns to generate revenue in the future to meet local needs. Other groups in opposition include the Arizona Construction Association, Arizona Small Business Association, Greater Phoenix Chamber of Commerce and Gov. Jan Brewer.

It is for these reasons that I encourage you to vote no on Proposition 204.

Rep. Michelle Ugenti represents Scottsdale and Fountain Hills and chairs the Government Committee and Appropriations subcommittee in the Legislature.

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Proposition 204 is recipe for financial disaster