Arizona in Desperate Need for Income

Gov. Jan Brewer

PHOENIX (By Matthew Benson, Arizona Republic) December 10, 2009 — Issuing some of her strongest words to date on what she views as a needed tax increase, Gov. Jan Brewer said "there's absolutely no possible way we can balance Arizona's budget unless we have additional revenue."

The Republican governor is asking legislators to ready for another special session — the fifth this year — before Christmas.

On the heels of roughly $300 million in budget cuts signed into law last week, the Joint Legislative Budget Committee estimated Monday the state shortfall now stands at $1.6 billion for the remainder of this fiscal year.

The figure is about double that for fiscal 2011, which will begin July 1.

"We are in desperate need of revenue," Brewer said. "Even with that revenue, we are going to have to do more major cuts.

"We could cut every government service in the state of Arizona, except that which is mandated by the federal government, and we still wouldn't balance the budget."

Brewer has for months advocated a temporary, 1-cent-per-dollar increase in the state sales tax that would raise an estimated $80 million a month for state coffers, or roughly $1 billion a year.

The provision could be tied to corporate tax cuts that would be enacted in future years in the hope of spurring job growth.

"It's something that is a focal point of my administration — and that is turning the economy around and bringing high-paying jobs to Arizona," Brewer said. "We will do whatever is necessary to accomplish that."

While the national economy is showing some signs of recovery, there remains little to be upbeat about in Arizona.

Tax collections for state government in October were $142 million short of projections, according to the latest report by legislative budget analysts. General-fund spending outpaced revenues by $644 million for the month.

So even as lawmakers slash hundreds of millions in state spending, the budget shortfall continues to worsen.

October's revenue figures were dragged down by sales-tax collections that fell nearly 18 percent short of the same month in 2008, and individual income-tax collections that were more than 34 percent off for the month.

Corporate income-tax revenue was $10 million below forecast for the month and, year to date, nearly 36 percent down from 2008.

Non-farm payroll grew slightly in October with the state adding more than 13,000 jobs. But the state unemployment rate continued to grow, climbing to 9.3 percent, the highest reading in more than 26 years, according to the Joint Budget Committee.

Brewer would like lawmakers to return to the Capitol this month to further cut state spending and refer a tax increase to voters. But the likelihood of calling another special session remains in doubt, especially with the holidays approaching and some lawmakers leery of reconsidering a tax increase.

Legislators spent about 50 days in special session this summer on a similar proposal that fell just shy of the votes needed to refer it to the ballot.