An assessment of Arizona’s current financial dilemma by Arizona Senator Steve Pierce …
Editor’s Note: Following are excerpts of a speech given by Arizona Senator Steve Pierce to a group of attorneys. His assessment is frank, he pulls no punches. But he does offer potential solutions that can make a start at addressing the serious issues facing the State of Arizona. And if nothing is done, the state is likely to find itself in the worst financial crisis experienced since becoming a State in 1912.
Senator Pierce’s Comments:
http://www.prescottenews.com/features/letters-to-the-editor/senator-steve-pierce-speaks-the-truth-nobody-wants-to-hear.html
From here forward, we have enormous issues.
FIRST, remember this…
1) the State is broke
2) we are going into insolvency
3) Next we will be in bankruptcy
This is the truth. No one wants to hear it or say it but it is the truth.
Here’s Why … We have a $3.6 billion structural deficit. … As of mid October, there is a $2 billion deficit in the 2010 budget alone, and we still have falling revenues. … The first 2 months of the fiscal 2010, revenues are another 16% below last year and $233,000 below our already conservative forecast. Current on-going projections of revenue are $6.4 billion.
If, and it’s a huge and improbable IF… we were to have 4 years of 10% growth, we still would not be where we were in 2007 when we had record revenues of $9.6 b. We spent $10 billion that year and have continued spending $10 billion every year since. It should be obvious, we have a SPENDING problem not a REVENUE problem.
We need cuts in spending and we need to generate revenues. If we had property tax cuts, income tax cuts and could do everything possible to get business to stop in Arizona instead of going to Texas, we could grow our way out of some of this with time. However, We have to find immediate relief by cutting spending and yet the cuts are the hardest. There simply isn’t the will to cut everything like we need to do. Legislators will not cut education or DES or DHS as deeply as it needs to be cut. One excuse being used is called MOE, like Larry, Curley, MOE. MOE is “Maintenance of Effort” and it is a directive or one of the Strings that came attached to the Stimulus money when we accepted it last spring. You can’t cut below spending levels of 2006 or “the MOE”.
If we had the Governor’s dreaded referral, (which, by the way, 46 of 53 Republicans voted for and not a single Democrat voted for it when normally they are the ones wanting more to spend) and it was voted down, then some of the legislators MIGHT be willing to make the cuts.
Sadly, the alternative is this… We follow California and decay so far into financial ruin that we begin to issue warrants to Arizona State employees. When the time comes that they cannot cash them for the full cash value issued, then they will realize what I am saying today is true. We are insolvent and we are slipping into bankruptcy. Many of us have tried to warn of this but so far it falls on deaf ears by members on both sides of the aisle.
My belief (State Senator Steve Pierce) is this: …We must do everything in our power to convince the Governor that she should declare a state of “fiscal emergency” and cut many of the so called voter-mandated spending programs like Prop 203, which is the First Things First Early Childhood Development and Health Fund, consisting of revenues generated by an increase in the state tax on tobacco products, donations and state appropriations.
OR … Address Prop 301 – that’s the K-12 funding creating a funding stream for public education from sales tax. Since sales tax fluctuates, the monies available to school districts will fluctuate annually. The intent of the majority of the Proposition 301 K-12 funding is to 1) increase teachers’ salaries, 2) increase accountability among public educational institutions and 3) reward highly-performing teachers. Let’s find other ways to do this.
These are examples of initiatives that we have passed thru voter initiatives. We could suspend them for 3-5 years so the hands of the legislative branch are no longer tied, use what revenues we have to create a balanced budget that would make the State then live within its means and create the plan to do so with the help of our constitution.
Next I would include restructuring and rebuilding education, AHCCCS, DHS and DES. I would suggest that the Governor form committees of the private sector to do this and their instructions would be this: streamline agencies in their functions, their spending, and their revenues. These committees would report back with an interim report in 45 days and then a complete report in 60 days. Then we put into operation those new guidelines along with what the State’s constitution demands and get our government back to the basics required by law.
We can grow out of this much quicker if we just use some common sense.
• Cuts in CIT, PIT (corporate income tax rates and personal income tax rates) were proposed in the past session and missed being passed by one vote last session. These would grow our economy and be a positive effect to business.
• Repealing property taxes would encourage companies to move here because they would know what was in the future, not guess.
• Easing of mandates, rules and regulations would help make it attractive to relocate here. Again, a positive that would tell businesses to relocate here and we will not create new regulations or new layers of rules to burden you.
We should start new programs like these for example:
• Self Certification system to streamline and save government resources by reducing the requirement for government personnel to inspect or certify simple items like paper work and simple record keeping
.
• Reduce “inspection personnel” by asking small businesses to perform some of these “certification” processes on their own rather than having a government inspector go out to their businesses and perform an inspection where they are just “checking the boxes.”
• Create the Arizona Volunteer Corps under ADOA where state citizens can sign up for 10 to 15% of state government jobs fulfilling a needed position and keep it as a volunteer program, where specific agreed upon wage and other state employment costs (ERE) like retirement, etc. are not born by the state because the “volunteer” is agreeing to the arrangement. Require each agency to identify 5 – 10% of their jobs which might be able to be filled by a “volunteer corps” worker.
Let’s start with ideas like this:
• Creating a business friendly environment that is willing to work with companies to move here.
• We currently have a group working on an energy park that could make Arizona a leader in energy and provide the state with cheaper energy.
• Additional revenue streams like casinos could bring new jobs, new tax bases, new businesses to the State that again will help us grow out of the financial mess we are in. We already have gaming in Arizona, look at the lottery, the Scratch It, go to any Circle K and gamble. Look at all the Indian lands…look at the tax base we are missing with those facilities. Why do we just look past this? Horse racing is a huge business nationwide and it could be brought here with a year round climate.
• We need to investigate this and other potential revenue sources thoroughly.
These are a few of my thoughts about the future… from where we are to where we need to be. We should strive to be the place to go for a business and a tax haven. Many of us in the Senate have used the term, “Safe Haven” and that’s what I want to be a part of…t o make Arizona a place that my grand children can live in and thrive, better than anywhere in the nation, or the world for that matter. … We can do it
DIFFERENT PERSPECTIVE . . . I rise to compliment State Senator Steve Pierce’s assessment of the current financial dilemma he sees Arizona facing. Left drifting as it is currently, Senator Pierce’s prognostication could well be realized.
“We” differ, I believe, in that I do not find his solution includes inviting … you and me … to the table, but, rather the financial crisis will be resolved through more governmental directives, rule, regulations, bulletins … oh … but all oversight will per Senator Pierce occur as a result of self-certification…?
With more than 30 years of hands-on-experience in the water and wastewater industry in Arizona I can attest that … self-certification … is nothing more than … “feel-good” pabulum and does absolutely nothing to assure safe water for you, me, our children, grandchildren.
It strikes me that NOW is the time for US to begin an open, honest, timely evaluation of what the environment in Arizona can actually support. I am quite sure few will find the results particularly appealing and will result in what will be depicted by many as requesting draconian changes in how we live in an arid desert environment like Arizona.
How long do “we” continue to play the ostrich game and bury out heads in the sand hoping that if or when we pull our head out things have miraculously changed and for the better.
Together we can provide the change necessary … but … it will NEVER occur as a result of government edict…
We do agree on one thing … “we can do it” … and the reality is only “we” – that’s you and me can do it … without our 100% buy-in it simply won’t fly …
… I invite “us” to consider not to shame, blame or criticize but rather simply ask … what would it look like when it’s fixed … and own that ONLY we have the power to bring about the change needed to fix it …