Monthly Archives: December 2010

There’s been much discussion about ASU professor Paul Bender’s eligibility on Arizona’s Independent Redistricting Commission.  Bender appears not to qualify because he is the Chief Justice of the Fort McDowell Nation Supreme Court (commissioners generally cannot have held any other public office within the previous three years).

But there’s another and more obvious reason Bender should not be on the commission.  It seems he has an agenda that doesn’t comport with the language of Prop. 106, which is now part of Arizona’s constitution.

Bender told the Yellow Sheet Reports, “I was really disappointed in the results of the first commission. The primary purpose was to get politics out of it and to make more competitive, less-safe seats – more districts in which there is real competition – to see who would win. The first commission reduced the amount of competitive districts rather than making it larger.  I really believe this is an important
process, and believe it’s important to get it going right in Arizona.”

Bender is flat wrong.  It may have been the intent of Jim Pederson, who financed Prop. 106 and later ran as a Democrat for U.S. Senate, to have more competitive districts (i.e. fewer districts held by conservatives), but whoever crafted the language for Pederson didn’t make competitiveness a high priority.

ARTICLE IV, PART 2, SECTION 1, PARAGRAPH 14 states:

(14) THE INDEPENDENT REDISTRICTING COMMISSION SHALL ESTABLISH CONGRESSIONAL AND LEGISLATIVE DISTRICTS. THE COMMENCEMENT OF THE MAPPING PROCESS FOR BOTH THE CONGRESSIONAL AND LEGISLATIVE DISTRICTS SHALL BE THE CREATION OF DISTRICTS OF EQUAL POPULATION IN A GRID-LIKE PATTERN ACROSS THE STATE. ADJUSTMENTS TO THE GRID SHALL THEN BE MADE AS NECESSARY TO ACCOMMODATE THE GOALS AS SET FORTH BELOW:

A. DISTRICTS SHALL COMPLY WITH THE UNITED STATES CONSTITUTION AND THE UNITED STATES VOTING RIGHTS ACT;

B. CONGRESSIONAL DISTRICTS SHALL HAVE EQUAL POPULATION TO THE EXTENT PRACTICABLE, AND STATE LEGISLATIVE DISTRICTS SHALL HAVE EQUAL POPULATION TO THE EXTENT PRACTICABLE;

C. DISTRICTS SHALL BE GEOGRAPHICALLY COMPACT AND CONTIGUOUS TO THE EXTENT PRACTICABLE;

D. DISTRICT BOUNDARIES SHALL RESPECT COMMUNITIES OF INTEREST TO THE EXTENT PRACTICABLE;

E. TO THE EXTENT PRACTICABLE, DISTRICT LINES SHALL USE VISIBLE GEOGRAPHIC FEATURES, CITY, TOWN AND COUNTY BOUNDARIES, AND UNDIVIDED CENSUS TRACTS;

F. TO THE EXTENT PRACTICABLE, COMPETITIVE DISTRICTS SHOULD BE FAVORED WHERE TO DO SO WOULD CREATE NO SIGNIFICANT DETRIMENT TO THE OTHER GOALS.  (Emphasis added.)

The first commission followed the letter of the law.  The result ended up being fewer contested general election campaigns.  Republicans and Democrats held safer seats, but Republicans held even more than before Prop. 106.  It was a stinging defeat for Pederson.

Bender doesn’t intend to similarly follow the letter of the law.  Before competitiveness can move up the chain of priorities, it must be weighed against the potential detriment to the other goals.   In other words, the other five goals have higher priority.  As a constitutional law expert, Bender knows this.  It doesn’t matter what he or other commissioners want.  Drawing district lines according to the constitution is pretty clear cut.  As someone who sat through many of the statewide hearings 10 years ago, I know there isn’t much wiggle room after the first five goals are met.

Bender is not eligible because of his position with the Fort McDowell Supreme Court, and he is not qualified because he intends to sidestep the constitution in order to fulfill his own agenda.

It’s rare when a state program ends.  But a bit of good news occurred last year in the legislature when Arizona lawmakers refrained from extending the dismal motion picture tax credit (we lobbied aggressively to kill the program).  It shouldn’t have been a difficult decision given the facts.

An Arizona Department of Commerce report revealed that Arizona gave out $8.6 million in credits in exchange for $2.3 million in new tax revenue.  Whoops.

Arizona isn’t alone in ending this misery, according to Bloomberg Businessweek.   In Michigan, jobs created by their film tax credit cost the state $193,000 each, thereby causing the governor-elect to re-examine the program.  Film credits have been scaled back in Wisconsin, capped in Rhode Island, and suspended in New Jersey, Iowa and Kansas.  Arizona’s will end at the end of the year, according to the magazine.

There is a lesson in the demise and failure of film tax credits.  When lawmakers are sworn in, they are not endowed with special insights into foolproof ways to manipulate the economy.  If Arizona just had a burgeoning film industry, the notion went, it would be a win-win for everyone.  As it turned out, it was a win only for those who received the subsidies.  Arizona never became a mini-Hollywood (not enough scripts calling for deserts or mountains?) and taxpayers were left holding the bag.

Because the credits failed to incentivize movie production, lawmakers should ask whether they’re in any position to micromanage some other industry.  They aren’t.  Incentives bestowed on some are paid for by others.  The tax code should not be used this way.  Not for manufacturing, not for health care, not for anything.

The best thing lawmakers can do is to minimize distortions in the tax code.  Ensure it is fair, neutral, transparent, and has the lowest rates possible.  The elimination of Arizona’s film tax credits is the first step in this direction.

Republicans were elected overwhelmingly nationally.  There was a backlash against incumbents, special interests, and Obama successfully (in some cases) pursuing his leftward agenda.

Candidates for state legislative offices benefited from the wave, too.  In Arizona, there are now only nine Democrats in the Senate.  Both Houses have super-majorities.   Balancing the budget and fixing the economy are common themes for the newly minted GOP lawmakers.

But when it comes to fixing the economy, the early reports indicate the Republicans might be a little tone deaf to the sentiment of the people who just elected them.

On tax policy, for example, there appears to be some life left in the notion that state policymakers can manipulate the tax code to improve the economy by providing carve outs and incentives for certain businesses.  The election should have driven a final nail in that coffin.

The expansion of enterprise zones, where companies who meet certain criteria would receive preferential tax treatment, is bad tax policy.   The House plan last year included something similar and GPEC has been the lead driver of this policy.  This provision won’t stimulate the economy and we hope it similarly fails to stimulate interest from new lawmakers.

There is simply no sound reason for this policy.  Creating a new benefit that only some companies benefit from distorts the tax code for everyone else.  Yes, some jobs pay more than others, some industries export more than others, some companies are high-tech, while others are not.  But the state should not tip the scales in favor of some activities over others.  It is not the job of state leaders to distort the tax code under the pretext that they know what they’re doing.  They don’t.  My favorite quote on this topic:

“The most fundamental problem is that many public officials appear to believe that they can influence the course of their state or local economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence.”

Alan Peters and Peter Fisher, “The Failures of Economic Development Incentives,” Journal of the American Planning Association 70, no. 1 (2004)

These are the policy reasons to oppose carve outs.  There are political ones, too.  Which constituency do carve outs appeal to?  Aside from the beneficiaries of the carve outs, nobody supports these things.  Do Republicans really believe they were given super-majorities in both the House and the Senate to bestow special tax favors to certain businesses?  Are the Tea Party activists clamoring for special breaks for big business?  Of course not.

One lawmaker told me that unless it benefits the guy running the hot dog cart, he’s not voting for it.  That’s the right sentiment.

Arizona lawmakers should begin to phase out special carve outs and incentives.  The tax code should become flatter with less distortion.  To the extent rates can be reduced, they should be reduced for everyone.  If they can’t be reduced for everyone, then reductions should be placed on the backburner, or phased in over time.

In short, Republicans should begin to simplify the tax code, not make it more complex.  This would prove to be both a policy and political winner.



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