Reprinted from the Wall Street Journal’s Political Diary (4-9-10)

April 9, 2010

Leaving Arizona . . . Poorer

Relative to the size of its budget, the red ink in Phoenix is even higher than in Sacramento or Albany. Arizona has one of the largest deficits of any state. Its mortgage foreclosure rate is also one of the highest. No wonder pro-spending groups and labor unions have been consistently pushing for higher taxes. Last year Arizona raised property taxes by more than $200 million.

Governor Jan Brewer, a Republican, is eyeing a sales-tax hike next. Legislators agreed to put a one-point hike before voters in a referendum scheduled for May. They also passed a “contingency” budget — conservatives mockingly call it the “doomsday budget” — that would take effect if the sales tax hike is voted down. Liberal interests want to persuade voters that failing to accept higher taxes will mean draconian cuts in schools, health-care services and road maintenance.

But Arizonans appear not in the mood for higher taxes this year. Last week the powerful Arizona Hospital and Healthcare Association backed away from an initiative it was supporting to boost the state income tax on “the rich” to 5.45% from 4.45%. Leading anti-tax groups, including the Arizona Free Enterprise Club, blasted the proposal, complaining that the health care lobby is in favor of every new tax that comes down the pike, including higher taxes on tobacco, snack foods and liquor.

Also speaking out was former Gov. Fife Symington, who says higher taxes would “make Arizona poorer, when we need more jobs and higher incomes to pay the bills.”

Steve Voeller, head of the Free Enterprise Club, says the hospital group finally “backed down because there was no political support in this state for the tax hike.” The anti-tax groups now are turning their attention to defeating the proposed sales tax increase. Tweaking the hospitals, Mr. Voeller says: “The best way to “keep people off Medicaid is by getting them a job.”

— Stephen Moore