Sen. Sylvia Allen’s (R-Snowflake) plan to raise the state’s sales tax to generate more money for education continues to move through the legislature, despite the announced opposition of Gov. Doug Ducey.
SCR 1001 (HCR 2024) would place on the ballot a proposal to boost the state’s sales tax by about half a cent, with the money earmarked for K-12 schools, universities and community colleges. If lawmakers pass the measure, voters could have a chance in 2020 to raise the state sales tax by .4 of a cent. This could potentially generate an extra $472 million annually.
That seems like an easy win in a state that’s 48th nationally in per-student spending, with among the nation’s lowest teacher salaries and largest class sizes.
However, the proposal has proven unexpectedly complicated – drawing criticism from outgoing Republican Superintendent of Education Diane Douglas and many Democratic lawmakers. Gov. Doug Ducey opposes it, but Arizona Republican Party Chairman Kelli Ward loves it.
So why all the furor?
Some critics oppose any tax increase.
Some say the proposal could actually hurting K-12 schools and universities, depending on how it affects an existing, half-cent sales tax voters in 2000 earmarked for education in the form of Proposition 301.
Some critics say the reliance on the sales tax means the poor will end up paying an even larger share of their income in taxes in a state that already has one of the nation’s most regressive tax codes.
Some critics say schools need $2 billion in additional support to come up to the national average and the measure would only dilute support for really solving the problem.
On the other hand, supporters say school advocates should not pass up any chance to boost per-student spending levels, which remain far behind the pre-recession levels of 2008.
Sen. Allen – the powerful head of the Senate education committee who recently announced she won’t seek re-election – has pushed hard for the proposal. She represents all of Rim Country and the White Mountains in the state senate.
“I think it’s solid. I think it’s a good proposal. I think the timing is now. I think my proposal is better than what would have been on the ballot in 2018,” Sen. Allen told Capital Media Service’s Howard Fisher.
The 2018 ballot measure would have imposed an 8 percent state income tax on upper income tax payers. That measure was headed for the ballot with 270,000 signatures, but got knocked off the ballot by the state Supreme Court due to technical problems with the petition signatures.
“My vision is for a revenue stream that allows everyone to participate; supports local control; and provides long-term funding for Arizona’s classrooms, university students and community colleges. Most importantly, it is a revenue stream that is passed by Arizona voters at the ballot box,” she said in a press release from the state Republican Party.
As drafted, K-12 schools would get 75 percent of the money from the increased sales tax. Universities would get 20 percent and community colleges 5 percent.
However, the measure could have unpredictable effects on the state’s complicated education funding system, said outgoing Republican Superintendent Douglas.
She said the “devil lies in the details” and how the added sales tax would affect the existing, .6 cent sales tax originally approved by the voters in the form of Proposition 301. The money from that existing tax has been crucial to school budgets for the past 20 years, including providing a merit-pay plan that boosts most teacher salaries by about 5 percent.
Douglas argued that the new measure could potentially supplant the existing tax, effectively removing the formulas that ensure the districts and universities get the money. That tax was slated to expire in 2021, but the legislature last year voted to extend it for 20 years. However, that means the legislature could change the law and repeal or reallocate that money in the future.
Douglas said two years ago she proposed making the Prop. 301 tax permanent and boosting it by almost half a cent to a full penny.
“I find it very ironic that the same Republicans who two years ago pooh-poohed, ignored or disparaged my idea are now doing handsprings in support of SCR1001 and the 1 cent sales tax,” she wrote. “Over my decades of experience, I have found the education system to be, shall we say – challenged – to provide the truth when it comes to taxing initiatives. Sadly, this also seems to be the case with SCR1001.”
On the other hand, Republican Party Chair Ward strongly praised the measure.
“By passing Sen. Allen’s ‘penny proposal’ the Republican Party can once again lead t he way in championing new funding for Arizona’s schools.”
After a decade of deep cuts in funding for K-12 schools and universities, the legislature in the past two years has boosted state funding for schools. The legislature earmarked enough new money to provide a 10 percent teacher pay raise last year, with another 10 percent promised in the next two years. Gov. Doug Ducey also pushed through a ballot measure three years ago that provided new money for schools, mostly in the form of larger distributions from the state land fund – which was already reserved for schools.
However, per-student spending levels remain below 2008 levels on an inflation-adjusted basis. The Arizona School Boards Association estimates it would take $2 billion just to restore the funding cut since the recession. That includes money for all-day kindergarten and capital improvements. The legislature has provided only about 20 percent of the court-ordered capital funding budget for schools. Districts like Payson have accumulated some $10 million in deferred maintenance and capital needs, according to a recent consultant’s report.