State Capitol News
10:41 pm
Mon December 29, 2008

Outgoing Napolitano Talks State Taxes

Phoenix, AZ – Outgoing Governor Janet Napolitano said Monday if it were up to her, people living here would be paying more taxes than they donow.

State tax negotiating between Napolitano and other legislators goes back to 2006 when the state had an $850 million surplus. Napolitano saw that as an opportunity to get more cash for her priorities, including her pet project: full funding for all-day kindergarten. When lawmakers balked, she agreed to something they wanted: a permanent 10 % cut in individual income tax rates. She said that reflected the political reality.

"We have a very, very conservative Republican Legislature," said Napolitano. "And they really didn't want to spend any money on education, much less add a grade to school, much less give teachers pay raises, much less add funding to the universities as I wanted to do. To get those things done, I had to agree to some of their proposals."

In an interview with KPNX-TV to air Sunday, the governor said that cut was probably not the wisest public policy for the state.

"I think we would have been better off giving tax rebates as opposed to permanent tax cuts," said Napolitano.

A rebate would have involved dropping the rates for one or two years, followed by an automatic increase back to the original rates -- and the original higher taxes -- something Napolitano said might have given the state more flexibility in dealing with the current deficit. Despite her current stance, the governor did take credit for the tax cut in her 2006 reelection campaign.