Permanent Penny Tax Defeated

Nov 7, 2012

The state sales tax rate will go back to 5.6 percent on May 31st as scheduled.

Credit Stricklins

Voters approved a temporary one-cent surcharge in 2010 as part of a plan to balance the state budget without making more drastic cuts to education and public safety. Proposition 204 would have imposed a new penny levy to kick in on June 1st, the day after that temporary one is set to self destruct. But initiative organizer Ann-Eve Pedersen said the description of the measure on the ballot made that less than clear.

"And it looks like it's a brand-new tax. And that's just not the case," she said. "It's something that's going to extend the old one. So we weren't going to be paying more than we were paying now."

The rate would have stayed at 6.6 percent. But it would, in fact, be a new tax. This new tax earmarked exactly where each dollar would go. Most of it would have been for K-12 education. But there was also money for universities, social programs and even $100 million a year for road construction. The voter rejection pleased state Treasurer Doug Ducey who led the opposition.

"We saved the state from a permanent $1 billion sales tax," Ducey said. "And the voters saw all the flaws in Proposition 204 and they voted it down."

Ducey said those flaws included what he said was a lack of accountability to ensure that more dollars led to better education outcomes. And he's not convinced more money is needed.

"So let's talk about how we take the dollars that we spend and tie it to reforms so that we can improve outcomes in the classroom. That would be a great next step," he said.

But Pedersen said what killed it was $900,000 from what was just discovered to be out-of-state interests.

"Before the dark money started pouring in, our polling was very, very high," she said.  "And voters approve of this. So we have a winning initiative. It's just when your pour dark money in to confuse people and to mislead people, that was the real problem."

Ducey was unapologetic for taking the funds, even though the series of transactions that led to the donation still leaves voters in the dark about who wrote the original check.

"Both sides played by the same rules. Both sides collected money in state and from organizations all across the country. I think we made a more persuasive argument," he said.