State Capitol News
4:44 am
Thu April 2, 2009

Universities make case for tax hike

Phoenix, AZ – A group of university economists, faculty and administrators say
the state should temporary raise taxes to balance the budget
rather than relying largely on spending cuts.

The study says the sheer size of the deficit -- about $3 billion
-- makes some spending reductions necessary. But it also says a
one-cent hike in the state sales tax could generate a billion
dollars a year, reducing the need for deeper cuts. Russell Pearce
who chairs the Senate Appropriations Committee said the
conclusions are not surprising.

"These are people that rely on government money for the most
part. I think there's some very bright people there. But I think
they're asleep at the switch."

Pearce said other experts say a tax hike would deepen the
recession. But Arizona State University economist Tom Rex said
spending cuts will hurt the economy deeper when people are laid
off. He also said those who oppose a temporary $1 billion tax
hike are not putting it in perspective: It amounts to about $150
a year for every Arizonan.

"This is a fraction of the amount of money people got back from
the federal government in tax rebates in '08 and decreases in
taxes in '09 and '10. You're not talking enough money to really
be harmful."

Rex also said the panel was chaired by a private consultant. And
some of the faculty have tenure and can't be fired for their
viewpoints -- though they could be let go if budget cuts
eliminate their departments.