SEN. RUSSELL PEARCE, CHAIRMAN OF THE SENATE APPROPRIATIONS COMMITTEE
(Tribune file photo)
Media outlets such as Capitol Media Services and the Arizona Guardian are reporting on an outcry from Arizona cities and county governments over a new budget plan at the state Legislature to divert $190 million from vehicle license taxes to help reduce a $3.3 billion budget deficit. The proposal received initial approval Wednesday as part of an overall budget package pushed through the Senate Appropriations Committee by its chairman, Sen. Russell Pearce, R-Mesa. But Gov. Jan Brewer says she’s opposed to it.
In the past, the Tribune Editorial Board has echoed Brewer’s comments that the Legislature should solve its own fiscal problems instead of passing the buck down to lower levels of government, either by requiring them to provide services previously funded by the state or by swiping away state-shared revenues that traditionally flow to cities and counties.
But in this case, I have to say Pearce is absolutely right when he says, “The truth is, it’s a state license.”
The best-known examples of state-shared revenue comes from taxes on income and motor fuel. In theory, cities and counties could collect those taxes on their own if the state decided to use the local governments’ share elsewhere (although such additional taxes would need legislative approval). The net result would be residents paying the same type of tax twice to different levels of government. That’s clearly bad policy because it would add inefficiency and a further drag on business activity.
However, Arizona is going to issue only one type of motor vehicle license and collect the tax associated with it. If the state chooses a new role for vehicle license taxes, cities and counties aren’t ever going to get the option of issuing duplicate licenses and assessing their own taxes on top of what the state charges.
Under the Senate plan, the $190 million in vehicle license taxes would be used to reduce budget cuts to K-12 education. This is exactly the kind of thinking that we need more of at the state Capitol — determine what should be our highest public priorities and direct limited resources to support them.
Yes, cities and counties would feel the loss keenly, and we’d notice further cutbacks in local services. But I’m pretty sure most Arizonans are willing to make that sacrifice if it provides some funding stability to the education system.
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Dear Mr. Templar,
There is much information that you should have about the current status and background of state-shared revenues in Arizona, and we would be happy to give you more information about this so you could have a very well-informed perspective on this subject. Unfortunately, it seems that you have some misconceptions about revenue-sharing in this state. We would be happy to provide any information to you. For example, just one major point - you note income tax as a “best-known example of state-shared revenue.” I trust you know that counties do not receive any state-shared income tax revenue from the state, as your article rather implies.
Thank you, Diane
Thanks for the clarification on state-shared revenue, Diane. I was aware that counties don’t receive a portion of state income taxes. However, counties do receive a portion of state motor fuels taxes for transportation purposes. My goal was to contrast those kinds of state-shared revenues (which local governments, in theory, could collect on their own) with vehicle license taxes (which most likely would never be collected by local governments.)