The State Of Our State Conference

Spent the morning in downtown Phoenix with approximately 200 folks, elected officials, agency heads, and community members listening to some really smart people talk about the fundamental underpinnings of Arizona's budget deficit.

The insights were provided by people like David Stockman, formerly the Reagan Administration budget chief, George Cunningham, a former state legislator and staffer/advisor for Governors Mofford and Napolitano, economist Alan Maguire, Dr. Matt Murray of the University of Tennessee - Knoxville, Jim Rounds, an economist with Elliott D. Pollack and Company, and Craig Sullivan, executive director of the (Arizona) County Supervisors Association.

While some supported a more "cut spending" based approached and others supported a more "increase revenues" based one, all agreed that a more balanced and forward thinking approach to budgeting is needed in Arizona.

There were a large number of electeds in the audience (John McComish, Bob Burns, Chad Campbell, Eric Meyer, Carolyn Allen, Don Shooter, Ruben Gallego [all lege, current or incoming], Ken Bennett [AZ SOS], and probably more that I missed), but unfortunately, the ones who most get it are Ds (Meyer, Campbell, Gallego) or soon to retire (Allen).

This is oversimplifying (a good summary would be too complex for this outlet), but basically the combination of permanent tax cuts and spending programs enacted during economic boom years combined with the 1992 amendment to the Arizona Constitution that requires a 2/3 vote of the lege to increase revenues has rendered the state almost bankrupt and without the ability (in practical terms) to fix the problems.

The report published this week by the Morrison Institute and Brookings Mountain West is available on this page.

The meeting was recorded, and once the Institute posts the video, I'll link to it.  Also, they'll eventually post some of the Powerpoint presentations that the experts gave to help illustrate Arizona's plight.

Until those items are posted, here are a few quotes:

...This situation is a "failure in our national logic." - Dr. Michael Crow, President of ASU, referring to the national economic trend away from *building* things (manufacturing) and toward just reselling things (aka - the housing bubble)

..."Both parties are completely faking" on fiscal matters - Stockman, criticizing the Democrats for not having a fiscal plan for America, short of campaigning on "tax the rich" and "stop the wars"...and then not even doing that much, and going on to criticize the Republicans for being even worse, talking about fiscal responsibility and then actually working to undermine fiscal solvency with targeted tax cuts that weren't matched with spending cuts.  He noted that none of the Reagan-era spending cuts remains.

Other highlights from Stockman:

- The White House "rolled over and declared 'party on' " with the recent surrender on continued tax cuts for the wealthiest 2%

- The Russian state is "the most gigantic kleptocracy" in history

- Quantitative easing, or QE2, is nothing more than the Federal Reserve "printing money and monetizing debt" and that it has never worked.  Think "Weimar Republic" (my term, not his)

- " 'Deficit today' is another way of saying 'taxes tomorrow.' "

- Said that the belief/ mantra that 'tax cuts pay for themselves' is a "hoary myth."

...Dr. Murray suggested that Arizona should "broaden, balance, and diversify" its tax base and fiscal policies

...He also said that "Arizona is at a crossroads" but is only a part of a "long decay" across the country (economically)

...Maguire predicted that FY2014 will be a "very, very, ugly year" due to the expiration of the temporary sales tax increase enacted earlier this year and the expected unwillingness/inability of the feds to help any more than they already have

...Sullivan said that counties have been preparing for this mess since 2007, with mixed success, but all are subject to the vagaries and whims of the legislature.  AKA the lege has been trying to balance its budget by taking money from the counties and giving them more things to be responsible for

- Rounds favors cuts to spending first and adding revenues 2nd, but like the others, doesn't believe that cuts only will successfully address AZ's problems

- Cunningham says that tax cuts right now, such as the business tax cuts proposed/threatened by the Rs in the legislature, would be "fiscally imprudent"

- Rounds believes that while a "competitive" tax environment helps economic development, particularly in attracting businesses from out of state, but that "fiscal stability" is even more important, because instability will drive away business, no matter what the tax environment looks like

So far, I haven't found any other write ups of the event, though there were some MSM representatives there today, including Mary Jo Pitzl of the Arizona Republic.  When/if any are posted, I'll link to them here.

Also, it will be interesting on Monday to see if the Governor takes any lessons from the study or the State Of Our State conference into her State of the State speech.

I'm betting she won't, but I'm rather cynical.  (Yes, that it a surprise to most readers, I'm sure. :) )


I'm not sure exactly what to take away from this, because a lot of this was already known, but to see the actual numbers was eye-opening and jaw-dropping.

I guess the best thing would be for everybody to contact their legislators (yes, even the Rs) to remind them that blindly cutting taxes isn't being "fiscally responsible."

It's just politically lazy.  And fiscally destructive.