Thursday, January 15, 2015

Steve Farley's view of Dicey Ducey's speech

Our friend Steve visited the Wednesday morning discussion group a while back and expressed the hope that Ducey would go for pragmatic (as opposed to ideological) governing. The new Governor's opening speeches, while short on details, were not cause for hope. Here are some snippets from Steve's Friends of Farley report including a review of how AZ got into our current mess.

The action tipped off with Governor Doug Ducey's first State of the State speech given to the assembled House and Senate on Monday afternoon. I had been looking forward to hearing his words and was hoping he would flesh out some of the vague statements he had given on the campaign trail and during his inauguration speech the previous week.

He started out promisingly -- he stated that it was important that we all work together in a bipartisan way to solve the state's problems. Sadly, it went downhill from there.

Right up front he demonstrated his central policy passion -- corporate tax cuts. I had hoped we would hear as much or more passion for rebuilding our public schools, but we did not. The only line in the sand he drew, the only time he said "not on my watch," was when he stated that he would never even consider suspending the remaining corporate tax giveaways that have not yet gone into place.

Here's a bit of background to refresh your memory. Two years ago, on the top of the $3 billion annually in tax cuts enacted in the previous 20 years, the legislative majority voted for and Governor Brewer signed into law a package of corporate tax handouts dubbed hopefully "The Jobs Bill".

Two years later, we have received none of the benefits we were promised -- in fact, the Arizona economy is still lagging the rest of the nation (including states with much worse tax climates than ours) in economic activity, job creation, and wage growth.

By 2018, these cuts will have eroded our corporate income tax base alone by more than 44% within four years. What have we received in return? We are facing a $500 million budget deficit in the current fiscal year ending in June, and over a billion-dollar deficit next fiscal year.

And it could get a lot worse, billions of dollars worse, if the GOPlins overturn the Medicaid expansion and have to pay the full tab for what they owe to public education. Steve continues:

It is clear to many thoughtful people that true economic development needs more than simply low corporate taxes to succeed. Businesses need well-educated employees and a great transportation system to get their people to work and goods to market. We all need a new generation of entrepreneurs to graduate from our universities and start world-changing businesses to fire up our economy and help us compete in the global economy.

If we keep giving away taxpayer dollars to out-of-state corporations based on outmoded theories of voodoo economics, leaving us without the money to fund our schools, universities, community colleges, and transportation system, it won't matter how low taxes go -- no businesses will want to come here or grow here. A healthy economy requires balance. We are currently dangerously unbalanced.

We need to invest in our state's future prosperity, not just give taxpayer money away with no accountability.

... In the end, I don't think I knew any more about his direction after I heard Gov. Ducey's talk than before. That will have to wait till Friday morning, when the Governor briefs Democratic leadership on his budget, and we can examine his spreadsheets in detail to find out what's really going on.

I'm hoping that his comments were simply sugar for his base so that he could help some medicine in the form of moderate reforms in his budget get through the legislative majority. I fear I may be too optimistic.

We are one day away from Dicey Ducey's budget proposal. The few statements he made in his speeches that could be seen as signaling actions based on principle lead me to believe that Dicey lives in The World According to GORP. I hope I am wrong, but ...

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