Voters will decide on state sales tax hike in May

PHOENIX -- With bipartisan support, the state Senate voted today to ask voters for a three-year hike in the state sales tax.

The 16-12 vote came over the objections of several lawmakers who said that even asking voters for more money is a bad idea.

Sen. Amanda Aguirre, D-Yuma, said residents of her county can't afford to pay the additional penny on the current 5.6 percernt sales tax.

"We have a lot of folks out there that have no way to buy goods,'' she said. "They are unemployed, they are working part time,'' Aguirre continued. "The business community is not hiring.''

On the other side of the political aisle, Sen. Ron Gould, R-Lake Havasu City cited a study performed for the Goldwater Institute that a one-cent hike in sales taxes will result in the loss of 40,000 jobs.

"We're going to be moving money out of the private sector into the public sector,'' he said.

Today's vote sends the proposal -- along with five other measures designed to balance the current year's budget -- to the House where they face an uncertain future.

And even if the sales tax plan survives that hurdle, it still needs voter approval in May.

Sen. Ken Cheuvront, D-Phoenix, said he sees the option of higher taxes as preferable to the alternative of having to cut spending by more than $900 million a year for the next three years, the amount that the levy would raise if approved by voters.

And Sen. Barbara Leff, R-Paradise Valley, said she has no problem with giving voters the final say on the question.

The vote came after lawmakers rejected an effort by Sen. Rebecca Rios, D-Apache Junction, to extend that one-cent hike to the taxes paid by the mining and the sand and gravel industry.

Rios pointed out that both industries already have a special tax break: The mines have a 2.5 percent levy; the tax on the value of sand and gravel is 3.2 percent. She said these firms should be "good corporate neighbors'' and contribute their share.

Not all the objections raised about the plan were to the possibility of higher sales taxes.

Gould said he believes two proposals to borrow money are not only ill-advised but also illegal.

He pointed to constitutional provisions limiting state debt to just $350,000. One plan would borrow $450 million, paying it back over 20 years with future proceeds from the Arizona Lottery; the other sells off $300 million of buildings, with the state essentially buying them back over the next 20 years.

Legislative staffers have said that constitutional provision bars lawmakers from obligating the state itself.

The provision to borrow against future Lottery proceeds pledges only those funds, with no obligation of Arizona taxpayers to make up the payments if people stop wagering and the profits from state-run gaming dry up.

And the sale of the buildings involves leasing them back for 20 years, with the deal being that the state would again own them at the end of that time. But the deal is structured so the state is not obligated to keep leasing the buildings that entire time and could walk away -- and lose the buildings.