Arizona Town Hall: Government Revenue

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Now that the legislature is back in session, work begins on crafting a new budget for Arizona. The most recent Arizona Town Hall focused its efforts on government revenue, producing a document on long term planning, investment and what the elected leaders might need to consider in their new legislative session. The consensus was that the current government financing system is not set to meet the state’s long-term needs. Bruce Dusenberry, a businessman from Tucson, and Peter Walsh, a local attorney and lobbyist and both participants in the town hall, will discuss recommendations from town hall.

VIDEO: COMING UP NEXT ON ARIZONA "HORIZON," DOES THE STATE HAVE ENOUGH MONEY TO MEET SHORT TERM AND LONG TEERM NEEDS? AND WE HAVE A GETTING A GUITAR LESSON WITH JASON HARORA. THAT IS NEXT ON ARIZONA "HORIZON."
TED SIMONS: GOOD EVENING AND WELCOME TO ARIZONA "HORIZON." I AM TED SIMONS. PAUL PENZONE PRESENTED HIS 100 DAY PLAN TODAY. PENZONE SAID HIS PRIORITES ARE COMBATING THE OBIOIDE APADEMIC, AND REVIEWING THE FUTURE OF TEND CITY. THE NEW SHERIFF ALSO ADDRESSED THE COLD CASE POSSE THAT INVESTIGATED PRESIDENT OBAMA'S BIRTH CERTIFICATE.
PAUL PENZONE: THE COLD CASE POSSE HAS BEEN DIS-BANNED. THE MEMBERS OF THE POSSE WILL RECEIVE NOTIFICATION. THAT IS SOMETHING I AM STARTING IMMEDIATELY. WHOEVER HAS BEEN REMOVED AS A POSE MEMBER, THEY WILL RECEIVE A FORMAL NOTIFICATION FROM THIS ORGANIZATION THEY NO LONGER HAVE THAT RIGHT TO REPRESENT AS A MEMBER OR EXTENSION OF IT.
TED SIMONS: OTHER VOLUNTEER POSSES WILL CONTINUE UNDER THE SUPERVISION OF VARIOUS DEPARTMENTS. GOVERNOR DUU -- GOVERNOR DUCEY RELEASED HIS BUDGET AND JOINING US NOW TO TALK ABOUT THE PLAN IS TOWN HALL MEMBER BRUCE DUSENBERRY, A TUCSON BUSINESS MAN. WELCOME TO ARIZONA "HORIZON." GOOD TO HAVE YOU.
BRUCE DUSENBERRY: THANK YOU, TED.
TED SIMONS: GOVERNMENT REVENUE, SHORT TERM, LONG TERM, WHAT WAS THE FINER FOCUS?
BRUCE DUSENBERRY: THE FOCUS WAS ACTUALLY NOT VERY FINE. IT WAS ALL ASPECTS. BOTH SHORT TERM AND LONG TERM.
TED SIMONS: I WOULD IMAGINE INVESTMENT IS A BIG FATH FACTOR.
BRUCE DUSENBERRY: BRUCE DUSENBERRY: WHEN WE FUND THE GOVERNMENT, WE ARE INVESTING IN THE GOVERNMENT AND OUR FUTURE BUT NOT SPECIFICALLY THE PENSION FUNDS AND THAT KIND OF INVESTMENT.
TED SIMONS: THE BOTTOM LINE IS STATE IS NOT DOING QUITE ENOUGH, IS IT?
BRUCE DUSENBERRY: THE PROBLEM IS THE STATE HAS BEEN REDUCING REVENUE FOR THE LAST 20 YEARS. SINCE THE MID TO LATE '90s THERE HAVE BEEN PERSISTENT CUTS, CREDITS AND EXEMPTIONS TO THE POINT THAT $4 BILLION IN REVENUE THAT WE WOULD HAVE TODAY IF NOT FOR THOSE CUTS. WE DON'T HAVE THEM.
TED SIMONS: AND WE WILL HAVE LAWMAKERS ON THE PROGRAM THAT SAY BECAUSE OF THOSE TAX CUTS BUSINESSES MOVE HERE, INCOME PROFITS ARE GENERATED AND THOSE PROFITS ARE TAXED AND THUS EVENTUALLY THAT WILL FILL THE COFFERS. ARE THEY ARE WRONG?

BRUCE DUSENBERRY: THEY ARE WRONG. THAT PROCESS ONLY WORKS IF YOU SUFFICIENT RESERVE REVENUE IN PLACE WHEN YOU MAKE THOSE CUTS. IF YOU HAVE A SOLID BASE OF SOURCE OF REVENUE AT THAT POINT. FURTHERMORE, YOU HAVE TO NOT ALREADY BE LOW ON REVENUE AND TAXES. YOU HAVE TO HAVE HIGH TAXES WHEN YOU START CUTTING THEM. ANOTHER FACT IS IN THE '90 AND DECADES BEFORE THAT WE WERE TAXING OUR RESIDENTS AT THE RATE OF $50,000 PER $1,000 OF PERSONAL INCOME. ABOUT 5%. VERY LOW COMPARED TO FEDERAL TAXES. NOW 35 PER THOUSAND.
TED SIMONS: YOU ARE SAYING THE SUPPLY SIDE ECONOMIC NEEDS A SUPPLY IN THE FIRST PLACE.
BRUCE DUSENBERRY: IT DOES AND IT DOESN'T WORK WELL WHEN YOU TASHGS -- TAXING IS LOWEST IN THE COUNTRY. IN THE SALES TAX AREA, THE SALES TAX IS VERY, VERY HIGH COMPARED TO OTHER STATES.
TED SIMONS: AND SOUNDS LIKE IT COULD POSSIBLY GET HIGHER BECAUSE THE GOVERNOR CHAMPIONED THE IDEA OF CUTTING TAXES EVERY YEAR.
BRUCE DUSENBERRY: HE IS. WE SHOULD GIVE HIM CREDIT. HIS TAX CUT THIS YEAR IS QUITE SMALL. THAT IS GOOD. IT IS A CHANGE IN THE PERSONAL DEDUCTION ON YOUR INCOME TAX RETURN AMOUNTS TO ABOUT 50 CENTS OF SAVING FOR EACH INDIVIDUAL.
TED SIMONS: SOUND LIKE SALES TAX, PROP 301 CONTINUATION OR EXPANSION, IT HAS TO COME FROM SOMEWHERE. I KNOW THE TOWN HALL MEMBERS LOOKED TO A FEW CHARITABLE TRUSTS AMONG MANY THINGS YOU LOOKED AT. THEY HAVE LIKE FIVE KEY INDICATES OF HEALTH. HOW IS ARIZONA DOING WITH TAX REVENUE? THIS IS A CHART OF REAL TAX REVENUE IN 31 STATES. THESE STATES HAVE RECOVERED FROM THE RECESSION. SOME HAVE. SOME HAVEN'T. LOOKS LIKE WE HAVEN'T. IN TERMS OF TAX REVENUE, AGAIN, BOTTOM LINE, HOW ARE WE DOING?
BRUCE DUSENBERRY: BOTTOM LINE OUR TAX REVENUE IN 2006 WAS ABOUT 9.3. 9.2 BILLION DOLLARS. IT IS NOW $9.4 IN FISCAL YEAR 2017. IT STAYED FLAT NOT WITHSTANDING POPULATION GROWTH AND ECONOMIC DEVELOPMENT OUR REVENUE IS THE SAME.
TED SIMONS: AS FAR AS VOLATILITY IS CONCERNED WHERE DO WE STAND?
BRUCE DUSENBERRY: THE SALES TAX IS OUR PRIMARY SOURCE OF REVENUE AND THAT WORKS IN A PROSPEROUS ECONOMY BECAUSE WE ARE CONSUMERS AND THAT IS WHERE WE GET OUR SALES TAX. IN RECESSIONS AS WE SAW IN 2007-2010 THE STATE SUFFERE AND WAS ONE OF THE SLOWEST TO COME OUT OF THE RECESSION.
TED SIMONS: AS FAR AS SPENDING, PARTICULARLY MEDICAID SPENDING WHICH IS A MAJOR PART OF THE ARIZONA BUDGET, THIS CHART SHOWS WITH THE STIMULUS WE ARE DOING WELL BUT BEFORE AND AFTER THE STIMULUS NOT SO MUCH.
BRUCE DUSENBERRY: THAT IS CORRECT. REMEMBER THE MEDICAID SPENDING IS LARGELY FEDERAL DOLLARS WE ARE TAKING ADVANTAGE OF. IT IS VERY FORTUNATE AND A GOOD THING ARIZONA HAS TAKEN ADVANTAGE OF THAT.
TED SIMONS: INDEED. AS FAR AS FEDERAL SHARE OF REVENUE IT IS PRETTY HIGH FOR ARIZONA.

BRUCE DUSENBERRY: IT IS OVERALL. IT IS VERY HIGH.
TED SIMONS: AS FAR AS THE ECONOMY IS CONCERNED. EMPLOYMENT, STATE PERSONAL INCOME. I THINK THEY LOOKED AT THIS AS FAR AS INCOME GROWTH RATES. IT IS HARD TO READ THE NUMBERS THERE BUT THE GROWTH RATE IS THERE FOR ARIZONA BUT AGAIN NOT AS HIGH AS OTHERS AND NOT AS HIGH AS I THINK YOU WOULD LIKE TO SEE IT.
BRUCE DUSENBERRY: I THINK WE WOULD ALL LIKE TO SEE THE PERSONAL INCOME BE HIGH. BUT EVEN IF IT GOES UP AND WE ARE REDUCING THE RATE OF TAXATION ON THAT PERSONAL INCOME WE STILL HAVE A REVENUE PROBLEM.
TED SIMONS: AS FAR AS LONG TERM COST, DEBT, I KNOW WE HAVE A PANEL REGARDING LONG-TERM OBLIGATIONS. A LITTLE BETTER. WE ARE NOT ALASKA, ILLINOIS BUT NOT NEBRASKA, TENNESSEE OR SOUTH DAKOTA EITHER. WHAT THE TOWN HALL SAW AS FAR AS LONG-TERM WERE YOU CONCERNED?
BRUCE DUSENBERRY: I AM NOT SURE IF WE RANKED 37TH -- WE ARE LOW IN LONG-TERM DEBT IS HOW I INTERPRET THIS. I THINK THAT IS ACCURATE. WE ARE NOT OVERLY LEVERAGED IN ARIZONA.
TED SIMONS: AND RETIREMENT COSTS DO WE FACTOR THAT INTO WHAT YOU ARE LOOKING AT?
BRUCE DUSENBERRY OH, SURE. ARIZONA DOES HAVE -- IT IS NOT AS BAD AS SOME STATES, ALL STATES ARE FACING THESE PROBLEMS -- BUT ARIZONA HAS A PENSION SHORTFALL AND A LIABILITY THAT IS UNFUNDED. THERE WAS AN ATTEMPT I BELIEVE LAST YEAR OR THE YOUR BEFORE TO MODIFY OUR PENSION SYSTEM AND THE COURTS OVERTURNED IT.
TED SIMONS: FISCAL POLICY, RESERVES, BALANCES, OUR LAST PANEL SHOWED ARIZONA COULD BE DOING BETTER AS FAR AS RESERVE FUNDS. EACH DAY THE STATE COULD RUN ON RESERVE FUNDS. THIS IS ANOTHER FACTOR IN LONG TERM AND SHORT TERM FISCAL PLANNING.
BRUCE DUSENBERRY: IT IS AND WE ARE BELOW THE MEDIUM, THE AVERAGE FOR THE STATES, BUT NOT TOO FAR BELOW. WE ARE BELOW WHAT WE WANT TO HAVE IN OUR RESERVE FUND.
TED SIMONS: WHAT DO WE TAKE FROM THE TOWN HALL AS FAR AS ARIZONA'S ECONOMY AND GETTING GOVERNMENT REVENUE WHERE IT SHOULD BE.
BRUCE DUSENBERRY: THE RAINY DAY FUND IS GOOD, CLOSE TO AVERAGE. REVENUE IS FLAT WHILE THE ROADS AND EDUCATION SYSTEM HAVE GROWN J AND WE DON'T HAVE THE FUNDS TO ADEQUATELY FUND IT. THE WORDS IN THE TOWN HALL REPORT IS IT IS WOEFULLY UNDERFUNDED.
TED SIMONS: RECOMMENDATIONS?
BRUCE DUSENBERRY: ONE IS REMOVE PROP 301, THE MODEST INCREASE IN SALES TAX VOTERS TO VOTED TO APPROVE IN 2000. THE INCREASE WAS FROM 5% SALES TAX TO 5.6%. SO IT IS .6% A PERCENT. THAT IS GOING TO EXPIRE IN 2021. THE TOWN HALL RECOMMEND WE RENEW IT FOR ANOTHER 20 YEARS AND LOOK AT INCREASING IT UP TO A FULL CENT.
TED SIMONS: THAT IS THE MAJOR RECOMMENDATION.

BRUCE DUSENBERRY: THAT IS ONE OF THEM. THE OTHER IS, AS I SAID EARLIER, THE TOWN HALL SAID WE SHOULD RENEW A MORE VIABILITY FUNDING FOR K-12 EDUCATION AND RESTORE THE $5 MILLION WE TOOK FROM OUR UNIVERSITIES.
TED SIMONS: ARE YOU EXPECTING LAWMAKERS TO MAY MUCH ATTENTION TO THOSE RECOMMENDATIONS?
BRUCE DUSENBERRY: IF THEY DON'T PAY ATTENTION TO IT, OUR EDUCATION SYSTEM IS OUR FUTURE, AND IF WE CARE ABOUT OUR CHILDREN AND GRANDCHILDREN SKWANT TO INVEST IN THE FUTURE OF THIS STATE WE NEED TO FUND ARIZONA.
TED SIMONS: WHERE CAN WE FIND THE ARIZONA TOWN HALL?
BRUCE DUSENBERRY: AZTOWNHALL.ORG.
TED SIMONS: THANK YOU SO MUCH ARE JOINING US.

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