Horrendous State Budget: An Insider's View from Rep. Steve Farley

Editorial Note: Spread the word among friends and family what state leaders are doing to destroy the middle class and public education. Following is an excerpted version of the FriendsOFarley report from Phoenix.

Howdy, Friends O'Farley…

I know it's a few days early for the monthly edition of the Farley Report, but there is action to report on the budget front.

Unfortunately, that is not good news.

You will recall in the last report I described a unanimous vote to restore and even increase funding to education and other important areas, and the hopeful beginning of negotiations between legislative Republicans and Democrats.

At the very start of those talks, Republican leadership made us promise that there would be no side deals with the Governor, unless all parties agreed to it. We invited her to take part, but she repeatedly refused.

For the last few weeks, we legislators had been making good progress in those talks, coming up with a reasonable compromise. We had reached agreement on about three-quarters of the budget.

A few days ago, it became clear that Republican leadership had intentionally misled us. They went behind our backs and worked out a secret deal with the Governor, leaving us--and most reasonable Arizonans--hung out to dry in the Phoenix heat.

As I write this, the Republicans are moving forward a package of bills to reflect those agreements. In order to win support from the far right, this package does exactly what the Governor has repeatedly said she did not want to do -- decimate K-12 education.

How exactly? That unanimous agreement we reached on the first day of this special session is completely and utterly betrayed. All increases are rolled back and the draconian cuts of the Republican Legislative budget of June 30 are re-imposed, and K-12 schools would lose their 2% inflation increase for the next three years.

The Governor vetoed that June 30 budget because it would "decimate education". Apparently she's fine with decimation now, because today's agreement also includes her Holy Grail: a ballot referral for that backwards-thinking middle-class-reaming three-year temporary sales tax increase.

But wait, there's more! If we act now, this screamin' deal also comes with:

• A permanent repeal of the education property tax, creating a $250 million hole in the budget so that most of that money can be taken from our public schools and given to large utilities and mines, many of which are owned by out-of-state investors
  

• $400 million in income tax cuts for the wealthy and business tax cuts for big corporations.
  

• A referendum to ask you to trust the Legislature to take all the money you voted to be dedicated to education and health care, and let them spend it on whatever they want for the next three years, including more tax cuts and bailouts for wealthy people and big corporations. Remember the .6% sales tax we agreed to in Prop 301 for education? That tax would still be collected and then delivered to the Legislature as a blank check.
  

• A three-year spending limit that would make it illegal to spend more money on schools, health care, and corrections than we spent in 2009, regardless of how much growth we have experienced in the student population, AHCCCS members, or convicts.
  

• A huge property tax shift off of businesses and onto homeowners.
  

• The sale of nearly all state property, including Kartchner Caverns and the State Capitol.
  

• A two-year moratorium on development impact fees and building codes.

And the way they claim to balance the budget is assuming that the sales tax and voter-protection-act repeal will pass muster with voters. Somehow, I have a hard time believing that voters will be excited to vote yes to dramatically increase taxes on middle-class families in order to pay for huge tax giveaways to the wealthiest among us. I also doubt they will vote to trust the Legislature instead of themselves when it comes to voter-approved initiatives.

The Governor's sales tax plan -- which makes us MORE dependent on the least stable form of revenue there is -- will COST the average Arizona family nearly $500 a year, while the Democratic plan to reduce the sales tax rate while broadening the base to services would SAVE that same family nearly $300 a year.

The Republican budget is wealth redistribution at its worst -- Robin Hood on its head. The budget steals from the middle class and gives to the wealthy, while chopping away at all the services that the middle class needs the most, especially public education.

And to add insult to injury, it asks the middle class voters to agree to it all at the ballot. Good luck with that, Republicans!

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One of the problems causing the majority caucus to lose votes is all those Republican legislators who signed libertarian ayatollah Grover Norquist's no-taxes-ever pledge. Yesterday morning, he sent an email saying that he was kinda-sorta OK with them voting for a referral of a tax hike to the ballot, but only because they got so many tax cuts for the wealthy in return.

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• They have appropriated $8.5 million to pay for this very special election.

• The sales tax referendum also includes the Taxpayer Bill of Rights (TABOR) spending cap provisions, likely in violation of the Constitution's single-subject rule. If in violation, the referendum would be thrown out after the Governor signs the deal. Which may be the intent of many of the Republicans who are saying that they would vote to refer the tax to the ballot, but then campaign against it. Does the Governor have any idea she is being played here?

• If the sales tax increase and the Voter Protection Act repeal fail at the ballot, the big tax cuts for the wealthy and for corporations (it's a 30% slashing of corporate taxes by the way!) will still be in place, costing $1.8 billion over the next four years without any way of paying for them.

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During Senate Appropriations, several new amendments were offered to obtain Sen. Jack Harper's vote. One would force an immediate layoff of 5% of the people in every government agency and department. Another would eliminate Rio Nuevo's ability to spend any money on anything, including the newly required transparency measures like a clear public database of expenditures.

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Friday, July 31, 3:10am:

This dirty-dealings in the middle of the night stuff is getting very old. We just got off floor, and all their budget bills passed with 32 votes in favor and all Democrats (at least the 11 of us who were left standing) voting against.

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• I did the numbers and discovered that their income tax cut will save $20 a year for households earning less than $50,000 a year, while household earning more than $5,000,000 a year will get more than $34,000 in their pockets.
  

• at the same time as the Republican majority voted for this windfall for our wealthiest, they also voted for one of the most callous amendments I have ever seen in this body. This was one of the Jack Harper amendments that was not stripped out. He demanded in exchange for his support of the budget that 5% of state employees be fired because his ideology said that government needs to be cut.

He didn't simply demand that all state agencies absorb a 5% reduction. He wanted people fired. Hard-working, good people who have families to support, mortgages to pay, health care to help their dependents. In the middle of the worst recession in our history. How did he do this?

He demanded, and Republican leadership agreed, and Republican members voted to approve wording that requires agencies to make the reduction ONLY through the number of positions, not through reduction of hours or furloughs. Even if the other employees desired to spread the pain so that no one person would suffer unduly.

This hurtful mass loss of jobs was debated and embraced by the majority just after other Republicans had been arguing that we need corporate tax cuts because they hoped they would create jobs.

Aside from the great personal toll of this move, I also pointed out that major economists of all political stripes have been very clear that cutting government spending and government jobs will deepen and worsen your recession.

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Friday, July 31, 3:55am:

The Senate just passed their budget out of their Committee of the Whole, and is now in recess as they look for those elusive 16 votes..

Friday, July 31, 5am:

The Senate is now adjourned until Tuesday, since they could not find the votes after all. This tawdry tale continues....