The Farley Report from Phoenix #263 - 1-31-17

It’s been a tough week in the USA on so many fronts. The scene in Phoenix is no exception. I’ll share with you the story of this year’s attempt to gut more than $211 million annually in desegregation funding from 18 of our state’s highest-poverty districts, and what you can do to stop it.

But first, some good news in the Farley Report Pledge Break…

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At a community event in Tucson on Sunday afternoon attended by nearly 300 people, an audience member asked whether I would be announcing a run for governor in 2018. My answer and the audience reaction was captured on video.  

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Click to watch and share. If you think I should run, please contribute today. I want to know if you are with me on this journey — it’s going to take all of us pulling together to move our state forward again.

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—> We’ve seen this show before. The Arizona Tax Research Association (ATRA) and Sen. Debbie Lesko (R-Sun City) have teamed up to eliminate desegregation funding from public school districts across the state who would be forced to fire teachers, shut down schools, and violate court orders. The programs potentially eliminated are some of the most innovative and successful examples of how we use education to lift families out of poverty. 

This year’s version of the bill, SB1174, takes a slightly different tack from previous years. This time, the bill would force these districts to hold a special election and run campaigns to keep the property taxes they already have. 

Remember, Arizona public schools have been slashed by 23.3% since 2008. They are desperate for funds. Taking away more millions is NOT what we need or want. 15 corporate representatives signed in favoring the bill, while 166 individuals signed in opposing. 

In the case of Tucson Unified School District (TUSD), which has $63.7 million at risk annually, a court order still stands requiring the expenditure of that money. For that reason, they are exempt from the bill until a judge decides that they have achieved “unitary status” and ends day-to-day oversight of the programs. Two years after that point, TUSD would also need to hold a special election to keep the money. The problem is, the judge would likely never award unitary status if he knew that TUSD might lose that money in short order and be right back where they started.  

Kevin McCarthy, founder of ATRA, said if those desegregation programs have popular support, then people will vote to keep the taxes that pay for them. Except that supporting those taxes appears not to be the intent of ATRA’s corporate board. ATRA board members and the Arizona Chamber of Commerce opposed all school override elections in the last round of elections, so it’s highly likely they will put up money to fight these desegregation elections in order to lower their corporate taxes. 

Let’s review. What is ATRA anyway? 

The Arizona Tax Research Assocation is not well-known outside Capitol circles. Why should you care? For 70 years, they have advocated for reduced taxes for Arizona's largest corporations. For decades, they have brought bills before the legislature -- most of them successful -- to reduce the funding sources of school districts, public health districts, library districts, fire districts, flood control districts, transportation districts, and much more.  

Why on earth are they doing this? And who is paying for it?   

ATRA is a 501c4 organization, which means it does not have to reveal its funders. However, analysis of their sponsorship materials and board of directors reveals something astonishing. 

Who funds them? 

You do. 

The major players in ATRA are the major business property owners in the state, including all the major utilities. The money they are paying to ATRA to bankroll efforts like these to slash education and other vital pubic services comes from the money YOU pay them in your utility bills. 

When you pay your monthly bill to Tucson Electric Power (TEP), Salt River Project (SRP), Arizona Public Service (APS), Southwest Gas, Cox Communications, CenturyLink, and AT&T, part of that money goes to help ATRA slash school funding. You can see the board of directors here.

I suggest you call them up, and let them know how you feel about your money going to such a purpose, and share that it undercuts their hard-earned image of community service. And you might suggest to them they can start to get on your good side again by telling them to tell ATRA to withdraw their support for SB1174, among other bills. You can find their contact info later in this email.

Why are they doing this? Read on for an ATRA primer.

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The unassuming building to the left is ATRA headquarters. It is no accident that it is the closest non-governmental building to the Capitol. That closeness over the years has developed into a relationship wherein ATRA staff (who are in fact lobbyists) are treated by the legislative majority as if they were legislative staff. 

The omnipresent ATRA figure around here is Kevin McCarthy. I believe Kevin is a good man, a man of integrity. His knowledge of state finance issues is immense, and I have learned a lot from him over the years. He has a sincere desire to make state finances less messy and more rational and fair. 

I worked closely with him (and SB1174’s sponsor Sen. Debbie Lesko) to reform the TPT sales tax collection and audit system in AZ to make it easier for businesses to pay their taxes with less hassle. I was invited to speak to the decidedly Republican audience at their 2014 annual conference where I told them that it is time to stop prioritizing tax cuts and start prioritizing education if we want our economy to thrive. I have not been invited back since.

The problem I have with Mr McCarthy and his son Sean (who also works at ATRA) is when they push for "fairness" without regard for the practical effects of their proposed changes on the services that our citizens need, particularly education. This is the case for SB1174. They believe is it a "fairness" issue that the desegregation districts get "extra" money that surrounding districts don't get. But his "fair and equitable" solution is not to raise the surrounding districts to the same level, it is to cut all districts to the lowest common denominator. 

Education gets cut even more in the name of "fairness" because the purpose of ATRA is to lower corporate (especially property) taxes. In ATRA's own words from their website, 

"Membership in ATRA is an investment toward the efficient and effective use of your taxpayer dollars, and therefore, an investment impacting every individual's and business' bottom line."

It's about large corporate ATRA member's "bottom line". More money for the biggest utilities, mines, communications companies, and less for public schools. Who are actually some of the ATRA board members’ biggest customers!

To be fair, Mr McCarthy has taken some gutsy positions over time that fit with his fairness doctrine. He opposed Prop 108, which requires a 2/3 majority to raise taxes, but only a simple majority to lower them. He remains firmly opposed to dramatic across-the-board property tax cuts like California's devastating Prop 13 because of the imbalance that brings to the system with owners of similar property paying wildly different rates. He is not simply a tool of his funders. 

But when he brings ideas for rebalancing the revenue picture to the Legislature, the majority eagerly approves tax cuts but refuses to even consider ideas about any revenue increases to offset those cuts, and we consequently end up in our structurally imbalanced situation today wherein we have cut $4 billion annually since 1990 from our revenues and our education system reels from eight years of slash-and-burn.

And his corporate backers like this just fine because it helps their "bottom line". Until you speak up, that is. 

Here’s how you help stop the gutting of Arizona public education.

Call the ATRA funders today -- the ones that you pay through your monthly bills -- and tell them since you help pay for ATRA, you would like them to tell ATRA to kill SB1174 and any other bill that has the effect of cutting education funding. Here are some helpful numbers for you:

For all of these, please ask for the Government Relations department.

Tucson Electric Power (TEP): 520-571-4000

Salt River Project (SRP): 602-236-5900

Arizona Public Service (APS): 602-250-1000

Southwest Gas: 602-395-4142

Cox Communications: 623-594-1000

CenturyLink: 520-838-3000

Let me know on my Facebook page how it goes.

—> Don’t despair, there is also some really good news! 

For years I have been introducing a bill to place a sunset on all corporate tax loopholes in our sales tax code. Some of those loopholes -- like the exemption on food -- may be perfectly justified. Others -- like the exemption on the sale of 4" pipes -- may not be justifiable.

This year’s SB1144 simply states that each one of the 333 loopholes (these are large bills!) must be brought back for debate and possible elimination every ten years. All I ask is that these loopholes be brought into the bright light of public perusal on a regular basis. These exemptions cost us more than $12 billion annually, and are part of why we have high sales tax rates and not enough money for education.

Let the good ones stand on their merits and let the others fail on their lack thereof. If that happens, I believe we will be successful in simplifying our tax code, stabilizing and modernizing our revenue stream, and reducing our overall tax burden. We can get past the era of fiscal mismanagement and recurring deficits that has hurt us all.

We do this already for all state agencies. We must do this for tax expenditures as well. It’s time we stopped giving away the store to every corporate lobbyist with a good argument for why his client needs a loophole. 

Laurie Roberts of the Arizona Republic wrote a great story on the bill as a revenue source on which we could all agree — Republican and Democrat alike — and tomorrow morning it will be heard in the Senate Finance Committee. Chairman David Farnsworth (R-Mesa) is my co-sponsor and I have negotiated a good amendment with Senate leadership, so I have great hope this can go far. 

Yes, even in our new national political era, it is still possible for leaders from both parties to work together on significant policy. Perhaps here in Arizona we can set an example for how it’s done. 

—> And finally tonight, if you want to take a little break from politics for some fun, check out my Kickstarter page to see a new history book project I am trying to get under way. There’s a detailed description and a cool video I made describing the project — a visual time machine that compares mid-century Tucson homes, then and now. 

As a tax-deductible project of the nonprofit 501c3 Tucson Historic Preservation Foundation (THPF) I will research, edit, rephotograph, and publish a website and book of a selection of homes from 1938-1942 from the mortgage records of the Valley National Bank, with text by UofA Architecture Professor Brooks Jeffery. Your home may be in it — you can check the included homes in a neighborhood list here

If you want to help make it real, invest and claim a reward today!

Thanks for your continuing faith in me as your Senator. 

Steve

Steve Farley

Senator, District 9, Tucson

If you like my representation and want to keep me in office, CONTRIBUTE TODAY!

Paid for by Friends O’Farley