The Farley Report from Phoenix #143: 1-17-12

Howdy, Friends O'Farley… 

The Governor's budget is out, and it seems to have taken its theme from the classic Spaghetti Western, The Good, the Bad and the Ugly. But believe it or not, it is an improvement over the last couple of years' budgets that were purely Bad and Ugly. This one actually has some things that we in the minority can support.

Here's some good: 

--> She does ask for more funding for a few education programs, including remedial reading instruction for third graders who are behind in their performance. 

--> $10 million in community college scholarships for veterans for workforce training.

--> More money for investigators for Child Protective Services, and more pay for overburdened CPS field workers -- something long overdue.

--> $39 million more for services for the seriously mentally ill, to comply with federal requirements. This helps to restore some of the cuts to these services that Brewer signed last year.

Here's some bad:

--> Yes, Gov. Brewer still wants to buy us the Capitol back for our birthday from the Wall Street investment bankers to whom she sold it two years ago, even though it will cost us $25 million in interest for that payday loan (lining the pockets of those aforesaid NY bankers), and $106 million in total. If she's going to blow more than $100 million, I think we would rather have good jobs and good schools and maybe some potholes filled for our birthday present.

--> Funding for higher education will be increasingly allocated on the basis of quantity of students rather than quality of education, benefiting ASU while hurting UofA. This is a big change from the consideration of our universities as one system, in which each school serves a different purpose for the greater good of all. It sets up the universities to compete against one another for scarce funding, which is not healthy.

--> The Governor wants to offer a five percent pay raise for state workers (except for University employees), but only if they give up the merit system of employment. Their position would then be uncovered permanently by the merit system even after those employees leave or are fired. This could enable mass hiring of political cronies by new Governors upon their ascent to power, since all these state employees could be fired at will for no cause, bringing us back to the classic era of 19th-century East Coast political corruption a la Boss Tweed.

Underlining the politics of this effort, Brewer will give raises to police officers, but not require them to give up their merit protections or their union like everybody else. 

And here's some big-time ugly:

--> This one is breathtaking in what it says about the Governor's view of Arizona's future. It's a one-two-punch:

Punch One: She wants to reduce state spending on new schools from $60 million a year to $10 million a year.  

Punch Two: She wants to increase state spending on new private prisons to $68 million in the next two years.

Ouch! Talk about your self-fulfilling prophecy. The less we spend on public schools, the more we spend on private prisons to house future kids who could have been redirected to better life by better education. Is that the Governor's vision of Arizona's second century? 

There are other problems that are not in the budget -- kids still don't get their KidsCare health care coverage back, and single childless adults in poverty will still have to show up in emergency rooms for treatment with unreimbursed care from increasingly cash-strapped hospitals who will pass along those costs to the rest of us, lay off their employees and possibly even go bankrupt.

Most glaringly there was no plan to deal with what could be up to a $1.5 billion deficit in Fiscal Year 2015, once the Governor's temporary sales tax disappears and the majority's corporate bailout bill kicks in at full force, giving away more than a half-billion dollars worth of tax cuts to big out of state corporations with no guarantee that they will create new jobs.

That's a pretty huge flaw. It is my belief that we must not waste this economic crisis from which we have suffered for so long. We have to seize the moment and enact true revenue reform so that we don't slide back into the bad old days of billion-dollar deficits. 

Our sales tax is way too high and unstable, and, as Farley report readers know all too well, there are more than $10 billion in special interest loopholes in the sales tax code alone. Most of those laws were enacted thanks to hard work over decades of corporate lobbyists looking to save their clients some big bucks, and they do not serve a wider public interest. 

Think of our sales tax pool as a big bucket filled with money. If that bucket has lots of holes in it, you need more money to fill it up, because so much money leaks out these loopholes -- some of which have been in statute since 1935 and have never been reviewed even once.

We don't have to eliminate all $10 billion, but for every $1 billion worth of loopholes we close, we could lower the state sales tax rate by 1%, helping business and consumers alike, while spurring  job creation.

It is beyond time to do something about this.

That's why I am introducing a bill this week to place a sunset on all sales tax loopholes and income tax credits in our tax code. Some of those loopholes and credits -- like the exemption on food -- may be perfectly justified. Others -- like the exemption on the sale of 4" pipes -- may not be justifiable.

The bill will simply state that each one of the hundreds of loopholes and credits (these are large bills!) will go away unless it is brought back for debate and possible renewal every seven years. All I ask is that these loopholes be brought into the bright light of public perusal on a regular basis. 

Let the good ones stand on their merits, 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.

Last Sunday, the Arizona Republic published a wonderful and  comprehensive article by ace reporter Mary Jo Pitzl (above the fold on the front page -- a giant victory for us fiscal policy geeks!) explaining the history and implications of these loopholes, and featuring my bill as a possible solution. You can read that article here:

Please pass along that link to your colleagues and friends. It is really important for us to overcome the "yawn factor" when discussing state revenues. This stuff makes all the difference to our future, and yet it too often ends up being ignored when compared to sexier ideological issues that ultimately don't make as big a difference in our lives. 

Speaking of a better future, I want to remind you that you are invited to make a difference by attending an event in Tucson on Saturday, January 21, with House Minority Leader Chad Campbell and I. 

We will be speaking at a fundraiser at Renee Morton's house, 526 S. Stone Ave, from 5-7pm, as we raise funds for Building Arizona's Future, a political committee created by Democratic leadership in the Arizona Legislature to support great candidates in competitive districts for the House and Senate next year.  

Please bring those who would be interested in creating real change in the Arizona Legislature. RSVP to Devin Rankin, or 602-770-3077. Mail checks to:  216 W. Turney Ave, Phoenix, AZ 85013. Please make checks payable to:  Building Arizona’s Future. You can also contribute online at

As you know, the only special interest I report to is you. Please consider helping out my campaign for the State Senate as I carry out my leadership duties to recruit, support, and elect a new generation of Arizona leaders. I can't do this alone. I need your support right now. 

---> You can contribute up to $424 per person online by going to my newly updated website and clicking on the "Contribute" button. Thanks so much for helping us transform our state. Every dollar you can share will make a difference. <---

Thanks for your continuing faith in me as your Representative. 


Steve Farley
Arizona State Representative, District 28
Assistant Minority Leader
Ranking Member, Transportation Committee
Ways & Means Committee
Ethics Committee
Legislative Council
Capitol office: 602-926-3022
Tucson office: 520-398-6000
Official email: 

Please contribute up to $424 per person to help me carry on the work:

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