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Nevada Taxpayers Association Annual Meeting

Nevada Taxpayers Association Annual Meeting. Kevin McCarthy ATRA. Source: The Brookings Institution- Governmental Research Association Annual Conference. Arizona Conditions. The impact of the recession on Arizona public finances has eclipsed that of most states.

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Nevada Taxpayers Association Annual Meeting

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  1. Nevada Taxpayers AssociationAnnual Meeting Kevin McCarthy ATRA

  2. Source: The Brookings Institution- Governmental Research Association Annual Conference.

  3. Arizona Conditions • The impact of the recession on Arizona public finances has eclipsed that of most states. • Actual On-going General Fund Revenues (In Millions): • FY 2007: $9,850 • FY 2008: $8,765 • FY 2009: $6,967 • FY 2010: $6,410 Difference FY 2007-FY 2010 = ($3,410) or 35%

  4. FY ’07 Actual Revenues $9,850 ($313 million over budgeted revenues) ($429) ($1,345) ($2,789) ($3,481) ($3,181) FY ’08 Actual Revenues $8,765 - $1,321 less than Budgeted Revenues $77 million (budgeted surplus) Adopted June ‘06 Adopted June ‘07 Adopted June ‘08 Adopted Sept. ‘09 Updated Oct. 22, ‘09 Updated Nov. 23, ‘09 Beg. Balance (in millions) 1.047 529 1 (478) (478) (478) *FY 2008 on-going spending of $10,515 includes $370 million in SFB cash financing, as well as $250 million in K-12 school aid not included in the FY 2010 on-going spending of $9,881. Arizona Tax Research Association

  5. Budget Solutions to Date? • Gimmickry abounds: • Debt financings (sold the Capitol to ourselves) • “Rollovers” – shift school state aid payments into future years • Raiding non-general fund revenues • Some budget cuts to state agencies. Education and health care largely spared • Statewide property tax increase this year • Temporary 1-cent sales tax increase on the ballot in May

  6. Major Impediments to Deficit Reduction • Voter-approved spending partially limits policymakers options • Supermajority required for a general fund tax increase • Federal stimulus money comes with strings attached - “maintenance of effort”

  7. Major Impediment - Politics • Political courage necessary to directly solve the problem • Most policymakers opt to blame someone else for the crisis • Democrats spent too much money • Republicans cut too many taxes • 2010 General Election – many players seeking to gain advantage from the crisis

  8. Are there any solutions? • In Arizona, state and local government budgets are dominated by the salaries and benefits of public employees. The deficit can’t be solved while insolating those employees from the recession. • “Current Services” budgeting guarantees deficits when the economy slows. The deficit can’t be closed w/o reversing the formulas and budget assumptions that drive spending. • Nothing meritorious about debt financing spending that lawmakers are unwilling to cut. Cut Spending or Raise Taxes

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