Ariz. voters to decide fate of new sales tax hike

PHOENIX -- Arizona voters two years ago overwhelmingly approved a temporary sales tax increase, but the political landscape is significantly different for a new proposal on this year's ballot.

The three-year tax increase approved in a 2010 special election is set to expire in mid-2013, and voters on Nov. 6 will decide whether to replace it with a permanent tax increase of the same size _ one penny on the dollar _ on top of the state's regular sales tax of 5.6 cents.

As in 2010, education groups and other supporters of the current proposal focus on benefits for schools and universities, which would get the bulk of the new funding from the permanent increase.

However, some key backers of the 2010 increase, including Gov. Jan Brewer and the Arizona Chamber of Commerce and Industry, oppose the proposal on this year's ballot.

And unlike 2010 when the "yes" campaign outspent the opponents by roughly 25-to-1, the combatants' war chests this time are relatively evenly matched.

Campaign finance reports and notices indicate each side is on track to spend at least $1.5 million, though supporters had to use some of their cash for a signature-gathering campaign to get the initiative measure on the ballot as Proposition 204.

Major contributors to the "pro" campaign included education groups and the construction industry. Opponents got big donations from the Arizona Automobile Dealers Association, an insurance company and a group formed last year by Phoenix-area businessman Robert Graham, a candidate for the state Republican Party chairmanship.

Like the 2010 measure, the new proposal would raise an estimated $1 billion of new revenue annually. All of the money is earmarked for specific purposes, including about three-quarters for education. The rest would go to transportation projects, children's health coverage and social programs for families.

The 2010 proposal didn't spell out how the state would have to use the money, but it was pitched to voters as a way to avoid deep cuts to education and other public services during the state's Great Recession budget crisis, among the worst in the nation. Budget cuts that would have taken effect automatically if the 2010 measure failed would have fallen hardest on education.

The budget crisis has receded, but education advocates say budget cuts hammered Arizona's schools and universities and that they need a stable, voter-mandated funding source that the Legislature can't cut or divert.

"Arizona schools could be doing much, much better if we actually made them a priority," said Ann-Eve Pedersen, an education activist and former newspaper editor who heads the initiative campaign. "We can't trust the Legislature to adequately fund it."

Brewer and other critics say the state's finances are on sounder footing and that another tax increase isn't necessary. They also say that the measure lacks true accountability requirements to link additional funding with improved performance by schools, principals and teachers.

"This measure is a $1 billion blank check," said State Treasurer Doug Ducey, who is heading the opposition campaign.

In fact, the measure does tie a small percentage of the education money to performance, but Pedersen said the bulk of the additional funding for K-12 schools is needed to help pay for improvement, accountability and assessment requirements already imposed on schools.

"It didn't matter what we had in this. That was going to be the attack," she said. "This was parent driven and parent drafted. We are absolutely committed that dollars are well spent and put into the classroom."

If voters reject Proposition 204, supporters and opponents alike can begin a dialogue on crafting "true education reform," Ducey said. "This is about stopping a bad tax, a bad policy, something that will hurt our economy and will not reform education."